Ruane and Bachmann-Ruane and Ors (No. 2)

[2012] FamCA 751

FAMILY COURT OF AUSTRALIA

RUANE & BACHMANN-RUANE AND ORS (NO. 2) [2012] FamCA 751

FAMILY LAW – COSTS – where the first respondent wife was successful in discrete proceedings involving the question of accrued jurisdiction – where the wife seeks an order that the second respondent law firm and third respondent counsel pay her costs of the discrete application on an indemnity basis – where the second and third respondents’ challenge to the court’s jurisdiction not ill-founded – where, in any event, the court had to be satisfied that it had jurisdiction – whether an order for costs should be made pursuant to s 117(2), Family Law Act 1975 (Cth) – where the second respondent in better financial position than the wife – where the respondent wife was wholly successful – where second and third respondents ordered to pay wife’s costs of and incidental to the proceedings.

Family Law Act 1975 (Cth)

Colgate-Palmolive Company and Or  v Cussons Pty Ltd  (1993) 118 ALR 248
Kohan & Kohan (1993) FLC 92-340
Latoudis v Casey (1990) 170 CLR 534
Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12]
Limousin & Limousin (Costs) (2007) 38 Fam LR 478
Noll & Noll and Anor [2011] FamCA 872
Fitzgerald (as child  representative for A (Legal Aid Commission of Tasmania)) v Fish & Anor (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311
Warby & Warby (2002) FLC 93-091
Yen & Yen (2010) 42 Fam LR 691
Yunghanns & Yunghanns (2000) FLC 93-029

APPLICANT: Mr Ruane

FIRST RESPONDENT: Ms Bachmann-Ruane

SECOND RESPONDENT: F Firm

THIRD RESPONDENT: Mr Curtis

FILE NUMBER: SYC 1991 of 2009

DATE DELIVERED: 31 August 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Chambers

JUDGMENT OF: Murphy J

HEARING DATE: By way of written submissions:
1^st Respondent: 12 June 2012
2^nd Respondent: 3 July 2012
3^rd Respondent: 3 July 2012

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Slater and Gordon

SOLICITOR FOR THE FIRST

RESPONDENT:

Stynes Dixon Lawyers

SOLICITOR FOR THE SECOND RESPONDENT: Wotton and Kearney

SOLICITOR FOR THE THIRD RESPONDENT: Norton Rose Australia

Orders

IT IS ORDERED:

1. That the second and third respondents pay the wife’s costs of and incidental to the proceedings before Justice Murphy on 5 December 2011 in an amount to be agreed in writing between the parties or, failing agreement within 21 days of the date of this order, as assessed.

2. Payment shall be made by or on behalf of the second and third respondents within 14 days of agreement or assessment as the case may be.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ruane & Bachmann-Ruane (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC1991/2009

Mr Ruane

Applicant

And

Ms Bachmann-Ruane

1^st Respondent

And

F Firm

2^nd Respondent

And

Mr Curtis

3^rd Respondent

REASONS FOR JUDGMENT

COSTS

1. On 22 May 2012 I made orders and delivered reasons for judgment in an application that had at its heart a dispute about this Court’s accrued jurisdiction. The circumstances pertaining to the application, and the place of the application in the broader proceedings between the husband and the wife, are outlined in my reasons delivered that day.

2. Orders were made providing a procedure whereby any party could make an application for costs by way of written submissions with a means by which oral submissions could supplement same if one or more parties so desired. Written submissions were subsequently received from three parties (the wife on 12 June 2012 and each of the second and third respondents on 3 July 2012). (The husband had, at the outset, been excused from participation in the proceedings before me). No party has sought to supplement those submissions orally.

3. The wife seeks costs “against the second and third respondents” and, in addition, the wife seeks an order that costs be awarded on an indemnity basis.

4. Section 117(1) of the Act:

   …expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. (Penfold v Penfold (1980) 144 CLR 311 at 315).

5. The plurality in Penfold held (at 315 - 316):

   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. … 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. [Citations omitted]

6. The Court is given the power to award costs upon a finding that “there are circumstances that justify it in doing so” (s 117(2)). The matters that might justify that a central finding are at large (s 117(2A)(g)) but regard must be had to a number of specified matters (s 117(2A)(a)-(f)).

7. Section 117(2A) does not prescribe that more than one factor must be present or that any one factor has more or less weight than any other. The statutory factors are each and all matters which inform the overall discretion inherent within the section (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish & Anor (2005) 33 Fam LR 123).

8. The principles in respect of the awarding of indemnity costs are often referenced to the well-known passage in Sheppard J’s judgment in Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248 at 256. Those principles have been accepted as relevant to such an award under the Family Law Act 1975 (Cth) (“the Act”) (Yunghanns v Yunghanns (2000) FLC 93-029).

9. Despite the reference in s 117(2A) of the Act to “the conduct of the parties to the proceedings in relation to the proceedings…” and “whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders” it ought be remembered that neither costs nor indemnity costs are awarded as a form of punishment (see, for example, Latoudis v Casey (1990) 170 CLR 534 at 543). Equally, however, conduct that might otherwise give rise to a punishment can be, in the particular circumstances of a particular case, directly relevant to a consideration of indemnity costs.

10. Sheppard J’s judgment and the decisions which have followed and applied it, make it clear that indemnity costs are not “the ordinary rule”, they might be seen as forming an exception to that general rule. Of course, any award of costs is, under the Act, an exception to a general rule. (See, for example, Limousin & Limousin (Costs) (2007) 38 Fam LR 478; Kohan & Kohan (1993) FLC 92-340).

11. The application on the part of the wife is supported by three primary arguments.

12. First it is said that the wife has been put to expense “…entirely as a result of an application which had nothing to do with the substantive rights of the parties.” Secondly, it is said that the wife is “…financially much weaker than the insurers who stand behind the Second and Third respondents” and thirdly, it is argued that the respondents have been “…wholly unsuccessful…”

13. No reference is made in any of the submissions as to any offers made in writing as between the parties in respect of the proceedings.

14. The claim in indemnity costs appears to be founded on this assertion, “[t]o use the vernacular, the dismissed application has been a total waste of time and money.” And, that as a result of the action, “…the respondent is worse off by reason of the dismissed Application.”

15. There can be no doubt that the wife has been successful in the proceedings before me. That success, though, was in respect of an application where serious questions about the Court’s jurisdiction were raised. Contrary to what, I gather, is an implication within the submissions on behalf of the wife, the challenge to the jurisdiction of the Court, although unsuccessful, was neither capricious nor ill-founded.

16. Lack of success does not necessarily mean that an application had no reasonable foundation and I do not consider that any such epithet applies to the respondents’ position here. In particular as pointed out, in my view correctly, in written submissions on behalf of the second respondent, the parties “…substantive rights include the right to have their matter determined by a court exercising jurisdiction … [and] … [t]hat right is of no less importance than the wife’s claim for damages.”

17. So, too, I accept the argument that, although it might be said that the respondents’ application was “wholly unsuccessful” the “…application itself permitted only one outcome.” Furthermore, the application was brought in the context of the Court having to satisfy for itself (that is to say independent of any application or issue raised by the parties) that it has the jurisdiction to hear and determine the application before it.

18. In this case, it can, I think, fairly be said, as submitted on behalf of the second and third respondents, that the position was unclear and, specifically, was potentially more unclear by reference to, for example, Noll & Noll and Anor [2011] FamCA 872 and a decision of Cronin J in Yen & Yen (2010) 42 Fam LR 691. That said, it also must be borne in mind, as counsel for the second respondent properly conceded during the course of the proceedings, the existence of accrued jurisdiction should be assumed at first instance by reference to the decision of the Full Court in Warby & Warby (2002) FLC 93-091.

19. It is contended on behalf of the second respondent that “[t]he question of disparity of financial resources relates to the parties to the proceedings…” not to the insurers who stand behind the second and third respondents.

20. It is true that s 117(2A)(a) refers to the financial circumstances “of each of the parties to the proceedings” and not to any insurers who might stand behind those parties. Nevertheless, I consider that where there is evidence that an insurer does in fact stand behind a party, that is a relevant matter to the exercise of the discretion generally (s 117(2A)(g) and s 117(2)).

21. It is also submitted on behalf of the respondents that it is not correct to assert that the insurers have “limitless pockets” and that “…it is naïve to suggest that such insurance would be unlimited.” Equally, however, it seems to be naïve to suggest that the financial circumstances or resources of an insurer might be seen as comparable to that of the wife in this case. That said, in the same way that financial impecuniosity cannot be pleaded as determinative in resisting an order for costs (see Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12]) so too, the capacity to pay costs is not necessarily determinative of that component of the issue at hand.

22. That particular consideration is, in my view, a significant consideration in the exercise of the discretion inherent in s 117(2) of the Act. That factor, combined with the lack of success are instrumental in persuading me that an order for costs should be made in favour of the wife.

23. I reject the submissions on behalf of the wife that the circumstances in this case justify an order for indemnity costs.

24. To the extent that the written submissions suggest some form of “improper purpose” or “vexatiousness” I reject any such submission.

25. I accept the submission on behalf of the second respondent that “[t]he emotive assertions that the application has been ‘a total waste of time and money’ and that the wife is ‘worse off’ do not advance the wife’s claim.” There are no circumstances in this case that satisfy me that an order for indemnity costs is justified.

26. I order accordingly.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 31 August 2012.

Associate: 

Date: 31 August  2012