Rivers and Rivers (No 2) - [2017] FamCA 41

FAMILY COURT OF AUSTRALIA

RIVERS & RIVERS (NO 2)

[2017] FamCA 41

FAMILY LAW – COSTS – Where the Respondent seeks payment of his costs on an indemnity basis – Applicant pay the Respondent’s costs on a party/party basis.

Family Law Act 1975 (Cth)
Family Law Rules 2004

Colgate-Palmolive Company & Cussons (1993) 46 FCR 225
D & D (Costs) No 2 (2010) FLC 93-435
Kohan & Kohan (1993) FLC 92-340
Limousin & Limousin [2008] FamCA 315
Yunghanns & Yunghanns (2000) FLC 93-029

APPLICANT:

Ms Rivers

RESPONDENT:

Mr Rivers

FILE NUMBER:

BRC

6267

2014

DATE DELIVERED:

24 January 2017

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Hogan J

HEARING DATE:

23 January 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Linklater-Steel

SOLICITOR FOR THE APPLICANT:

Barry.Nilsson Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Hackett

SOLICITOR FOR THE RESPONDENT:

Hirst & Co

Orders

IT IS ORDERED THAT

The Applicant pay the Respondent’s costs of and incidental to the Application – Contravention filed 4 January 2017 and the Application in a Case filed 4 January 2017 and that:
(a)such costs to be paid on a party/party basis in an amount as agreed between the parties or, failing agreement, as assessed on a party/party basis; and
(b)such costs, in the amount agreed or as assessed, be paid by the Applicant to the Respondent by 4.00 pm on 1 August 2017.

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 Rivers & Rivers (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 BRISBANE

FILE NUMBER: BRC 6267 of 2014

Ms Rivers

Applicant

And

Mr Rivers

Respondent

REASONS FOR JUDGMENT

Yesterday, Counsel for the Respondent applied for an order that the Applicant pay his costs of and incidental to the Application for Contravention, filed 4 January 2017, and the Application in a Case also filed on 4 January 2017. That application came after orders were made dismissing each of those Applications.
Section 117(1) of the Family Law Act 1975 (Cth) provides that, subject to ss (2) and other particularised sections of the Family Law Act 1975 (Cth) that are not relevant to the determination of this Application, “each party to proceedings under the Act shall bear their own costs”.
Subsection (2) of s 117 provides that, if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to ss (2A) relevantly, and the applicable Rules of Court, make such order as to costs as the Court considers just.
Subsection (2A) of s 117 contains a number of considerations to which the court shall have regard in determining what order, if any, as to costs should be made in any particular circumstance.
The financial circumstances of each of the parties in this proceeding are, it seems from reference to the terms of the consent order, such that, once those terms are implemented, they are not such as to be a relevant or disqualifying factor vis-à-vis the making of an order for costs. So much was, of course, sensibly recognised by Counsel for the Applicant, who made no submissions about the Applicant’s ability to pay an order for costs, if made, other than submitting that any requirement that she do so follow the implementation of the terms of the consent order made on 27 September 2016.
Neither party is in receipt of legal aid.
The remaining considerations contained within ss (2A) of s 117, namely: the conduct of parties in relation to the proceedings; whether proceedings were necessitated by a failure of a party to comply with a previous order; whether any party was wholly unsuccessful; whether an offer in writing had been made to settle the proceedings and the terms of any such offer, and; any other relevant matter will now be considered.
Here, both the Application for Contravention and the Application in a Case were dismissed by order made yesterday. In that sense, then, the Applicant was wholly unsuccessful in relation to each of those Applications.
Further, the evidence establishes that the Respondent made an offer in writing, conveyed in correspondence (dated in error 13 December 2016, it being accepted that it should have been dated 18 January 2017: Exhibit 1) whereby it was proposed that the Applicant withdraw the Applications and pay the Respondent’s costs on a party and party basis. The offer to resolve the Applications also contained the assertion that, if such offer was not accepted by 4.00 pm the next day (which clearly can only have been 19 January 2017) the Respondent intended to brief Counsel and seek an order for costs on an indemnity basis.
Exhibit A follows on from the information conveyed to the Applicant’s current solicitors by the Respondent’s current solicitors that they had started to act for him. This correspondence is again incorrectly dated 13 December 2016 – it is accepted that it should have had the correct date of 18 January 2017. Given the timeframes, the likely costs as at the date on which the offer to resolve and pay party and party costs was made are likely to have been limited - given the engagement by the Respondent of his current solicitors; the evidence suggests that they were engaged, perhaps, only from about 18 January 2017 (or a little before that) and the Application was heard and determined yesterday (23 January 2017).
Given the determination of the Applications, the offer and the refusal to take up the offer to resolve the Applications on the basis contained within it, I am persuaded that there are circumstances which justify the making of an order as to costs and which require the Applicant to pay the Respondent’s costs of and incidental to the Application for Contravention and the Application in a Case, each filed 4 January 2017.
The remaining issue, though, is the terms of such order, given the requirement imposed upon the Court to make such order as to costs as it considers just.
The Respondent seeks that an order for costs be made on an indemnity basis. In essence, it is submitted that this is a just order because of a combination of the circumstances, including the dismissal of the Applications, and the submission that the Court would be persuaded the Applicant imprudently refused to accept the offer to resolve in circumstances where such refusal resulted in the Respondent engaging Counsel and incurring costs associated with Counsel’s appearance yesterday and the appearance also of the solicitor who instructed him.
The principles relevant to a determination of an application for an order for costs on an indemnity basis have been enunciated in previous decisions such as Colgate-Palmolive Company & Cussons (1993) 46 FCR 225, Yunghanns & Yunghanns (2000) FLC 93-029, Kohan & Kohan (1993) FLC 92-340, Limousin & Limousin [2008] FamCA 315, D & D (Costs)No 2 (2010) FLC 93-435.
It is clear from Colgate-Palmolive (supra) that the Court there summarised the circumstances thought to be exceptional, so as to warrant the exercise of discretion to order costs to be paid on an indemnity basis. In broad summary, they are said to include the following: the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that the proceedings were commenced or continued for some ulterior motive, or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made, or the undue prolongation of a case by groundless contentions; an imprudent refusal of an offer to compromise.
Rule 19.08(3) provides that a party applying for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement and its terms. The affidavit of the Respondent, filed by leave yesterday, and relied on only insofar as it is relevant to the determination of these applications for costs, establishes that the Respondent has entered into a costs agreement with his current solicitor and that those solicitors have entered into a cost agreement with Counsel who appeared on the Respondent’s behalf yesterday.
Whilst there are no specific details as to the costs incurred by the Respondent thus far, reference to those costs agreements exhibited to his affidavit establish that his solicitor’s charges are $550.00 per hour (exclusive of GST) on an hourly rate and $4,410.00 per day (exclusive of GST) on a daily rate. Reference to the evidence also establishes that an estimate was provided to the Respondent for the fees which may be incurred, limited to the hearing and determination of the Applications filed on 4 January 2017 for contravention and enforcement respectively - that estimate outlined that such costs may be from $20,000.00 to $30,000.00, inclusive of Counsel’s fees.
Reference to Counsel’s retainer agreement, dated 18 January 2017, establishes that Counsel considered he was unable to provide an estimate of the total fees for the Applications, but asked that instructing solicitors hold $10,800.00 plus GST in trust for the Applications: said to cover the Applications, settling material, conferences, advices, and the appearance. It appears, from reference to Counsel’s costs agreement, that the daily fee is $5,400.00 (exclusive of GST) for an eight and a half hour day, or an hourly rate of $600.00 (plus GST) if billed on an hourly basis.
Acknowledgment and consideration of such likely costs, namely that they may be in the vicinity of $20,000.00 to $30,000.00 in relation to the Applications filed 4 January 2017, is relevant because, in Kohan & Kohan (supra), the Full Court of this Court said, at 79,611:
We are of the opinion that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered, where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the judge should not only understand that such an order is a very great departure from the normal standard, but also that the judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under section 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The Court further said, at 79,614:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges.
Counsel for the Respondent submitted that the Court would be persuaded to depart from the usual practise of ordering costs to be paid on a party and party basis because the Applications were doomed to fail and should never have been brought, the Applicant’s refusal of the offer to resolve was imprudent and that such matters, in combination, in essence, constitute those exceptional circumstances necessary to justify the departure from the usual practise of ordering costs on a party and party basis.
I have already outlined the reasons which underpinned the decision to dismiss the Applications filed on 4 January 2017. In addition to those, I am persuaded that the Applicant’s failure to accept the Respondent’s offer to resolve the proceedings on the basis of the payment of party and party costs was imprudent. However, even taking this into account, I am not persuaded, nor do I consider it just, to make an order that the Applicant pay the Respondent’s costs on an indemnity basis - where the evidence before the Court establishes the extent to which such costs are likely to depart from those which may be arrived at via application of the costs outlined in Schedule 3 to the Family Law Rules 2004, reference to which establishes that, in relation to the solicitor’s costs, the upper scale is $241.74 per hour for the solicitor and $1,902.99 per day (or $395.86 per hour) for Counsel for chambers work.
In such circumstances, having regard to the degree to which the costs agreement departs from the norm established by the scale, fixed by Schedule 3 to the Rules, and having regard to the actual financial significance of the departure, I consider that this is a reason for not ordering costs on an indemnity basis.
In such circumstances, then, I am not persuaded that to order the Applicant to pay the Respondent’s costs of and incidental to the Applications on an indemnity basis is just. For these reasons, I decline to make such an order.
I accept the submissions made by Counsel for the Applicant in relation to the time by which the Applicant should be ordered to pay costs to the Respondent. It is clear, from reference to the terms of the consent order made 27 September 2016, that she will be in receipt of significant funds by no later than 1 July 2017. Consequently, I consider that it is just that she be required to pay the Respondent’s costs within 30 days after that date.
The order I am persuaded that is just, in all the circumstances of this case, is one that requires the Applicant to pay the Respondent’s costs of an incidental to the Application in a Case filed 4 January 2017, and the Application for Contravention filed 4 January 2017, on a party and party basis.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 24 January 2017.

Associate:

Date: 24 January 2017