ROLAND & ARGENTO - [2019] FamCA 749

FAMILY COURT OF AUSTRALIA

ROLAND & ARGENTO

[2019] FamCA 749

FAMILY LAW – COSTS – Costs application made by the administrator for estate of the late applicant husband as agreed or assessed on an indemnity basis – Consideration of applicable principles – Where no basis for indemnity costs – Where appropriate that there be an order for costs on a party/party basis – Where appropriate to certify engagement of Senior Counsel – Where orders made accordingly.

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

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins & Collins (1985) FLC 91-603
Greedy & Greedy (1982) FLC 91-250
Harris & Dewell and Anor (No.2) [2018] FamCAFC 180
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
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
Roland & Argento and Anor [2019] FamCA 550

APPLICANT:

Mr F as legal representative of the deceased husband Mr Roland

RESPONDENT:

Ms Argento

FILE NUMBER:

PAC

2474

2013

DATE DELIVERED:

17 October 2019

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Foster J

HEARING DATE:

By way of written submissions last received on 26 September 2019

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Norris Somers Maait Lawyers

SOLICITOR FOR THE RESPONDENT:

Jo-Anna F S Moy Solicitor

Orders

That the respondent wife pay the applicant’s costs of and incidental to the application for substitution determined by orders made 15 August 2019 as agreed within one month from this date or otherwise as assessed on a party/party basis.
It is certified under Rule 19.50 of the Family Law Rules 2004 (Cth) that it was reasonable to engage Senior Counsel.

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 Roland & Argento 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 2474 of 2013

Mr F as legal representative of the deceased husband Mr Roland

Applicant

And

Ms Argento

Respondent

REASONS FOR JUDGMENT

In the context of ongoing property proceedings and in circumstances where the applicant husband in primary proceedings for property adjustment died in 2016, the Court made orders on 15 August 2019 as follows:
(1)That pursuant to Rule 6.15 of the Family Law Rules 2004 (Cth) Mr F as legal representative of the deceased husband Mr Roland be substituted for the deceased husband as a party in these proceedings.
(2)That the wife’s application for security for costs is dismissed.
(3)That any application for costs be by way of written submissions filed and served within one month from this date with any submissions in response to be filed and served within a further 14 days and upon completion of submissions judgment reserved to chambers.
Reasons for judgment were delivered on 15 August 2019 in respect of the above orders: Roland & Argento and Anor [2019] FamCA 550.
The discrete issue for determination is the application by the legal representative of the deceased husband for an order that the wife pay his costs of and incidental to his application to be substituted for the deceased husband in these proceedings.
These reasons assume familiarity with the reasons for judgment referred to above.

Costs: General Principles

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.
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.
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.
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.
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.
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:
1.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".
2.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.
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.
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.
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”.
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”.
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”…

Context

The applicant has standing to make an application for costs as, in effect, he is now a party to these proceedings.
The financial circumstances of each of the parties are to be considered. The wife has assets of some significance including the home occupied by her at Suburb J and a second real estate property at Suburb H. Otherwise, there are issues in relation to funds assertively gifted by the wife to her daughter that comprised significantly funds the property of the parties.
Otherwise, it is common ground that the assets of the deceased estate are at present negligible but that there may be an expectation of a dividend from the winding up of the company previously operated by the husband and wife and some funds being available for payment to the estate from the parties’ self-managed superannuation fund.
Neither party has a grant of legal aid.
In the context of the application giving rise to the present application for costs the wife sought primarily an order that the application for substitution by Mr F be dismissed or in the alternative that in the event that there was a person substituted for the deceased person that there be an order for the lodgement of $120,000 by way of security for costs with the registrar of this Court and that in default of such lodgement the application for substitution be dismissed.
Otherwise, the wife sought orders restraining the solicitor presently representing the substituted applicant from continuing in the proceedings although such an order was not pressed at final hearing as a consequence of certain undertakings provided by that solicitor.
The applicant had obtained from the Supreme Court of New South Wales in separate proceedings in that jurisdiction a grant of special administration of the estate of the deceased husband upon condition that such grant was limited to facilitate the representation of the estate in the current property proceedings before this Court. The special grant of administration was subject to stringent conditions imposed by the Supreme Court of New South Wales.
The putative beneficiaries should any assets vest in the estate of the deceased husband are the husband’s three adult children. For reasons unknown they chose not to seek a grant of administration.
The history of the parties’ relationship is overviewed in brief in the previous reasons for judgment referred to above. Clearly, such history enlivens the question of property settlement as between the deceased husband and the respondent wife. There are significant factual issues for determination including assertions by the wife as to the husband misappropriating funds from their company; a misappropriation the wife asserts that she remedied from her own resources. In the event that the present applicant is successful in obtaining an order under s 79 of the Act, then any resultant benefit will pass to the estate of the deceased after payment of liabilities.
The applicant asserts that he proposed in correspondence dated 21 June 2019 that the whole of the proceedings be resolved on a certain basis. Part of that proposed resolution was the appointment of the present applicant in substitution for the deceased husband. It is not readily apparent that the relief proposed as to the discrete issue of substitution was contingent or otherwise on a resolution of the whole of the proceedings as proposed in that correspondence. Accordingly, such an offer is of little assistance to the Court.
In all the circumstances, in particular, in light of the existing grant of special administration by the Supreme Court of New South Wales prior to the application by the present applicant for substitution, it is difficult to understand the opposition of the wife.
The previous reasons for judgment clearly demonstrate the inevitability of the success of the applicant for substitution and such an order was duly made. The respondent wife was wholly unsuccessful in the relief sought by her in circumstances whereby properly advised the application for substitution should have been resolved at a much earlier time by consent.
It is trite to say that the present applicant for an order for costs does not need to demonstrate special circumstances.
The respondent wife’s financial circumstances are significantly superior to those of the deceased estate.
As to indemnity costs the applicant in submissions refers to the frequently cited judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and that often repeated statement need not be repeated here.
In Harris & Dewell and Anor (No.2) [2018] FamCAFC 180 the Full Court said:
23.In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24.That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25.The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
26.Of course, in proceedings under the Act, an overriding “usual rule” is prescribed by s 117(1), namely that each party bears their own costs. The degree of departure between that “usual rule” and a result where one party bears the totality of the other party’s costs can be seen to be all the greater.
This is not a circumstance where indemnity costs arise.
In all the circumstances, however, it is appropriate that the general rule be departed from and that there be an order that the respondent wife pay the applicant’s costs of and incidental to the application disposed of by orders made 15 August 2019 on a party/party basis.
Otherwise, it is appropriate to certify the engagement of Senior Counsel by reason of the terms of the applicant’s limited grant of administration.
Orders will be made accordingly.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 October 2019.

Associate:

Date: 17 October 2019