Rickard and Rickard (No. 2)

[2018] FamCA 713

FAMILY COURT OF AUSTRALIA

RICKARD & RICKARD (NO. 2) [2018] FamCA 713

FAMILY LAW – COSTS – Where application for costs made in respect to interim issues – Where consideration of applicable principles – Where circumstances justify departure from general rule – Where husband to pay 75 per cent of the wife’s costs as agreed or as assessed on party/party basis.

Family Law Act 1975 Suburb C s 117
Family Law Rules 2004 (Cth) r 19.18

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
Collins & Collins (1985) FLC 91-603
D & D (Costs) (No. 2) [2010] FamCAFC 64
Fennessy & Gregorian [2009] FamCAFC 44
Greedy & Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Joyce & Fante [2013] FamCAFC 141
Limousin & Limousin [2007] FamCAFC 1178
Luadaka & Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Rickard & Rickard [2018] FamCA 400
Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681

APPLICANT: Ms Rickard

RESPONDENT: Mr Rickard

FILE NUMBER: PAC 1356 of 2016

DATE DELIVERED: 12 September 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: By way of written submissions last received on 11 July 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Rebekah Dorter Family Lawyer

SOLICITOR FOR THE RESPONDENT: McLachlan Thorpe Partners

Orders

1. That the husband pay 75 per cent of the wife’s costs of and incidental to the applications determined by orders made on 1 June 2018 and this application for costs, such costs to be on a party/party basis as agreed within one month from this date or otherwise 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 Rickard & Rickard (No. 2) 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 PARRAMATTA

FILE NUMBER: PAC 1356 of 2016

Ms Rickard

Applicant

And

Mr Rickard

Respondent

REASONS FOR JUDGMENT 

1. The application for determination is the wife’s application for an order that the husband pay her costs of and incidental to her application for spouse maintenance provision and interim property distribution and/or costs.

2. The husband’s response to the wife’s application sought orders that the wife’s application be dismissed and a property at Suburb C be sold with the proceeds to be held in a controlled money account.

3. Reasons for Judgment in respect of the competing applications of the parties were delivered on 1 June 2018 following receipt of written submissions and these Reasons assume familiarity with those delivered on 1 June 2018: Rickard & Rickard [2018] FamCA 400.

4. Orders were made on 1 June 2018 as follows:

   (1)That the husband pay to the wife the sum of $1,000.00 per week for a period of 50 weeks from this date by way of interim spousal maintenance with the first payment to be made within seven days from the date of these orders and the husband’s obligation for such payments be satisfied by the following order.

   (2)That the husband and wife do all things necessary to authorise and direct that of the funds held in a controlled money account on behalf of the parties or either of them the wife be paid the sum of $50,000.00 within seven days from the date of these orders.

   (3)That, otherwise, the parties do all things necessary to authorise and direct that of the funds held in a controlled money account on behalf of the parties or either of them the wife be paid the sum of $50,000.00 within seven days from the date of these orders and that the characterisation of such payment be reserved to final hearing.

   (4)That any application for costs arising from the present applications be made by way of written submissions filed and served within 28 days from this date with any submissions in reply to be filed and served within a further 14 days and that on completion of submissions judgment will be reserved to chambers.

Costs

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

3. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.

4. The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party has legal aid and the terms of any grant of aid;

   (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 answers, 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.

5. In Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.

6. In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.

7. The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:

   17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:

   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.

   (footnotes omitted)

   18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this 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”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:

   … A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

8. The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:

Method of calculation of costs

(1)The court may order that a party is entitled to costs:

(a)of a specific amount;

(b)as assessed on a particular basis (e.g. 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.

1. It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.

2. In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.

3. Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [130]:

   If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…

Indemnity Costs

1. The application before the Court is an application for the husband to pay the wife’s costs on an indemnity basis, or such other order as the Court thinks fit.

2. It is usual for the Court to make an order for costs on a party/party basis if an order for costs is made at all.

3. Rule 19.18(3) further provides that:

   (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.

4. The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.

5. The category of cases in which an award of an indemnity costs order may be appropriate are not closed and the Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:

   … It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such order is sought. …

6. More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCAFC 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.

7. Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:

   …

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis. …

   3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. …

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. …

8. Sheppard J made observations as to some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:

   a)false and irrelevant allegations of fraud;

   b)misconduct that causes a loss of time to the Court and other parties;

   c)where the proceedings were commenced or continued for an ulterior motive;

   d)the undue prolongation of a case on groundless contentions; and

   e)wilful disregard of known facts and clearly established law. 

Relevant considerations

1. The financial circumstances of the parties are touched upon in the June 2018 Reasons for Judgment referred to above. They are such that they do not preclude an order for costs by reason of impecuniosity nor should they. The husband is in a superior financial position to that of the wife.

2. Neither party is in receipt of a grant of legal aid.

3. The conduct of the parties is relevant. It is clear from the June 2018 Reasons for Judgment that the husband failed to make full and frank disclosure to the Court of his financial resources.  It was open to the Court to make robust findings against him.  The wife was obliged to adduce extensive evidence as to the husband’s financial position. Otherwise, the wife was recalcitrant in instructing the agreed single expert necessitating the husband seeking specific orders in his response.

4. Proceedings were not necessitated by a failure by either party to comply with previous orders.

5. The husband’s application was wholly unsuccessful in terms of the orders sought by him in response to the wife’s application save for the order made on 22 February 2018 as to instructions to the single expert. Whereas the wife was successful in her application for financial orders.

6. The wife in September 2017 made an offer to the husband as to capital sums available for distribution that the wife contends would have obviated the wife’s interim application. The offer was rejected by the husband. Orders ultimately made substantially reflected the offer of the wife made many months before. This is a most significant consideration, in particular, as to indemnity costs as sought by the wife. 

7. The wife, however, has not provided a copy of her costs agreement as between herself and her solicitors in compliance with Rule 19.08(3). Failure to do so is fatal to her application for indemnity costs. 

8. Otherwise, the wife was substantially successful in her application. In financial matters such as this where there is clearly financial imbalance between the parties and where the wife was put to considerable expense in obtaining orders reasonably sought, such a consideration also weighs heavily in the displacement of the general rule as to costs.

9. As the wife was wholly successful save and except for the order sought by the husband in relation to valuation and had made a previous offer that substantially reflected the orders made in June 2018 there is justification for the general rule to be displaced as to costs in favour of the wife. Accordingly, an order will be made that the husband contribute to the wife’s costs of and incidental to the application by way of 75 per cent of the wife’s costs on a party/party basis as agreed within one month from this date or otherwise as assessed.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 12 September 2018.

Associate: 

Date:  12 September 2018