Roydon & Roydon

Case [2024] FedCFamC1A 105

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Roydon & Roydon [2024] FedCFamC1A 105

Appeal from: Roydon &Roydon [2023] FedCFamC2F 1265
Appeal number(s): NAA 297 of 2023
File number(s): CAC 90 of 2021
Judgment of: RIETHMULLER J
Date of judgment: 5 July 2024
Catchwords:

FAMILY LAW – APPEAL – COSTS – Where the primary judge ordered the appellant pay costs on an indemnity basis – Where the parties made several Calderbank offers – Where outcome achieved by respondent not equal to or better than the offer – Where offer would not have resolved entire proceedings.

FAMILY LAW – APPEAL – COSTS – Indemnity costs not to be awarded simply as a result of achieving a better result than an earlier offer – Unreasonable refusal of an offer in family law proceedings is not necessarily an “imprudent” rejection of an offer for purpose of indemnity costs application.

FAMILY LAW – APPEAL – COSTS – Specific considerations – Lack of success on an issue or interim application can be taken into account when considering costs – Misconduct of party in incurring excessive costs only relevant on costs application to the extent it has caused the other party to incur greater costs in the proceedings.

FAMILY LAW – APPEAL – COSTS – Importance of costs scales in the court rules as setting a reasonable rate for charges by legal practitioners – Regard to be had to at least estimated costs calculated on the costs scale when making significant costs orders – Informal “rules of thumb” estimating difference between “solicitor and own client costs” and scale costs are of insufficient accuracy to be relied upon as each solicitor charges at different rates.  

Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia Act 2021 (Cth)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.17, 12.48

Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth)

Cases cited:

Badawi & Badawi (Costs) [2017] FamCAFC 196

CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 76

Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248; (1993) 46 FCR 225

Galbadon & Galbadon [2015] FamCAFC 59

House v The King (1936) 55 CLR 499; [1936] HCA 40

Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116

Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178

Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42

Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157

Murray & Murray (2020) FLC 94-000; [2020] FamCAFC 293

Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17

Paradin & Paradin (2020) FLC 93-991; [2020] FamCAFC 245

Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4

Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105

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AGLC
Roydon & Roydon [2024] FedCFamC1A 105
Case
[2024] FedCFamC1A 105
Decision Date

CaseChat Overview and Summary

The appeal in Roydon & Roydon was brought by the appellant against the primary judge’s costs order. The appellant, who was found to be wholly unsuccessful at each critical stage of the proceedings, sought to challenge the primary judge’s order that he pay the respondent’s costs on an indemnity basis from 2 May 2022. The appeal raised issues about the application of indemnity costs in family law proceedings, particularly when the outcome achieved by the respondent was not equal to or better than the appellant’s offer and the offer would not have resolved the entire proceedings. The court had to consider whether indemnity costs were warranted under these circumstances and whether the conduct of the litigation by the appellant warranted such an order.

The court noted that indemnity costs should not be awarded merely because a party achieves a better result than an earlier offer. It was also observed that an unreasonable refusal of an offer in family law proceedings is not necessarily an “imprudent” rejection of an offer for the purposes of an indemnity costs application. The court considered that lack of success on an issue or interim application could be taken into account when considering costs, but the misconduct of a party in incurring excessive costs was only relevant to the extent it caused the other party to incur greater costs in the proceedings. The court highlighted the importance of costs scales in the court rules in setting a reasonable rate for legal practitioners’ charges and emphasised that estimated costs calculated on the costs scale should be considered when making significant costs orders.

The court found that the primary judge had not adequately considered the various offers made during the proceedings and their relevance to the final outcome. The primary judge had also erred in concluding that an indemnity costs order was warranted, as the outcome achieved by the respondent was not equal to or better than the appellant’s offer. The court concluded that the appeal should be allowed and the matter remitted for rehearing.

The court ordered that the appeal NAA 297 of 2023 be allowed and the application in a proceeding filed on 31 October 2022 be remitted for rehearing. The form of the order is subject to the entry in the Court’s records, and this copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors or to record a variation to the order.

Orders

Orders of the court

NAA 297 of 2023

CAC 90 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR ROYDON

Appellant

AND:

MS ROYDON

Respondent

ORDER MADE BY:

RIETHMULLER J

DATE OF ORDER:

5 JULY 2024

THE COURT ORDERS THAT:

1. Appeal NAA 297 of 2023 be allowed and the Application in a Proceeding filed on 31 October 2022 be remitted for rehearing.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The primary judge was confronted with a difficult costs application following bitterly contested litigation. The parties’ legal fees in the proceedings were staggering. Whilst the property pool, inclusive of superannuation and add backs, was under $1.3 million, the parties’ costs were over $1 million, with around $793,600 of that sum being the appellant’s costs and around $264,600 being the respondent’s costs (at [5]). The difficulties confronting the primary judge were exacerbated by the volume of material filed on the costs’ application and submissions. The comparisons of earlier offers and the final property orders were, at best, confusingly opaque (a difficulty that continued at the hearing of the appeal). The appellant failed to put significant arguments to the primary judge and the respondent made submissions that were wrong in law. BACKGROUND The parties (who are in their mid to late 30s) commenced their relationship in 2006 and married in 2007. They separated on a final basis in January 2021. There are three children of the relationship (who are 16, 12 and 8 years of age). The parties were polarised in their views from the outset. At the commencement of the proceedings in January 2021 the respondent sought orders for equal shared parental responsibility for the children to live with her, for the younger two children to spend supervised time with the appellant one day per week, and no specific orders for the eldest child to spend time with the appellant (instead, that she would encourage the eldest child to attend with the younger two children). The respondent also sought orders for the appellant to have a mental health assessment, complete anger management and parenting courses, and engage with the eldest child’s therapist in order to repair their relationship (at [37]). The appellant sought equal shared parental responsibility, for the children to live with him, for the children to spend no time with the respondent for 28 days (during which period the respondent would undertake drug and alcohol testing), and thereafter, for the children to spend time with the respondent one day per week (at [38]). The allegations between the parties were serious. Each alleged that the other had mental health issues and had perpetrated family violence. The appellant was charged with assaulting the eldest child, although those charges were not ultimately pursued by police. The appellant alleged the respondent had substance abuse issues. The conduct of the parties during the litigation was also extreme: the appellant took the vehicle the respondent was using when she was attending a counselling session (claiming he thought it had been abandoned and reporting her as a missing person) leaving her with a smaller car; the respondent wrote to the appellant’s employers outlining allegations against him that would have been embarrassing and significantly impacted his employability as upper management of F company. On 22 April 2021, interim orders were initially made by consent for the children to live with the respondent and the younger two children to spend time with the appellant for several hours twice each week (at [39]). An Independent Children’s Lawyer (“ICL”) was appointed and the matter was listed for a contested interim hearing on 25 May 2021: see Roydon & Roydon [2022] FedCFamC2F 533 at [24]–[25].The interim applications

Evidence

Evidence Before The Court

The primary judge made a costs order against the appellant, ordering him to pay “the sum of $100,000 to the [respondent] by way of contribution to her costs on an indemnity basis from 2 May 2022”. There are no reasons explaining how the figure of $100,000 was struck, which was a subject of complaint by counsel for the respondent, however no cross-appeal was filed.APPLICATION IN APPEAL TO LEAD FURTHER EVIDENCE The appellant sought leave to lead further evidence at the hearing of the appeal. The principles relevant to the discretion were discussed by the High Court in CDJ v VAJ (1998) 197 CLR 172, where McHugh, Gummow and Callinan JJ observed: 114. No doubt the Full Court will readily admit further evidence which is not in dispute and which the Court is able to evaluate and take into account in considering the appeal without the necessity to have the proceedings re-heard. Further evidence of this kind is particularly likely to be admitted where the evidence relates to events occurring after trial. In the case of undisputed evidence which the Full Court can evaluate as part of the evidence in the appeal, the discretion to admit the evidence may even be properly exercised without the Full Court considering what effect it would have had on the trial judge's decision. In that context, the likely effect of the further evidence on the Full Court's view of the evidence before the trial judge is the important consideration. Where there is no need for a new trial or extensive taking of evidence, other discretionary factors such as the availability of the evidence at the trial and the need for finality of litigation are likely to be more relevant in the exercise of the discretion than the effect that the evidence would have had at the trial.…116. The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion. In other cases, the failure to call the evidence even if it could have been discovered by the exercise of reasonable diligence may be of little significance. No invariable rule concerning the failure to call the evidence can or should be laid down in view of the wide discretion conferred on the court by the section. The respondent opposed leave. The evidence was in two parts. The first was an affidavit from the appellant seeking to place evidence before the court as to his capacity to meet the terms of the property settlement offer central to the appeal. This evidence was clearly available at the time of the original hearing and there was no explanation for the failure to put that evidence before the court at that time. I was not persuaded to allow such evidence on the appeal. The appellant also sought to put copies of two orders made in the proceedings by the primary judge before the court. There could be no dispute that the orders were made in the proceedings, rather, it appears they were omitted from the Appeal Book. There was no prejudice that the respondent could point to in opposing the leave with respect to these orders. For these reasons, I granted leave for the appellant to tender the two earlier court orders in the proceedings.GROUNDS OF APPEAL

Decision

Reasons for decision

Even if a settlement agreement had been reached, it was not an enforceable contract as only a binding financial agreement can exclude the court’s jurisdiction pursuant to s 79 of the Act. The submissions that the appellant could have sought to enforce the alleged settlement agreement were wrong in law and served only to distract the primary judge. The relevance of the events was to show that the appellant was prepared to settle for the amount set out in the respondent’s withdrawn offer or that this was effectively his counteroffer (depending on the view taken of the negotiations). However, the appellant did not achieve a better outcome in the final settlement as the amount the respondent was to receive in accordance with this offer was less than the respondent ultimately achieved. As a result, the offer had little relevance to the outcome other than to demonstrate the ongoing difficulty with respect to the time needed for payment.The primary judge’s conclusions The primary judge concluded, with respect to the offers, that:91The [respondent] achieved a better settlement in the final property orders than what she had offered to accept by way of property settlement in her first offer on 2 May 2022 and her various subsequent offers. She also achieved in the final parenting orders what she had offered on 2 May 2022. She should not be out of pocket for any costs incurred because of the [appellant] rejecting her offers which would also have saved him significant costs and, in relation to the property aspects, would have seen him pay significantly less to the [respondent] by way of property settlement. Further, the primary judge concluded that an “indemnity costs order” was warranted from 2 May 2022, saying that:92The most significant factor in my determination is the offer itself which, had it been accepted at that stage, would have settled all matters, and would have saved both parties the significant legal fees subsequently incurred. A further factor weighing in favour of a costs order is that the [appellant] was wholly unsuccessful at each critical stage of the proceedings. The third factor is the conduct of the litigation by the [appellant] which undoubtedly increased the costs of both parties. … However, given the possibility that a different conclusion may have been reached following cross-examination, this is not as strong a point as it might have been at the end of a contested hearing. …94Weighing against an order for indemnity costs is the fact that the [appellant] is in a net deficit financial position, even when the property he will take in the settlement is considered. This puts him in a very difficult situation. However, the [respondent] bears no responsibility for this. The [appellant] and his lawyers allowed his legal fees to build up to the value of the whole property pool if his redundancy and inheritance are excluded. He incurred legal costs of almost double the value of the property settlement to the [respondent]. This had the effect of increasing the [respondent]’s legal fees in having to answer correspondence and interim applications. It is hard to understand how the [appellant] and his lawyers allowed this to happen.

Ratio Decidendi

Legal Principle Established

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