Searle Pty Ltd and Pencious And Ors

[2013] FamCA 717

FAMILY COURT OF AUSTRALIA

SEARLE PTY LTD & PENCIOUS AND ORS [2013] FamCA 717

FAMILY LAW – SECURITY FOR COSTS – Application for security of costs by Intervener – Order made in first instance proceedings – declined to exercise jurisdiction in appeal process referred to Full Court

FAMILY LAW – INDENMITY COSTS – Application by Intervener that Husband pay the Interveners costs of the proceedings on an indemnity basis – Order that Husband pay costs of proceedings on a party/party basis

FAMILY LAW – COSTS – Application by Intervener that Husband pay the Intervener’s costs of the costs application – Order that Husband pay the costs of the costs application on a party/party basis

Family Law Act 1975 (Cth) ss 117 and 117 (2A)

Family Law Rules 2004 (Cth) rr 19.18(1)(b) and 19.34

Finlayson & Finlayson and Gillam [2001] 27 FamLR 428; 160 FLR 370 and FLC 93-068
Woodley & Time and Anor [2008] FamCA 162
Prantage & Prantage [2013] FamCAFC 105
Hand & Bodilly [2013] FamCAFC 98

APPLICANT INTERVENER: Searle Pty Ltd

FIRST NAMED RESPONDENT SECOND NAMED RESPONDENT:	Mr Pencious Ms Searle
FILE NUMBER:	MLC	11069	of		2008

DATE DELIVERED: 13 September 2013

PLACE DELIVERED: Hobart

PLACE HEARD: Melbourne

JUDGMENT OF: Benjamin J

HEARING DATE: 31 July 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Williams

SOLICITOR FOR THE APPLICANT: Halperin & Co Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr Carlile

SOLICITOR FOR THE RESPONDENT: Altona Legal

COUNSEL FOR THE SECOND NAMED RESPONDENT	Ms Wood
SOLICITOR FOR THE SECOND NAMED RESPONDENT	Adrian Abrahams Family Lawyers

Orders

1. The Husband must pay the costs of the Intervener, Searle Pty Ltd, being the costs of the proceedings and the costs of this costs application on a party/party basis as agreed or in default of agreement as assessed under the Family Law Rules 2004 (Cth).

2. On or before 28 August 2013 the Wife shall pay to the solicitor for the Husband and the solicitor for the Intervener the sum of $100,000 out of the monies otherwise payable by her to the Husband pursuant to and in partial satisfaction of the property order made 28 May 2013 that she pay the Husband $346,720.  Such sum of $100,000 to be held as security for this costs order and shall be subject to the following:-

   a)The solicitor for the Husband and the solicitor for the Intervener shall, within seven (7) days of the date of this order, open with a bank an interest bearing account in their names as trustee for the Husband;

   b)The sum of $100,000 and accumulated interest shall remain in such trust account and shall be applied in payment of this costs order.  Once the quantum of the costs pursuant to these orders has been determined, the amount of those costs shall be paid out of the trust account to the Intervener and the balance shall be paid to the Husband.

3. Leave is given to the parties to apply in relation to this order on the giving of seven (7) days notice to the other parties and the Court, such leave to apply for a period of one (1) year from the date of this order or such other time as is determined within that one (1) year period.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. The application for security for costs of the appeal be referred to the Appeal Division.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Searle Pty Ltd & Pencious and Ors 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 MELBOURNE

FILE NUMBER: MLC 11069 of 2008

APPLICANT INTERVENER: Searle Pty Ltd

AND

FIRST NAMED RESPONDENT

AND

SECOND NAMED RESPONDENT:

Mr Pencious

Ms Searle

REASONS FOR JUDGMENT

INTRODUCTION

1. Searle Pty Ltd (“the Trustee”) is a party to the property proceedings initially conducted between Mr Pencious and Ms Searle (formerly Pencious) (the Husband and Wife respectively).  Those proceedings having been concluded, at first instance at least.  The Trustee sought indemnity costs and security for costs orders.  

2. The Trustee initially sought an order for $147,954.40 by way of indemnity costs as set out in an application in a case filed on the 25 June 2013 which was amended by an application filed the 29 June 2013.  An affidavit of the Trustee’s solicitor, Graeme Halperin, was filed 25 June 2013 in support of that initial application.  Mr Halperin filed a further affidavit on 29 July 2013 seeking indemnity costs for the Trustee in the sum of $169,127.20.  This was filed on the same day as an affidavit of Ms Searle Snr and refined the Trustee’s costs and security applications.

3. The application was opposed by the Husband.  The Trustee and Husband were each represented by counsel.

4. The Trustee sought orders that:-

   1)$240,000 be paid from a sum of $346,720 due to be paid by the Wife to the Husband on 28 August 2013;

   2)That the sum of $240,000 be paid into a trust account;

   3)That the Husband pays the interveners costs of the proceedings and that such costs be assessed on an indemnity basis by the court at $169,127.20; and

   4)The Husband pays the interveners costs of the costs application. 

BACKGROUND TO THE PROCEEDINGS

1. The background to the proceedings is set out at paragraphs 13 to 32 of the substantive reasons which I repeat here:-

   13.At the time of the hearing the Husband was aged 47 and the Wife was aged 48.  They met in the mid 1980’s and married and commenced cohabitation in 1988.

   14.The Husband worked throughout the marriage until a date shortly before separation.

   15.The Wife undertook tertiary studies during the marriage and obtained a number of qualifications and degrees. She is now a psychologist by occupation and runs her own business. She earns a good income.

   16.The Wife claims she was the primary carer for the children and primary homemaker during the marriage.  The Husband disputes this assertion and claims that he was an equal or at least significant child carer and homemaker.

   17.There are two children of the relationship, [C] and [K]. [C] is now aged nineteen and attends full time study at university.  [K] is now aged sixteen, turns seventeen in August 2013 and studies full time.  The children live with the Wife and in 2012 the Wife paid school fees for [K] of just under $9,000.  The Husband has not spent time with C since May 2009 and has not spent time with [K] since March 2010.  There is an issue as to the cause of those circumstances, which issue I do not need to determine in the context of this proceeding.

   18.In February 1990 the parties purchased a property at [O] Street, [Suburb L] (‘the matrimonial home”).  In the early 1990’s the existing home on that property was demolished and a new home built.  The parties entered into a contract with the Wife’s father to build that new home.  There is an issue as to the extent of the involvement of the Wife’s father in that building.

   19.The Wife alleges that the Husband was violent to her throughout the relationship and in particular assaulted her in March 2000, August 2001, April 2005 and November 2008.  She alleges the Husband assaulted [C] in October 2008, November 2008 and May 2009.

   20.The Wife claims that the parties separated in August 2008 but remained living under the one roof.  The Husband says they separated on 1 December 2008.  Not much turns on whether that date was August or December 2008.  In any event the Wife and children left the matrimonial home on or about 1 December 2008 and the parties have not cohabitated since that date.

   21.It is an agreed fact that shortly before 1 December 2008 the Wife removed $165,000 in cash from the safe at the matrimonial home.  There remain issues about the use of that money and whether a similar sum remained in the safe, which cash the Wife alleges has been retained and used by the Husband.

   22.The Husband was involved in a motor vehicle accident on 6 February 2009 and suffered injuries.  He received periodic payments from the Victorian Transport Accident Commission from a time soon after the accident until February 2012.  He is now in receipt of a disability pension.  The Husband claims he does not have capacity to be in paid employment, but the Wife disputes that assertion. 

   23.In late 2011 the Husband’s application for a ‘Serious Injury Certificate’ was rejected by the Victorian Transport Accident Commission.  The Husband has commenced proceedings in the County Court of Victoria to review that decision. 

   24.The Wife commenced parenting and property proceedings in December 2008 and an Independent Children's Lawyer was subsequently appointed.

   25.On 30 January 2009 the Husband vacated the matrimonial home pursuant to a Court order.

   26.On 26 February 2010 the Husband filed an application seeking to join the Wife’s parents to the proceedings.  The Husband sought an injunction to require the Wife’s parents to pay money in their hands into trust, being the sum of $150,000 allegedly paid to them by the Wife from monies which she took from a safe at the former matrimonial home.  That application was dismissed.

   27.On 3 December 2009 the Husband filed an application in a case seeking to restrain the Wife’s solicitor from acting in the property and parenting proceedings.  Those proceedings were protracted and involved a number of interlocutory hearings.  That injunction application was heard by Cronin J.  The proceeding was conducted over two days in February 2011, two days in September 2011, and four days in February 2012, some eight hearing days.  The Husband was represented by senior counsel in that litigation.

   28.On 28 February 2012, the Husband’s application for the injunction was dismissed.  The Wife sought costs and on 5 April 2012 Cronin J ordered the Husband to pay the Wife’s costs of the proceedings on an indemnity basis.  The Husband was also ordered to pay the costs of the Independent Children's Lawyer.

   29.The substantive proceeding was then placed in my docket.  I did not have jurisdiction to make parenting orders in respect of [C], the elder child and the parenting application in respect of [K] was essentially abandoned.

   30.The Husband filed an appeal in relation to the order made on 28 February 2012.  It is an agreed fact that that appeal was abandoned. 

   31.In his case outline, the Husband sought an order that ‘there be no order in relation to the present costs dispute’.  If that is an application for me to reconsider the indemnity costs orders made by Cronin J, I decline such invitation, as it is beyond the powers of this first instance Court.

   32.The Wife sought to adduce evidence of a doctor as to her father’s present health.  However, that application to use that evidence was not pressed, the Husband’s counsel having said that no adverse comment would be drawn about the Wife’s father failing to give evidence in these proceedings.

2. These Reasons have been delivered after the orders were made, as the payment of the property settlement to the Husband was likely to take place before the reasons were formally delivered.

3. Two affidavits were filed by the solicitor for the Trustee.  Initially he said that the Trustee had incurred costs of $147,954.40 and it sought an indemnity costs order in that amount.  

4. The second affidavit of Mr Halperin was a little more refined in evidence and what was sought for the Trustee.  His evidence was that in December 2012 the Trustee entered into a costs agreement with Mr Halperin’s legal practice and a copy of that agreement was annexed.  That costs agreement provided that Mr Halperin’s firm was paid $600 per hour plus GST for his work.  The agreement also provided for various other charges and processes in terms of costs.

5. Mr Halperin also annexed a series of invoices to his later affidavit which showed a total solicitor/client bill to the Trustee of $169,127.20.  This was a larger sum than that referred to in his earlier affidavit as an invoice had apparently been omitted in error.

6. The Trustee also sought security for costs in relation to the proceedings in the Full Court.  I raised with counsel for the Trustee as to the source of the Court’s power to make such an order.  She could not provide me with any authority or satisfactory submission to that end.

7. Counsel for the Husband referred me to Finlayson & Finlayson and Gillam [2001] 27 FamLR 428; 160 FLR 370 and FLC 93-068 which is authority for the proposition that an application for security for costs on an appeal is to be made to the Full Court and that a first instance court had no power to make such an order. In the summary of the Full Court in Finlayson it said:-  

   3.Having regard to the definition of “… court” in s 4(1) of the Act, and to the fact that, by s.28(3), jurisdiction in appeals is vested in a Full Court, s 117(2) confers no jurisdiction on a single judge (as distinct from the Full Court) to make an order for security for the costs of an appeal to the Full Court from a decision of a judge exercising the original jurisdiction of the Court. No other section of the Act purports to vest that jurisdiction in a single judge of the Court, but Order 32, rule 5 purports to do so. Order 32 rule 5 of the Rules is one which varies or departs from and is inconsistent with the positive provisions of the Act (namely ss 28(3) and 117(2)), and/or goes “… beyond the field of operation marked out by the Act”. Further, the Rule “… goes beyond the provision of the means by which substantive rights are to be enforced or protected” and in fact purports “… impermissibly to alter substantive rights.” Accordingly, it is ultra vires the rule making power, and is invalid. Harrington v Lowe (1996) 190 CLR 311 discussed and adopted.

   4.There being no provision in the Act similar or equivalent to s 56 of the Federal Court of Australia Act empowering a single judge to order security for costs of an appeal, and O 32, r 5 of the Rules being invalid, her Honour had no jurisdiction to make such an order, and any application for such an order, were it to be made, should have been made to the Full Court, which is the Court invested with jurisdiction in appeals. Accordingly, the trial Judge’s order that the hearing of the Husband’s appeals be stayed, was beyond power.

8. The Full Court concluded that ‘such applications must be made to and dealt with by a Full Court’.[1]

   [1]Paragraph 86.

9. In Finlayson (supra) the Full Court suggested legislative amendments to the Family Law Act 1975 (Cth) to enable a single judge to exercise the appeal jurisdiction of the Family Court in respect of an application security for costs. Such amendment was subsequently made in 2005.[2] The effect of that amendment was such that a single judge, exercising the appellate powers under s 94(2D)(f) of the Family Law Act 1975 (Cth), has power to make the order for security of costs on an appeal in some circumstances. The section provides:-

   94(2D) Applications of a procedural nature, including applications:

   …

   (f) for security for costs in relation to an appeal; or

   …

   may be heard and determined by a Judge of the Appeal Division or other Judge if there is no Judge of the Appeal Division available, or by a Full Court of the Family Court.

   [2]Section 94(2D) Family Law Act; inserted by No98 of 2005.

10. The exercise of the power can be by a judge other than a judge of the Appeal Division, if there was no Appeal Division Judge available.  There was no evidence or even indication that there was not an Appeal Judge of Appeal available.

11. Further as the appeal was from a first instance decision made by me it would not have been appropriate for me, in those circumstances, to determine the application.  I leave that security application to the Judges of the Appeal Division.

12. Accordingly, I dealt with was the application for security for costs in relation to the first instance proceedings and the costs application.  The process I adopted was to determine whether I ought to make a costs order, and if so, whether that costs order ought to be on a party/party basis, lawyer/client basis or indemnity basis.  Once I had determined to make a costs order, I would need to consider whether there ought to be security and the nature and amount of such security.

Costs which are subject to s 117 of the Family Law Act1975 (Cth)

1. I repeat the comments that I said in Woodley & Time and Anor [2008] FamCA 162 where I said:-

   30.In Brown v Brown (1998) FLC 92-882, Kay J said at pp 85,346 to 85,347:-

   The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder. This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the court may in making an order take into account various matters. The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.'

   31.In the absence of their being circumstances that justify the court making an order for costs, then s 117(1) provides that each party will bear his or her own costs of the proceedings under the act.

   32.The interpretation to be applied to s117 and the inter relationship of s 117(1) and s 117(2) was considered by the High Court in Penfold v Penfold (1980) FLC 98-800. In this case Stephen, Mason Aickin and Wilson JJ, said at 75,053-75,054:

   It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec, (1) is expressed to be subject to subsec. (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.

Subsection (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…we do not agree with the suggestion…that an order can only be made under sec. 117(2) in a ‘clear case.

Subsection (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 the 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.

Moreover, the transcript shows that it was only after the respondent’s financial position had been investigated at the hearing that, in answer to questions put by the judge in cross-examination, he admitted that he could afford to pay the increased maintenance which was ultimately ordered. The respondent had filed a Form 19… (which) presented a picture of the respondent as an insolvent, a man whose liabilities exceeded his assets. It made no mention of the very valuable assets which he owned and in which he had an interest ... (at 75,054).

Consequently, there was ample material from which the judge could find that there were circumstances justifying the making of an order for costs. The facts that the appellant failed in relation to the trust and the matrimonial home, and that the vacation judge dismissed the interlocutory application, though matters which are of relevance, are not of sufficient strength to deny the conclusion that there were circumstances justifying the making of the order.”

33.The case of Penfolds was discussed by Justice Wilson in the High Court decision of Mallet v Mallet (1984) FLC 91-507 (with whom Gibbs CJ, Mason, Dean and Dawson JJ agreed at pp 79,123-79,124). Penfolds case also made it clear that s 117(2A) “requires a finding justifying circumstances as an essential preliminary to the making of an order”. It is clear that the court has a wide discretion and that beyond this there is no “additional or special onus” on the applicant for costs which requires the court to make a preliminary finding that special or exceptional circumstances exist before making an order for costs. .

34.By virtue of s 117(2A), in considering what order (if any) should be made under s 117(2), I am required to have regard to the matters set out in s117(2A) (a)-(g) in so far as they are relevant. The factors set out in the subparagraphs do not comprise of a closed list of factors, because s117(2A)(g) includes “such other matters as the court thinks relevant”. I need to consider each of the various factors, subject to their relevance, however, in PBF (as Child Representative for AF (Legal Aid Commission of Tasmania) v TRF and LKL (2005) FamCA 118 the Full Court held at paragraph 41:

… Nowhere in subsection 2(A) or elsewhere in section 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 subsection 2(A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

35.In the matter of I and I (No 2) FLC 92-625, the Full Court at p 82,277 said:

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.

36.In this case Nicholson CJ, Ellis and Baker JJ declined to follow the approach adopted in the decision of McDonald and McDonald (1994) FLC 92-508 in relation to the question of costs. In that earlier case his Mushin J had said at p 81,271;

In the first instance it is important to note that the principal proceedings concerned questions of custody. As between parties in the strict sense of that word, it is rare for an order for costs to be made in such proceedings. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a custody order which does not even establish a prima facie case, the withholding of evidence, the giving of false evidence and like matters are common bases for such an order. However, where no factor of this type exists, there would usually need to be a very significant disparity in financial circumstances between the parties before a costs order was made.

37.The Full Court in I and I (No 2) above, declined to follow this approach and held at p 82,277;

With respect... we see nothing in the provisions of s 117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to 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. The financial circumstances of the parties are but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties.

1. The Trustee seeks costs pursuant to the provisions of the Family Law Act.

2. It is apposite at this time to look at the outcome of the proceedings in relation to the Trustee.  There were a number of issues which involved the Trust.  One was whether the Trust owed the Husband or his alter ego the sum of $121,677 and another was whether the Wife had a legal or equitable interest in the property of the Trust and if so, the value of that interest.

3. In relation to the Wife’s asserted legal or equitable interest in the family trust, I considered those at paragraphs 137 to 166 of my substantive reasons.  I determined that the Wife had no beneficial interest in the Trust.

4. It was asserted by counsel for the Trustee that the argument in respect of that argument was frivolous and vexatious.  The Husband contended that the argument, whilst ultimately unsuccessful, was a viable argument to which he was entitled to put.  The consideration of trusts and how to deal with them has vexed Family Courts over many years.  I was critical of the Husband and after hearing the evidence I determined that the Wife had no legal or equitable interest in the property of the trust and that her interest was a mere expectancy. I am not satisfied that the argument in this respect was frivolous or vexatious on that point.

5. The second issue was the question of the alleged sum of $121,677.00 due to the Husband or his alter ego by the Trust.  I dealt with that aspect of that claim against the Trust at paragraphs 211 through to 238 of the substantive reasons.  In concluding that there was no such debt, I found that the Husband’s demand for that money was opportunistic and prompted after an examination of the financial records of the trust and was likely to have been of recent invention.

6. In a statement of claim filed on behalf of the Husband he claimed that the Wife had an interest in the Trust and sought orders which would have materially impacted upon the Trust.

7. In terms of the various issues for me to address on a costs application I have considered the relevant factors under s 117(2) of the Act.

8. As to the financial circumstances of each of the parties, subject to this application, the Trustee on the one hand and the Husband on the other.  The Trustee had assets of about ten million dollars.  The Husband has property totalling $868,249 as set out in the substantive reasons.  The Husband is likely to have that sum reduced having regard to the outcome of the costs order between he and his former Wife.

9. Neither party was in receipt of legal aid.

10. In terms of the conduct of the proceedings, the Husband pursued his claim that the Wife had a legal or equitable interest in the Searle Family Trust (putting aside the claim of about $121,000 which I will deal with later).  It was clear that these assets were accumulated by the Wife’s parents and that the Wife had very limited involvement in that trust.  The money was only distributed to the Wife’s parents and their alter ego as determined by me in those reasons.

11. The Husband pursued his application against this trust, a stranger to the marriage, and with property which was not accumulated by the parties during the course of the marriage.

12. In respect of the sum of $121,677 claimed by the Husband, I made adverse comments about the Husband and he ought not to have pursued that claim.

13. There is no issue, in respect of this application, about the parties not complying with court orders.

14. The Husband argued that he was not wholly unsuccessful as a consequence of the issue of validity of a 2004 deed.  I do not accept that submission.  In terms of the Trustee the Husband was wholly unsuccessful.  There was no evidence of offers being made.

15. I have had regard to the circumstances that the Trustee is, to all intents and purposes, a creature of the Wife’s parents and there is no issue of money from the parties going into the Trust, it is more likely that the Trust and the Wife’s parents assisted the parties in the construction of the parties matrimonial home in the 1990’s.

16. Having regard to all of these factors I am satisfied, on balance, that I ought to make an order for costs in favour of the Trustee. 

Indemnity costs

1. The Full Court in Prantage & Prantage [2013] FamCAFC 105 discussed the question of indemnity costs and noted that it was:-[3]

   …an entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or have been incurred unreasonably.

   [3] At paragraph 17.

2. In this case the Full Court set out the settled law in relation to indemnity costs (paragraphs 76-86).  There is no reason why a court cannot make an order for indemnity costs in the appropriate case.  The Full Court has made it very clear that whilst it is possible to make indemnity costs orders, such applications are to be treated as a very great departure from the normal standard.

3. In the indemnity costs application of the Trustee, I have been informed of the terms of the relevant costs agreement and how it operated.  

4. I am not satisfied, in all the circumstances of this case that I ought to depart from that normal standard.  It was arguable (but not successful) in respect of one part of the Husband’s case and was opportunistic in the other.  

5. It was submitted that I could consider a lawyer and client costs order rather than an indemnity costs order.  The Full Court in Hand & Bodilly [2013] FamCAFC 98 (24 June 2013) considered the difference between indemnity costs and lawyer and client costs. Interestingly the Rules make a distinction between the two wherein Rule 19.18(1)(b) notes that a court may order that a party is entitled to costs assessed on a particular basis (eg. lawyer and client, party and party or indemnity).

6. The Full Court in Hand & Bodilly (Supra) observed:-

   100.As we explained earlier, his Honour at [223] described the difference in the level of indemnity between party/party costs and solicitor/client costs.  That said, it is possible that an order for solicitor/client costs may, in some circumstances, provide a complete indemnity.

   101.His Honour did not give the Wife a full indemnity.  As the reasons make clear, the Wife’s actual costs were $30,000 more than the Husband was ordered to pay.

   102.Costs on a “solicitor and client basis” have had different shades of meaning over the decades.  Sometimes that discussion equates “solicitor and client” costs with “indemnity” costs but as Santow JA said in Bouras v Grandelis (2005) 65 NSWLR 214:

   125. The weight of authority is that solicitor and client costs and indemnity costs are distinct, though the difference between them has been eroded by practice and by inconsistent amendments to the various legislative instruments that make up the costs assessment regime.

   126. An order for solicitor and client costs will allow all reasonable costs or all costs as fair justice to the other party will allow. The onus of proving that the costs are reasonable falls on the receiving party.

   127. Historically, solicitor and client costs were somewhat more generous than party/party costs. …

   103.It is clear from the trial judge’s reasons that he was aware that the Wife bore the onus of proving that her claim for costs was reasonable.

7. I had considered making an order for lawyer/client costs.  However, I was concerned about the rates of costs charged by counsel and by the solicitors.

8. Generally, the difference between indemnity costs and practitioner/client costs is that in indemnity costs the onus of satisfying a taxing officer that costs are unnecessary or unreasonable rest with the payer whilst in all other cases, where there is an assessment or taxation the onus is on the party seeking the costs.  Yet under the Family Law Rules 19.34(1) a Registrar is still obliged to determine costs reasonably and proportionality. Even with indemnity costs the test of reasonableness remains (Rule  19.34(2))  

9. Rule 19.34 which provides:-

   19.34(1)A Registrar must not allow costs that, in the opinion of the Registrar:

   (a)are not reasonably necessary for the attainment of justice; and

   (b)are not proportionate to the issues in the case.

   19.34(2)If the court has ordered costs on an indemnity basis, the Registrar must allow all costs reasonably incurred and of a reasonable amount, having regard to, among other things:

   (a)the scale of costs in Schedule 3;

   (b)any costs agreement between the party to whom the costs are payable and the party’s lawyer;

   (c)charges ordinarily payable by a client to a lawyer for the work.

   19.34(3)When assessing costs as between party and party a Registrar must not allow:

   (a)costs incurred because of improper, unnecessary or unreasonable conduct by a party or a party’s lawyer; and

   (b)costs for work (in type or amount) that was not reasonably required to be done for the case; or

   (c)unusual expenses.

10. The effect of this rule is to impose upon a registrar an obligation to determine all cases whether the work was reasonably necessary and/or proportionate to the issue

11. However, having reflected on the discussion of the Full Court in Prantage & Prantage (supra) I am thus reluctant to depart from the usual rule, and as such make a party and party order.

I certify that the preceding forty four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on          13 September 2013.

Associate:     

Date:              13 September 2013