SALA & HABNER (No.2)
[2018] FCCA 2738
•25 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SALA & HABNER (No.2) | [2018] FCCA 2738 |
| Catchwords FAMILY LAW – Costs – applicant wholly unsuccessful – unmeritorious claim – repeatedly failed to give discovery – put respondent to significant expense – indemnity costs awarded. |
| Legislation Family Law Act 1975, s.117(2A) |
| Cases cited Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Gordon & Gordon [2017] FCCA 2899 House v R (1936) 55 CLR 499 Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 Norbis v Norbis (1986) 161 CLR 513 Sala & Habner [2018] FCCA 2321 |
| Applicant: | MR SALA |
| Respondent: | MS HABNER |
| File Number: | MLC 11358 of 2012 |
| Judgment of: | His Honour Judge Wilson |
| Hearing date: | 22 August 2018 |
| Date of Last Submission: | 5 September 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 25 September 2018 |
REPRESENTATION
| Counsel for the Applicant: |
| Solicitors for the Applicant: | Chris Woods & Associates |
| Counsel for the Respondent: | Mr J Stanley |
| Solicitors for the Respondent: | Lander & Rogers |
ORDER
The applicant pay the respondent’s costs of this proceeding on an indemnity basis, such costs to be assessed if by 12 October 2018 the parties are unable to agree on the amount.
IT IS NOTED that publication of this judgment under the pseudonym Sala & Habner (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 11358 of 2012
| MR SALA |
Applicant
And
| MS HABNER |
Respondent
REASONS FOR JUDGMENT
On 22 August 2018 I handed down judgment in this proceeding (Sala & Habner)[1] in which the father’s application to set aside the binding child-support agreement (“BCSA”) made 10 September 2015 was dismissed. At the time I indicated I would hold over any consideration as to costs pending submissions of the parties about whether to make a costs order and if so, whether to make an indemnity costs order or merely a party-party costs order.
[1] [2018] FCCA 2321
For the reasons that follow, in my judgment it is appropriate to make a costs order on an indemnity basis in favour of the respondent against the applicant
The modern formulation for the imposition of an indemnity costs order is the judgment of Shepherd J in Colgate-Palmolive Co v Cussons Pty Ltd.[2] In Gordon & Gordon[3] I distilled the propositions adumbrated by Sheppard J into three notions, as the applicant’s solicitor helpfully addressed in his 5 September 2018 written submissions. They were as follows –
a)the application of the ordinary well-settled rule of costs being ordered on a party and party basis will usually result in the amount received by the successful party falling short of a complete indemnity;
b)some special or unusual feature of the case must, in the circumstances, warrant departure from the well-settled practice of awarding costs on a party and party basis including an imprudent refusal of an offer of compromise; and
c)even if facts exist to justify the making of an indemnity costs order, such an order need not necessarily be made because costs are always in the discretion of the court.
[2] (1993) 46 FCR 225
[3] [2017] FCCA 2899
Naturally, an indemnity costs order should not be made in the exercise of the court’s discretion where, by such an order, a crushing result would be visited upon the party ordered to pay those indemnity costs.
In this case the respondent, who successfully resisted the application to set aside the BCSA, gave details of her costs when assessed on a party-party basis and when assessed on an indemnity costs basis. Her party-party costs were $7 436 whereas her costs on an indemnity basis were $34 948.61. On each basis the respondent provided quantification of those costs, which I accept.
While acknowledging that an order for the payment of costs on an indemnity basis remains an exception to the ordinary rule that costs are ordered on a party-party basis, counsel for the respondent argued that the basis for and the amount of costs is wholly discretionary. He contended that in the circumstances of this case it was a proper exercise of the discretion reposed in the trial judge to order costs on an indemnity basis because this proceeding had been commenced, or at least continued, where the applicant properly advised ought to have recognised that he had no prospects of success.
In my view, nothing in the proper construction of s 117(2A) of the Family Law Act compels the conclusion that any particular aspect of that section predominated in assessing whether to make a costs order. It seemed to me the applicant was wholly unsuccessful in this case. It followed that s 117(2A) was thereby engaged entitling me to make a costs order. It was then necessary for me to examine the categories essayed by Sheppard J in Colgate-Palmolive for the circumstances warranting my acceding to the respondent’s application to deviate from the ordinary order for the imposition of party-party costs.
In my view the application to set aside the BCSA was doomed from inception. Under the guise of “exceptional circumstances”, the applicant sought relief from his obligations under the BCSA. In reality, his circumstances in making the application were not exceptional, as I found. True, his financial and domestic circumstances had changed but they had changed of his own choosing. He entered into a different domestic relationship. He purchased a new home. His income had altered. In short, his discretionary spending had diminished. That was no basis to apply to this court for orders relieving him of the financial obligations under the BCSA. In the process of applying, then pressing his application in this litigation, the applicant incurred not only his own costs but caused the respondent to expend significant costs. I agree that the applicant should not have commenced this proceeding. He should have, but failed to, recognise that, according to the law as it stood, he had no prospect of showing the existence of exceptional circumstances.
Yet he did commence this proceeding. Then, having commenced it, he failed to comply with the respondent’s request for discovery made on 30 June 2017, 20 October 2017, 22 November 2017 and 22 December 2017. In other words, having commenced this litigation in circumstances where his claim was hopeless, he put the respondent to the expense and inconvenience of an unmeritorious claim (flawed, as it was) yet thereafter failed, refused or neglected to properly prosecute this case. Despite that unacceptable conduct, he pressed this case to the point of the hearing. He should have recognised that his case was doomed from inception. In my view he should have abandoned his claim the moment he commenced it, realising that the claim that he made was forlorn. Instead, by his continuation of the proceeding he caused the respondent to incur over $34 000 in solicitor and client costs. The burden of the imposition of those costs should not fall at the respondent’s feet without redress.
I do not accept that it is an adequate answer for the applicant to contend that he had no option but to bring this proceeding having regard to his financial situation. Nor do I accept that an order for indemnity costs will trigger his own insolvency, ultimately leading to a sequestration order being made against his estate. That may not happen. It remains to be seen. But that is beyond the matters that fall for my consideration in the exercise of my discretion to make an order for the imposition of indemnity costs. In the exercise of that discretion, I must apply the doctrinal propositions espoused in a trilogy of High Court decisions consisting of House v R,[4] Norbis v Norbis[5] and most recently in Minister for Immigration and Border Protection v SZVFW.[6] When applying those principles, in my view an order for an indemnity costs is appropriate, such costs to be assessed in default of agreement.
[4] (1936) 55 CLR 499
[5] (1986) 161 CLR 513
[6] [2018] HCA 30 (8 August 2018)
Conclusion
I order the applicant to pay the respondent’s costs of this proceeding on an indemnity basis, such cost to be assessed if by 12 October 2018 the parties are unable to agree on the amount.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Date: 25 September 2018
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