Sabado & Sabado
[2021] FamCA 137
•24 March 2021
FAMILY COURT OF AUSTRALIA
Sabado & Sabado [2021] FamCA 137
File number(s): PAC 5549 of 2018 Judgment of: FOSTER J Date of judgment: 24 March 2021 Catchwords: FAMILY LAW – COSTS – where application for costs arising from a Response of the first respondent husband in so far as it sought orders as against the second respondent and where such Response was dismissed – where consideration of applicable principles – where order made for husband to pay the second respondent’s costs in fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) rr 19.08(3), 19.18(1)
Cases cited: Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Collins and Collins (1985) FLC 91-603
Greedy and Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Luadaka v Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Sabado & Sabado and Anor [2019] FamCA 425
Number of paragraphs: 28 Date of last submission/s: 1 March 2021 Date of hearing: 20 January 2021 Place: Suburb F Solicitor for the Applicant: Forshaw Lawyers Counsel for the First Respondent: Mr Milanovic Solicitor for the First Respondent: Prestige Solicitors & Associates Counsel for the Second Respondent: Mr Fermanis Solicitor for the Second Respondent: Phillip A Wilkins & Associates Solicitor for the Independent Children's Lawyer: Sydney West Family Lawyers ORDERS
PAC 5549 of 2018 BETWEEN: MS SABADO
Applicant
AND: MR SABADO
First Respondent
MS CARMINE
Second RespondentMR LENNON
Independent Children’s Lawyer
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
24 MARCH 2021
THE COURT ORDERS THAT:
1.That within one month from this date the husband pay the second respondent’s costs of and incidental to these proceedings in the sum of $10,932.
2.That the costs as ordered above and interest accrued, if any, be a charge as against the husband’s entitlement to property adjustment in these proceedings and that the parties do all things necessary to cause such costs be paid out of the husband’s said entitlement prior to him receiving any payment by way of such adjustment.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sabado & Sabado has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
The discrete application for determination is an application for costs by the second respondent Ms Carmine who was joined in property proceedings as between the applicant wife and first respondent husband.
In her Amended Initiating Application filed 17 May 2019, the applicant wife relevantly sought orders, in summary, that she pay to the husband the sum of $105,000 and that upon such payment, that the wife be declared solely entitled to a home unit property situated at B Street, Suburb C, New South Wales.
The husband in his Amended Response filed 13 June 2019 joined the second respondent, Ms Carmine, and relevantly sought orders requiring the second respondent to transfer a one half interest in the property at B Street, Suburb C to the wife, and that the property then be sold with the proceeds of sale paid as to 50 per cent to the second respondent and 25 per cent each to the husband and wife. Otherwise, the husband sought a superannuation splitting order so as to equalise the parties’ superannuation entitlements.
Relevant background facts are set out in reasons for judgment delivered 4 July 2019 in respect to certain interlocutory issues between the parties. Relevantly those reasons provide:
17.In about 1999 prior to the parties’ cohabitation the mother purchased with her sister Ms Carmine for $155,000.00 an investment home unit property at Suburb C that later became the property occupied by the father and mother. The purchase price was funded by way of a mortgage advance and funds provided by the maternal grandmother.
18.The property was tenanted until 2007. The mother, her sister and the maternal grandmother met any shortfall in outgoings without contribution from the father. The mortgage over the property was discharged in about 2004.
19.In about 2007 the father and mother moved from their rental property to live in the Suburb C property.
…
42.In 2004 the mother and her sister jointly purchased property at D Street Suburb F for $383,000.00. The purchase price comprised a small deposit of $1,000.00 and a mortgage from G Bank. The property was tenanted approximately 12 months after the time of purchase. Ongoing outgoings shortfall were funded by the mother, her sister and the maternal grandmother. The father made no financial contributions to this property. The mortgage encumbrance on this Suburb F property was discharged in 2015. Subsequent to discharge of mortgage the property was occupied by the mother’s sister Ms Carmine. The mother asserts that the agreement between herself and her sister was that the mother would retain the Suburb C property and the sister would retain the Suburb F property. In February 2018 the mother completed a transfer of her interest in the Suburb F property to her sister.
On 6 August 2019 a registrar ordered that the husband file and serve points of claim as against the second respondent, setting out with particularity the orders sought by way of equity declaration and the particular facts and circumstances relied upon in support of the declaration or declarations sought by way of relief. The husband failed to comply with the order.
On 26 August 2019 a registrar again directed that the husband file and serve his points of claim on or before 17 September 2019. The husband failed to do so.
On 22 October 2019 the matter was before the Court for judicial case management. The husband was represented by his solicitor. It was ordered that the husband file and serve an affidavit, setting out with particularity the evidence relied upon by him, in support of the relief sought by him as against the second respondent, and exhibit to that affidavit such additional documents as may be relevant to his claim, with such affidavit to be filed and served by no later than 20 December 2019. The Court noted that in default of the husband complying with the order, his claim against the second respondent will be dismissed and the second respondent removed from the proceedings as a party.
On 14 May 2020 proceedings were again before the Court for judicial case management. It was ordered on that day that the time provided in orders made 22 October 2019 for the husband to file and serve the affidavit referred to in that order be extended to no later than 12 June 2020, and that in default of the husband complying with the order his claim against the second respondent will be dismissed and the second respondent removed as a party to the proceedings. The cost of the second respondent were reserved.
The proceedings were before the Court for the purposes of trial directions being made on 20 January 2021. On that date the husband had failed to comply with the orders referred to above and his Response insofar as it seeks orders as against the second respondent was dismissed. The Court directed that the second respondent file and serve any supplementary submissions as to costs by no later than 3 February 2021 and that the husband file and serve any submissions as to costs by no later than 19 February 2021. The second respondent, should she elect, was ordered to file and serve any short submissions in reply by no later than 5 March 2021 and that upon completion of submissions judgment would be reserved as to costs.
The second respondent filed short submissions in reply on 1 March 2021 and judgment was reserved accordingly.
In substance, the second respondent seeks an order that the husband pay the second respondent’s costs on an indemnity basis in the sum of $12,888, comprising counsel’s fees of $5,060 with the balance being solicitor client costs. In the alternative the second respondent seeks an order that costs be ordered on a party/party basis.
Costs
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 relevantly, in these proceedings, relate to the following:
(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 and 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.
In Greedy and Greedy (1982) FLC 91-250 and Luadaka v Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
Later the Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold and 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.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162, 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:
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
The application before the Court, referred to above is primarily an application for costs on an indemnity basis.
It is usual for the Court to make an order for costs on a party/party basis if costs are to be ordered.
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:
19.18 Method of calculation of costs
The court may order that a party is entitled to costs:
(a) of a specific amount;
(b)as assessed on a particular basis (eg 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.
Rule 19.08(3), however, provides that a party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement. The second respondent has not complied with the provisions of this rule but seeks an order dispensing with compliance. In circumstances where the rule is expressed in mandatory terms, it is inappropriate to do so. It is thus not necessary to consider the question of indemnity costs.
Otherwise, in considering the relevant considerations:
(a)There are continuing property proceedings as between the husband and wife. In those proceedings the wife seeks an order that she pay to the husband the sum referred to above. On her case she will receive a not insignificant payment. Accordingly, the husband has the capacity to meet an order for costs.
(b)Neither party is in receipt of a grant of legal aid.
(c)The husband, as outlined above, has for many months simply failed to comply with directions and orders of the Court, particularly in circumstances where he has brought into matrimonial proceedings a third-party.
(d)In the circumstances of this matter, he has been wholly unsuccessful as against the second respondent in that his claim for relief has been dismissed.
(e)Otherwise, it is noted that at all material times the husband has been represented by a solicitor and/or counsel. No explanation was or is proffered for his failure to comply with orders.
In all of the circumstances, it is appropriate to depart from the general rule and that there be an order that the husband pay the second respondent’s costs of and incidental to these proceedings. In the event that the application for indemnity costs was not successful in the sum referred to above, it is submitted on behalf of the second respondent that so as to avoid the necessity of incurring further expense for assessment of costs that costs be ordered on a party party basis in the sum of $10,932. In the circumstances of this matter that submission is accepted and an order for costs will be made accordingly.
By reason of the nature of the ongoing property proceedings it is otherwise appropriate that the second respondent’s costs, together with any interest accrued, be a charge as against the husband’s ultimate entitlement to a property settlement adjustment and be paid from any such adjustment before any payment to the husband. Such order will be made accordingly.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 24 March 2021
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