Redmond & Redmond (Costs)
[2014] FamCAFC 55
FAMILY COURT OF AUSTRALIA
| REDMOND & REDMOND AND ANOR (COSTS) | [2014] FamCAFC 55 |
FAMILY LAW – APPEAL – COSTS – heard by way of submissions – offer of settlement – where an offer of settlement was not accepted – where one party was not wholly unsuccessful – whether circumstance warrant an order for costs – where the circumstances warrant an order for costs.
Child Support Act 1988 (Cth)
Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)
Bele & Vaughan (Costs) [2012] FamCAFC 198
Cachia v Hanes (1994) 179 CLR 403
Guss v Veenhuizen (No. 2) (1976) 136 CLR 47
Khera v Jones [2006] NSWCA 85
The London Scottish Benefit Society v Chorley, Crawford and Chester (“Chorley’s Case”) (1884) 13 QBD 872
Worchild v Petersen [2008] QCA 26
| APPELLANT: | Mr Redmond |
| FIRST RESPONDENT: | Ms Redmond |
| SECOND RESPONDENT | Firm Y |
| APPEAL NUMBERS: | NA 62 of 2012 NA 97 of 2012 |
| FILE NUMBER: | BRC 4493 of 2011 |
| DATE DELIVERED: | 4 April 2014 |
| PLACE DELIVERED: | Sydney |
| DATE HEARD: | By way of written submissions |
| JUDGMENT OF: | May, Ainslie-Wallace and Kent JJ |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 10 July 2012 22 November 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 681 [2012] FMCAfam 1306 |
SUBMISSIONS RECEIVED FROM:
| THE APPELLANT: | Mr Redmond |
| FIRST RESPONDENT: | Ms Redmond |
| SECOND RESPONDENT | Firm Y |
Orders
NA 62 of 2012
Save and except for any costs directly relating to the appeal against order 3 of the orders made on 10 July 2012, the husband pay the wife’s costs of and incidental to the appeal to be assessed on an indemnity basis.
Save and except for any costs directly relating to the appeal against order 3 of the orders made on 10 July 2012, the husband pay Firm Y’s costs of and incidental to the appeal to be assessed on an indemnity basis.
NA 97 of 2012
The husband pay the wife’s costs of and incidental to the appeal to be assessed on an indemnity basis.
The husband pay Firm Y’s costs of and incidental to the appeal to be assessed on an indemnity basis.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Redmond & Redmond and Anor (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Numbers: NA 62 and NA97 of 2012
File Number: BRC 4493 of 2011
| Mr Redmond |
Appellant
and
| Ms Redmond |
First Respondent
and
| Firm Y |
Second Respondent in Appeals NA 62 of 2012 and NA 97 of 2012
REASONS FOR JUDGMENT
on costs application
This is an application for costs orders against the husband, Mr Redmond consequent on the Full Court’s determination of two of four appeals brought by him. The two other appeals, NA 47 and NA 89 of 2012, were brought against orders made by Federal Magistrate Coates (as he then was) in respect of child support. Those orders were made on 28 May and 18 October 2012. These appeals were successful, the orders made by Federal Magistrate Coates were set aside and we granted costs certificates in relation to the appeals. No other costs orders are sought in relation to these appeals.
The wife and a firm of solicitors Firm Y were respondents to the appeals with which we are now concerned. Each seeks an order for costs against the husband. The husband opposes the making of any costs order.
At the conclusion of the hearing of the husband’s appeals it was indicated that the wife and solicitors preferred not to make costs submissions until the appeals had been determined. Thus, in the orders made on the appeal, we directed the parties to make submissions in writing on the question of costs of the appeals.
The wife, the solicitors and the husband all made submissions on the costs. The submissions were considered in chambers without the need for further hearing.
It is not necessary to set out other than a brief background to this present application. The detail of the appeals and their disposition can be found in the reasons for decision of the Full Court of 9 October 2013.
Appeals NA 62 and NA 97 of 2012 concern orders made by Federal Magistrate Howard (as he then was) on 10 July and 22 November 2012.
On 10 July 2012 the Federal Magistrate dismissed the husband’s application that the wife’s solicitors (the second respondent in the appeal) be dealt with for criminal contempt; ordered costs against the husband in respect of the contempt application and restrained the husband from bringing further applications in the proceedings without leave first being granted. The appeal against these orders is NA 62 of 2012.
The husband sought a stay of the orders of 10 July 2012 until the determination of the appeal; that the Federal Magistrate recuse himself from further hearing the matter and that the wife pay his costs of the application.
On 22 November 2012, Federal Magistrate Howard dismissed the husband’s application and ordered the husband pay the wife’s costs and those of the second respondent, the wife’s solicitor. The appeal against those orders was
NA 97 of 2012.
Appeals NA 62 and NA 97 of 2012
This court provided a lengthy judgment in relation to these appeals. It is necessary only to add the following in the context of the costs application. On 10 July 2012 the Federal Magistrate ordered:
(1)That the application for contempt against [Firm Y] filed 9 February 2012 be dismissed.
(2)That the Applicant pay costs to [Firm Y] in the sum of $3,490 within fourteen (14) days of the date of this Order.
(3)That the Applicant is prevented from filing any further application in relation to these property and/or parenting proceedings without first obtaining the leave of a Federal Magistrate in Chambers.
…
The husband filed 17 grounds of appeal (NA 62 of 2012) in relation to the Federal Magistrate’s decision. They were principally directed to the dismissal of his criminal contempt application against the solicitors.
It bears repeating what we said in our reasons:
39. As we have already emphasised, by his application in a case the husband did not seek enforcement of the subpoena by seeking an order for production of specific documents; nor did the husband apply under s 112AD of the Act for sanctions for contravention of an order. He mounted an application for criminal contempt and directed it personally to Mr [H] and sought that the Federal Magistrate exercise its power to punish for contempt under s 17 of the Federal Magistrates Act 1999.
40.The husband could have been in no doubt of the availability of
s 112AD given the specific reference to that section on the face of the subject subpoena.41.In both his grounds of appeal (particularly ground 4) and his summary of argument the husband argues that the Federal Magistrate was wrong to question whether further documents the husband sought to have produced pursuant to the subpoena were of any relevance to the substantive proceedings. However, the husband’s application before the Federal Magistrate was to have
Mr [H] personally dealt with for contempt and “punished to the full extent available to the Court”.42.Given the nature of the husband’s application it was fundamental for the Federal Magistrate to consider the relevance to the substantive proceedings of further documents the husband contended ought to have been produced pursuant to the subpoena in order for the Federal Magistrate to determine the gravity of any alleged disobedience of Mr [H] or whether any disobedience of Mr [H] to the order of the court constituted disobedience which was “contumacious”.
43.Neither in the proceedings below, nor in argument before us, was the husband able to demonstrate the existence of any document directly relevant to the substantive proceedings which had not already been produced pursuant to the subpoena. Indeed, as Ground 4 and the husband’s summary of argument demonstrates (paragraphs 26, 27 and 28) the husband seeks to divert attention from the essential conclusion that the husband could not demonstrate below the existence of documents relevant to the substantive proceedings in the possession of the solicitors not produced under the subpoena.
44.The authorities, including those referred to by the Federal Magistrate, emphasise the serious nature of an application for contempt and that it is a remedy of last resort. (See for example, Ibbotson & Wincen (1994) FLC 92-496 at p81,162; Sahari & Sahari (1976) FLC 90-086 at p75,407 & p75,410; Helliar & Helliar (1980) FLC 90-805 at pp75,075-75,076).
45.Relevant to the seriousness of the application, as the Federal Magistrate himself identified in his reasons [28] is that the alleged contemnor Mr [H] is a legal practitioner and principal of a firm. There were obvious potential ramifications for Mr [H], beyond any penalty imposed by the Court if, as a legal practitioner, he was found guilty of contempt.
…
48. As is clear the rules contemplate an applicant in a contempt application establishing a prima facie case failing which the court may dismiss the application. Bearing in mind that the husband was pursuing an application for criminal contempt against, and punishment of, Mr [H] “to the full extent available to the court” pursuant to the power in s 17 of the Federal Magistrates Act 1999 the husband had the onus of proof identified by the Federal Magistrate in his reasons.
…
50. We reiterate that whilst the husband challenges the Federal Magistrate’s approach of considering the relevance to the substantive proceedings of the documents the husband alleged had not been produced, a challenge which is misconceived and which we reject, he does not challenge the Federal Magistrate’s findings and conclusions to the effect that no document relevant to the substantive proceedings had not been produced. We also reiterate that in the proceedings below the husband likewise did not agitate that documents directly relevant to the substantive proceedings (as opposed to the subpoena) had not been produced.
51.For the reasons we have already discussed whilst that position pertained the husband was never in a position to establish a prima facie case for contempt.
In relation to Federal Magistrate Howard’s costs order in paragraph (2) we merely refer to our reasons at [70] and [71].
The husband’s appeal against the Federal Magistrate’s orders in relation to the application for criminal contempt and the costs order, required leave to appeal.
Leave was granted only in respect of order 3 of the Federal Magistrate which purported to restrain the husband from bringing further applications in the proceedings against the wife without first obtaining the leave of a Federal Magistrate. The appeal was allowed only in so far as it related to order 3 which was set aside. In this respect regard should be had to [133] to [147] of our reasons. Otherwise leave to appeal was refused.
Again, as we have indicated, on 22 November 2012 the Federal Magistrate dismissed the husband’s application seeking a stay of the 10 July 2012 orders and his application that the Federal Magistrate disqualify himself from further hearing the matter. The husband was ordered to pay the costs of the solicitors and the wife of that application. The husband appealed against those orders (NA 97 of 2012). That appeal was also one which required leave to appeal. Leave was refused.
On 18 April 2013 the husband filed an application in an appeal seeking to adduce further evidence in relation to appeals NA 62 and NA 97 of 2012. That application was refused.
We observe that in 2011 the husband instituted proceedings in the Federal Magistrates Court for property settlement and parenting orders, and sought orders under the Child Support Act 1988 (Cth). An Independent Children's Lawyer has been appointed in relation to the parenting matters.
As presently advised, we do not understand these proceedings to have been completed or otherwise resolved. Indeed the genesis of the husband’s application that the solicitors be dealt with for criminal contempt is in a subpoena issued to the solicitors seeking information, inter alia, about the estate of the wife’s late mother apparently in relation to the preparation of the property settlement proceedings.
The applications for costs
It is in relation to these two appeals that the wife and the solicitors seek orders for costs against the husband.
The wife and the solicitors in their separate submissions also seek an order that the husband pay their costs on an indemnity basis.
The wife and husband filed affidavits in which they each attest to their personal and financial circumstances relevant to the costs applications.
The principles which govern an application for costs in proceedings under the Family Law Act 1975 (Cth) (“the Act”) are set out in s 117. The relevant subsections provide 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.
Thus the general rule is that each party should bear his or her own costs of proceedings under the Act. However, the court is empowered to make an order for costs if it is of the opinion that there are circumstances which would justify such an order. Section 117(2A) sets out the range of matters to which the court should have regard in considering whether to make an order for costs, and, if so, what order should be made.
Before turning to the relevant factors set out in s 117(2A), we observe that the solicitors’ costs submissions generally adopt those of the wife.
The husband contends that because, in respect of both appeals, the solicitors represented themselves and did not engage “external lawyers” they did not thus incur any recoverable legal costs. That is, the husband’s contention is that the solicitors have not incurred any costs capable of being the subject of an order for costs.
Whilst it is well settled that litigants in person are not entitled to be compensated for the value of their time there is a limited exception to that general rule where a solicitor self-represents. The general rule and exception were articulated by the House of Lords in The London Scottish Benefit Society v Chorley, Crawford and Chester (“Chorley’s Case”) (1884) 13 QBD 872 at p 877 as follows:
… only legal costs which the court can measure are to be allowed, and that such legal costs are to be treated as expenses necessarily arising from the litigation and necessarily caused by the course which it takes. Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs…
In Guss v Veenhuizen (No. 2) (1976) 136 CLR 47, a self-represented solicitor sought taxation of costs on the basis that he fell within the rule of practice that a solicitor should be entitled to costs in those circumstances. The High Court, applying Chorley’s case, described the basis of the rule in the following terms at p 51:
… the litigant in person does not recover such costs in such circumstances in the capacity of a solicitor, but because he happening to be a solicitor, his costs are able to be quantified by the court and its officers.
In Khera v Jones [2006] NSWCA 85, the New South Wales Court of Appeal affirmed the limited scope of the rule allowing solicitors in litigation to claim professional costs. Likewise, in Worchild v Petersen [2008] QCA 26, Mackenzie AJA, with whom McMurdo P and Holmes JA agreed, articulated the general rule and the exception under Australian law as follows at [4]:
… the principle said to be derived from Guss v Veenhuizen … [is] that a solicitor who appears in person is entitled to costs for his professional time, not because he is a solicitor in the formal sense, but because, being a solicitor, his costs can be quantified…
Whilst in Cachia v Hanes (1994) 179 CLR 403 (“Cachia’s case”) the High Court questioned the principle that a self-represented solicitor may be entitled to costs it was unnecessary to overrule that principle for the purpose of deciding that case. However, it would seem that in Cachia’s case the majority thought the exception “questionable” in a situation in which a successful litigant not only receives the amount of a verdict but actually profits from the conduct of the litigation. Here, there was no verdict or money judgment in favour of the solicitors at stake.
We reject the husband’s contention that the solicitors are not entitled to an order for costs simply because they were litigants in person in the appeals.
(a) The financial circumstances of the parties
The wife is a solicitor in private practice, employed by the solicitors. She says, and it does not appear to be contentious that she works part time and earns $968 net per week. The parties have a child for whom she has primary responsibility. She receives child support payments from the husband in the sum of $44.97 per fortnight. The wife asserts that save for these payments, she bears the brunt of the financial cost of supporting the child.
The husband too is a solicitor and, at the time of the appeal hearing was in practice, however he deposes that his practice is in the process of being wound up. He argues that he does not have the capacity to meet any costs ordered. He says that he is in receipt of a Centrelink benefit of $418.13 each fortnight. The husband asserts he has no assets of significance.
The husband argues that this court should not make a costs order with which he cannot comply and further, says that to make a costs order “would adversely affect [the Appellant’s] child by impacting on [the Appellant’s] ability to properly provide for her.”
That the husband is impecunious while a relevant factor is not, of itself, a bar to the making of a costs order if the circumstances otherwise warrant it. Moreover it is to be noted that these appeals arise out of interim determinations made in the course of substantive property settlement proceedings which remain on foot.
(c) The conduct of the parties to the proceedings in relation to the proceedings
The wife argues that the husband had “minimal prospects of success” in appeal NA 97 of 2012 and submitted that responding to the numerous, unmeritorious grounds of appeal in relation to appeal NA 62 of 2012 put her to considerable cost.
As part of this submission, the wife referred to the husband’s summary of argument and, in particular, his references in it to Hollywood movies and his use of vulgar language, circumstances which she said were compounded by them being filed by a practising solicitor.
The wife accurately describes parts of the husband’s summary of argument which contained wholly inappropriate references and language, a matter raised by us with the husband during the hearing of the appeal. Nonetheless, these unfortunate references aside, the document as a whole was adequate to the task of articulating the husband’s arguments in support of his appeal grounds.
Further, the wife refers to evidence of a text message sent to her by the husband (reproduced in her submissions) and on which she argues that the husband’s motive in pursuing the litigation in general and the appeal in particular was not bona fide. It is unnecessary to repeat the whole of the text message, however it concludes:
… So look the longer I drag this out, the worse it gets for you, so you may want to think about that as well. So I’m quite happy to run this… I know that the longer I run this, the better off I will be and that’s the way it’s working out at the moment.
Reading this we can readily understand the wife’s concern that the husband’s pursuit of the litigation generally is for an ulterior purpose. A finding that litigation is being conducted for an improper or ulterior purpose is a grave one. The text message was included in the wife’s evidence before the Federal Magistrate however he made no finding in relation to it nor did he refer to it in his reasons. Although the terms of the text message could give rise to serious unease, we are unable to make the finding urged on us by the wife.
Finally it was submitted by the wife that the litigation was frivolous and the husband, as a solicitor, would have been well aware of that. For that reason alone, the wife submits the court should order the husband to pay her costs.
The husband asserts that the challenges to the Federal Magistrate’s decision were not frivolous or necessarily doomed to failure. In an associated submission, the husband observes that he has lodged an application for special leave to appeal to the High Court and says:
The Appellant has no doubt that the High Court will grant leave to the Appellant on the basis that the Full Court erred in its decision to remit the matter back to Judge Howard after finding he did not afford the Appellant procedural fairness.
The husband’s application for special leave to appeal has been refused by the High Court.
In our view, the husband’s challenges to the Federal Magistrate’s dismissal of his contempt application were palpably unmeritorious as was the challenge to the Federal Magistrate’s orders made on 22 November 2012. As we have repeated above we emphasised in our earlier reasons that the husband pursued a criminal contempt application that was not only unmeritorious but which was never destined to advance the progress of the substantive financial proceedings below in any way.
The orders the husband sought on this appeal were not limited to setting aside order 3 of the orders made on 10 July 2012. The husband sought the setting aside of all orders made and sought that his application in a case filed on 9 February 2012 be remitted for a new hearing, with all the attendant expense that would involve for the wife. Moreover, the husband also sought an order on appeal that the wife pay his costs of the appeal on an indemnity basis.
We recorded in our earlier reasons that the husband’s pursuit of the criminal contempt application was “vexatious and frivolous and serves no utility whatsoever”. We allowed the appeal against the order restraining the husband from filing any further application without leave for the reasons we detailed at [140] to [147] of that judgment
It is relevant to the present applications that it was in that context which the husband’s appeal against that particular order succeeded, not because of any determination that there was ever any merit in the criminal contempt application, which clearly there was not.
It also must be kept in mind that order 3 of the orders made on 10 July 2012 was not made upon the application or instigation of either the wife or the solicitors. That order, as we discussed in our earlier reasons, was made on the Federal Magistrate’s own motion.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The wife argued that the husband failed in 15 of 17 grounds of appeal in appeal NA 62 of 2012 and wholly failed in appeal NA 97 of 2012.
In response, the husband relies on the fact of his application for special leave.
It could not sensibly be gainsaid that the husband, while not “wholly” unsuccessful has been almost entirely unsuccessful in the appeals. He failed to have all orders set aside and failed in his bid to have his application in a case filed 9 February 2012 remitted for rehearing. As we have said, the husband’s application for special leave has been refused by the High Court.
(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
On 22 March 2013 the solicitors sent the husband a letter indicating that they were instructed to represent the wife in the appeals and said:
…
We advise that both [the wife] and [Firm F] (in their capacity as a party to two of the Appeals) intend to jointly brief [Counsel] to represent them at the hearings.
Therefore, prior to [the wife] incurring what are likely to be significant legal fees, we are instructed to put forward the following offer of settlement:
1.[The wife] will consent to a discontinuance of any or all of your Appeals with no order as to costs.
This offer will remain open until 5pm on Tuesday 2 April 2013, after which time it will lapse and will no longer be capable of acceptance.
Should you fail to discontinue your Appeals, we hereby put you on notice that [the wife] will be seeking an order for payment of her costs on an indemnity basis when your Appeals are ultimately dismissed.
…
(original emphasis)
The husband’s response to the submission was to argue “[a]t no time had the 1st Respondent conceded that Magistrate Howard had not afforded the Appellant procedural fairness before the hearing of these matters.”
We do not regard this as an answer to the reliance on the offer by the wife. Of particular importance in our view is the term inviting the husband to withdraw “any or all of your Appeals”. That invited the husband to consider his appeal against each of the orders made by the Federal Magistrate on 10 July 2012. It allowed him to withdraw any of those appeals without penalty as to costs. Likewise, with respect to his appeal against the Federal Magistrate’s refusal to stay the orders. It put the husband on notice that indemnity costs would be sought.
The solicitors also sent the husband a letter of offer on their own behalf, it too was dated 22 March 2013 and the offer was in the following terms:
…
Therefore, prior to [Firm Y] incurring what are likely to be significant legal fees, we are prepared to put forward the following offer of settlement:
1.[Firm Y] will consent to a discontinuance of both of your Appeals with no order as to costs.
…
It was expressed to lapse at the same time as the offer conveyed on behalf of the wife.
It continued:
Should you fail to discontinue your Appeals, we hereby put you on notice the [Firm Y] will be seeking an order for payment of our costs on an indemnity basis when your Appeals are ultimately dismissed.
The husband’s argument in response to the solicitor’s reliance on the letter of offer is:
The Appeals were not both dismissed, and therefore, the offers by [Firm Y] were not capable of acceptance by the Appellant.
Clearly, the husband, as a solicitor, understood that he could then have discontinued his appeals against one or more of the appealed orders without penalty as to costs. Both offers were capable of acceptance. He chose not to accept either.
In our view the offer on the wife’s part and that of the solicitors were reasonable and capable of acceptance.
(g) Other matters as the court considers relevant
The husband argues that the second respondent, the solicitors, were responsible for order 3 made by Federal Magistrate Howard. It was contended that appeal NA 62 of 2012 arose because the solicitors contended that his application to have them dealt with for criminal contempt was vexatious and frivolous which, the husband argues was taken by the Federal Magistrate as an application by the solicitors that he be “declared a vexatious litigant”.
We reject this assertion.
In the reasons for judgment on the appeal we said:
137.The solicitors’ letter to the husband delivered to the Court in response to the order of 10 July 2012, in dealing with the adequacy of their response to the subpoena states, relevantly to this issue:
The documents that you allege in your letter of 15 May 2012 that “should have been disclosed” by [Firm Y] are not in any way relevant to the issues for determination by the Court and would appear to be no more than a “fishing expedition” and an abuse of process in circumstances where you now seek to enlarge the scope of your Subpoena. We suggest that your Contempt of Court Application is vexatious and frivolous and serves no utility whatsoever.
138.We first observe that the solicitors did not assert that the husband’s conduct was frivolous, vexatious and an abuse of process, as the Federal Magistrate’s reasons seem to assert. The solicitors’ complaint related to the bringing of a contempt application based on an alleged non compliance with the subpoena. For our part, we entirely agree with the solicitors’ categorisation of the pursuit that the solicitors to be dealt with for contempt. It further appears clear to us that the husband has been very ready to have the court deal with the other parties for contempt in circumstances that could easily be described as frivolous.
Costs Certificates
The husband contends that because of his partial success in appeal NA 62 of 2012 he and the other parties ought receive costs certificates pursuant to the relevant provisions of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”). However, the grant of a costs certificate to the husband as appellant under s 9 of the Costs Act is subject to the condition that, in accordance with s 117 of the Act, each party to the appeal bears his or her own costs. As we propose to make orders for costs under s 117 in favour of the wife and the solicitors that condition is not fulfilled.
Whilst the condition referred to does not apply to either the wife nor the solicitors as respondents to the appeal, within the meaning of s 6 of the Costs Act, in circumstances where we propose to make orders for costs in favour of those parties we do not propose to exercise the discretion in favour of also granting costs certificates with respect to that part of the appeal not the subject of the costs orders we make.
The wife further submitted that, if because the husband was partially successful in relation to appeal NA 62 of 2012 the Court was not persuaded to make a costs order in relation to that appeal, she seeks a costs certificate for that appeal. However she maintained her submission for costs on an indemnity basis in relation to appeal NA 97 of 2012.
Conclusion
The husband having been substantially unsuccessful in the appeals and having rejected the offer of discontinuance without penalty are, in our view sufficient circumstances to justify an order that the husband pay the costs of both the wife and the solicitors. We make this finding notwithstanding the husband’s assertions of impecuniosity. Lack of funds, even indigence is no bar to a costs order where otherwise warranted, and in this case such an order is clearly warranted.
We note that the costs order we propose to make in favour of the wife does not include her costs of or in relation to so much of the appeal as related to the husband’s appeal against the order made by the Federal Magistrate purporting to restrain him from bringing further applications in the proceedings. Equally, the costs order in favour of the solicitors, will not relate to the part of the appeal on which the husband was successful.
As to the solicitors, their submissions seek that the amount of costs ordered be agreed or failing agreement be assessed. The wife’s submission seeks that the costs be fixed as to $4,830 in relation to appeal NA 62 of 2012 and as to $2,870 as to Appeal NA 97 of 2012.
Indemnity costs
As we have already indicated, both the wife and the solicitors sought orders that the husband pay their costs on an indemnity basis.
In her submissions, the wife set out an extract from the decision of Strickland J in Bele & Vaughan (Costs) [2012] FamCAFC 198 at [26] to [28] on this issue and we repeat it here as it encapsulates the relevant legal principles.
26. A useful recent discussion of the question of indemnity costs is to be found in the decision of the Full Court in D & D (Costs) (No 2) (2010) FLC 93-435. There the Full Court reviewed extensively earlier authorities including Limousin v Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co & Another
v Cussons Pty Ltd (1993) 118 ALR 248.27.The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities referred to above that to depart from that rule exceptional circumstances need to be demonstrated.
28. As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397).
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra)).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court,
3 May 1991)).(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
Turning to the application of the solicitors, we note as being of particular relevance in considering this question, the husband’s conduct in pursuing the appeal. The subpoena issued to Firm Y and which formed the genesis of the husband’s application that the solicitor from Firm Y be dealt with for criminal contempt related to documents held by the solicitor in regard to the estate of the wife’s late mother. The only relevance of those documents was to the wife’s entitlement in her mother’s estate and as the evidence before the Federal Magistrate revealed, all of those relevant documents had been provided to the husband by the solicitors.
The husband chose to bring criminal contempt proceedings against the solicitors, notwithstanding the availability of other, less draconian procedures in the Family Law Act and, as a solicitor himself, would have well understood the ramification for the solicitor in the bringing of such an application.
There was never any merit in the husband’s appeal against the Federal Magistrate’s dismissal of the criminal contempt application against the solicitor.
The husband was on notice, from the receipt of those offers that the solicitors would seek indemnity costs in the event that his appeal was unsuccessful, a matter with which he was familiar having himself sought orders for indemnity costs against the solicitors.
In all of the circumstances we conclude that the husband should be ordered to pay the solicitor’s costs of and incidental to the appeal (other than those costs directly referable to order 3) on an indemnity basis.
From the wife’s perspective, having incurred the costs she did in the proceedings, she was called upon by the appeals to resist the orders sought on appeal by the husband including that the husband’s application in a case filed 9 February 2012, determined by the orders of 10 July 2012, be remitted for yet another hearing. The wife was also called upon to answer the husband’s claim that she ought be ordered to pay the husband’s costs of appeal on an indemnity basis.
It was always open to the husband to challenge on appeal only order 3 made on 10 July 2012. That challenge could have been framed without any need to seek any rehearing of the whole of the application determined below. Indeed, we set that particular order aside without any need to remit the matter for rehearing.
Inevitably, these appeals have substantially delayed the progress and resolution of the substantive proceedings, with all of the adverse consequences of that for the wife.
Relevant to delay, as we observed in our earlier reasons, the only documents on the estate file relevant to the substantive financial proceedings below were documents evidencing the amount or benefit the wife was to receive from the estate. The Federal Magistrate had found that all or any such documents had been disclosed to the husband and there was no challenge to that finding on appeal.
That the appeals were primarily directed, in an unmeritorious manner and form, to a criminal contempt application highlights the unfairness occasioned to the wife.
That unfairness ought not be compounded by the wife having to meet any part of her own costs referrable to the utterly unmeritorious pursuit by the husband of the appeals as advanced.
We conclude that the husband should be ordered to pay the wife’s costs of and incidental to the appeal (other than those costs directly relating to order 3) on an indemnity basis.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Ainslie-Wallace and Kent JJ) delivered on 4 April 2014.
Associate:
Date: 4 April 2014
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