Scala and Scala (No.2)
[2020] FCCA 38
•7 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SCALA & SCALA (No.2) | [2020] FCCA 38 |
| Catchwords: FAMILY LAW – Costs – application for costs by successful applicant – whether costs should follow the event in respect of accrued jurisdiction claim for damages for breach of confidence – whether costs should be paid on an indemnity basis. |
| Legislation: Family Law Act 1975 (Cth), s.117 |
| Cases cited: Giller & Procopets [2008] VSCA 238 Kappel & Carlsson (No.2) [2018] FCCA 2973 Kohan & Kohan [1993] FLC 92-340 |
| Applicant: | MS SCALA |
| Respondent: | MR SCALA |
| File Number: | DGC 1434 of 2018 |
| Judgment of: | Judge Burchardt |
| Hearing date: | N/A |
| Date of Last Submission: | 21 January 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 7 February 2020 |
REPRESENTATION
| Counsel for the Applicant: | Not applicable |
| Solicitors for the Applicant: | Waters Lawyers |
| Counsel for the Respondent: | Not applicable |
| Solicitors for the Respondent: | James Mcconvill and Associates |
ORDERS
The Respondent pay the Applicant’s costs in the sum of $9,200.00.
All extant applications are dismissed and removed from the pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Scala & Scala (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
DGC 1434 of 2018
| MS SCALA |
Applicant
And
| MR SCALA |
Respondent
REASONS FOR JUDGMENT
In this matter, the Court handed down judgment on 10 December 2019. Relevantly for these purposes, the Court divided the parties’ property in the proportions of 60 per cent to the Applicant and 40 per cent to the Respondent. There was an equalisation of superannuation by agreement, and the Court ordered, additionally, that the Respondent pay the Applicant $70,000 for breach of confidence. These Reasons for Judgment should be read in conjunction with the earlier ones.
The Applicant seeks costs on an indemnity or, alternatively, party-party basis. The written submissions of the applicant seek that costs should be awarded on a lump sum basis to avoid the time, cost and expense of taxation.
The matter proceeded by way of written submissions. The written submissions of the Applicant traverse the law in relation to indemnity costs and the terms of section 117 of the Family Law Act 1975 (Cth) in somewhat generalised terms. The gravamen of the submissions would seem to me to be in paragraph 13 where it is asserted that:
Without going into detail over and above the matters contained in the Court’s judgment justify the award of costs on an indemnity basis. To adopt the language of Sheppard J in Colgate Palmolive it is submitted that in this case the discretion should be exercised in favour of the Applicant and the Court would be easily justified in departing from the ordinary practice.
Reference was also made to a decision of Judge Wilson, as his Honour then was, in the matter of Kappel & Carlsson (No.2) [2018] FCCA 2973 and to the decision of the Full Court of the Family Court in Kohan & Kohan [1993] FLC 92-340. I have regard to those matters.
The Respondent’s written submissions refer to the fact, which was brought to the Court’s attention during trial, that the Husband had offered to pay $50,000 and the Wife had sought $250,000 for the breach of confidence claim. Reference was made to Calderbank offers. I have since been provided with further written submissions and copies of correspondence in which both parties made offers to settle. In some instances, the convoluted way the offers were expressed might suggest they would not perhaps properly be described as Calderbank offers. On any view of the matter, however, neither side can be said to have achieved an outcome superior to their offers. Since neither party obtained a result better than their Calderbank offers, the weight to be given to them, in my opinion, is extremely limited.
It should be noted that, over the years, a number of applications have been made in the industrial law arena where, as a general rule, costs do not follow the event in a fashion not dissimilar to that contained within section 117 of the Family Law Act 1975 (Cth). In WayneGooley & Westpac Banking Corporation [1995] IRCA 132, Wilcox CJ appears to have approached the matter on the basis that costs might be approached on the basis that the Court would undertake an analysis of how much time the defamation claim in that case had taken out of the total. His Honour came to the conclusion that the defamation case had added little in terms of time in the Court. Indeed, no costs order was appropriate.
It is also well-established that in appropriate circumstances the Court may adjust costs orders to reflect discrete outcomes of part of a dispute. In Rakic & Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) (No.2) [2016] FCA 783, Bromberg J denied the successful applicant 10 per cent of costs due to a failure on discrete issues in respect of which she had failed. This was, of course, a consumer law case in which costs would ordinarily follow the event.
In my view, in circumstances such as these, without in any sense seeking to propound an observation of general application, where a claim involves a non-cost component (the standard property claim) and a costs component (the breach of confidence claim), a starting point is to consider how much of the proceeding may properly be allocated to each component.
It should be noted that this is obviously to an extent, a somewhat impressionistic and crude criterion. It should also be noted that a number of the matters which arose from the breach of confidence action, including obviously the Wife’s ill health, were also inextricably bound up with the property claim more generally. Plainly, her health and the effects on her future capacity to earn and the like were part of both parts of the case.
Indeed, for the property case to have been run at all, it would have been necessary to traverse the materials which arose in the breach of confidence claim.
In my opinion and doing the best one can in circumstances that inherently lack precision, approximately one-third of the case could properly be attributed solely to the breach of confidence claim, notwithstanding, as I recorded in the earlier Reasons for Judgment, the prominence of this in the way the case was run.
Having said that, I turn to section 117 of the Family Law Act 1975 (Cth). Pursuant to section 117(2):
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the Court considers just.
Pursuant to subsection (2A), the Court is required to look to a number of matters in considering what order, if any, should be made as to costs.
The financial circumstances of the parties
In a sense this matter is given less emphasis by virtue of the fact that, by definition, and subject obviously to an appeal, the circumstances of the parties are presently just and equitable as between them both. That is what I found in my earlier judgment. Having said that, however, the Wife has ongoing secure employment at a higher rate of pay than that that the Husband is ever likely to be able to achieve. She does, of course, have ongoing responsibilities in relation to the children. The division of the parties’ properties will give both some element of capital with which to continue to re-establish their lives.
Legal aid
This is irrelevant.
The conduct of the parties to the proceeding
Here, I note that both parties made offers to settle before the case, but as I say, since neither have achieved a result commensurate with what they offered, the weight to be given to these offers is, in my view, extremely limited. It should be noted, however, and this is not, in my view, irrelevant, although it may not fall to be considered under this subclause, but, rather, subsection (g) that the ultimate outcome was far closer to that contended for by the Husband than that contended for by the Wife.
Whether the proceedings were necessitated by a failure to comply with previous orders
This is not relevant.
Whether any party has been wholly unsuccessful
The Husband’s claim, as enunciated in his Outline of Case document, was that there should be a 55/45 split of the parties’ properties in favour of the Wife. The ultimate outcome was not wildly disparate from that position. On the other hand, he was unsuccessful in resisting the Wife’s breach of confidence action and she obtained what, in the scheme of the parties’ circumstances, was quite a considerable sum in excess of what he was proposing. However, the Wife, while successful in her claim for damages for breach of confidence, was not successful in obtaining any additional order for aggravated damages and failed completely in respect of her claim for exemplary damages. It should, however, be noted that those two claims occupied very little of the Court’s time, in any event.
Offers to settle
I have already dealt with this. Both sides have offered to settle, but neither, as it were, beat the other’s offer.
Any other matters considered relevant
There are no such matters.
Conclusion
The Court, of course, has an unfettered discretion on the question of costs. It must be exercised judicially. In my view, balancing all these matters set out above together, it is appropriate that the Applicant receive one-third of her costs of the proceeding on a party-party basis. I do not think that the conduct of the Respondent in taking the matter to judgment was, in any sense, irresponsible or ill conceived. Given what he was being asked to pay, his assessment was a reasonable one. Indeed, the Wife would clearly would have been informed of the effect of Giller & Procopets [2008] VSCA 238, and might well have properly taken regard to the observations of Neave JA in that case as to the quantum of the claim.
This case does not have any features of such a nature as to give rise to an order for indemnity costs. Indeed, the written submissions of the Applicant do not identify such a matter, in any event. To the extent that the written submissions infer that the Respondent’s breach of confidence should lead to indemnity costs, I would not be persuaded. The award of damages has given appropriate compensation and he should not be punished twice.
As I have indicated, notwithstanding the emphasis given to the breach of confidence claim, both in the way the case was run and in the judgment, the fact is that it did not prolong the proceedings by all that much. Bearing in mind that the Applicant was ultimately successful in getting a better result than the Respondent was prepared to offer, I think that costs should follow the event to the extent that the Court is able to disaggregate them, which is what I have done.
I accept the submissions for the Applicant that costs should be fixed in a lump sum, rather than putting the parties to the cost and time of a taxation. The attachment 2 prepared by the solicitors for the Applicant is, in my view, an accurate tabulation of the Court’s fixed cost items schedule and amounts to just in excess of $27,500. I think that the Applicant should have $9,200.00 which is a rounded off figure for one-third of those amounts.
I will order the Respondent to pay the Applicant’s costs in that sum.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Date: 31 January 2020
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