Shee & Hale
[2022] FedCFamC1F 169
Federal Circuit and Family Court of Australia
(DIVISION 1)
Shee & Hale [2022] FedCFamC1F 169
File number(s): SYC 2311 of 2017 Judgment of: BAUMANN J Date of judgment: 18 March 2022 Catchwords: FAMILY LAW – COSTS – Where circumstances exist to justify an order for costs in respect of the unsuccessful application (heard over four days) and the unsuccessful recusal application – Parties seek that costs be fixed – Costs fixed in the sum of $230,000 Legislation: Family Law Act 1975 (Cth), ss 44, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), r 12.17
Cases cited: Krach & Krach (No. 2) [2009] FamCA 886
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Shee & Hale [2020] FamCA 84
Shee & Hale (No. 2) [2020] FamCA 494
Shee & Hale [2020] FamCAFC 140
Division: Division 1 First Instance Number of paragraphs: 45 Date of last submission/s: 20 November 2020 Date of hearing: On the papers Place: Brisbane Solicitor for the Applicant: York Law Family Law Specialists Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
SYC 2311 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SHEE
Applicant
AND: MR HALE
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
18 March 2022
THE COURT ORDERS:
1.That within sixty (60) days, the Applicant, Ms Shee, shall make a contribution to the costs of the Respondent, Mr Hale, fixed in the sum of $230,000.
2.That these proceedings be certified as appropriate for Senior Counsel.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Shee & Hale has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
On 18 February 2020, the Court ordered that the Applicant, Ms Shee and the Respondent, Mr Hale were in a de facto relationship from 2007 to March 2010, (which the parties had agreed was the case), but the Court was not satisfied that a de facto relationship between the parties within the meaning of the Act was created or existed for the period from mid-2012 to mid-2016, as asserted by the Applicant (see Shee & Hale [2020] FamCA 84).
Arising from that Judgment, further steps in the proceedings took place, in particular:
(a)an application for me to recuse myself was filed by the Ms Shee; was heard on 10 June 2020 and dismissed on 19 June 2020 (see Shee & Hale (No. 2) [2020] FamCA 494);
(b)as Ms Shee had a pending application for leave to proceed pursuant to s 44(6) of the Family Law Act 1975 (Cth) (“the Act”), that discrete application was listed for hearing on 26/27 October 2020. However, on 18 September 2020 Ms Shee filed a Notice of Discontinuance in respect of her application (being paragraph 3 of the further amended Application filed 5 April 2018), and by Order of the Court the application was formally dismissed on 14 October 2020.
As a result of the history now recited, the Respondent, Mr Hale, seeks an order for costs for:
(a)the substantive hearing on 5 and 6 July 2018 and 8 and 9 October 2018 on an indemnity basis as assessed, or in the alternative “as taxed on a party-party basis, with an additional 10% for complexity”;
(b)the recusal application, as agreed or as taxed on an indemnity basis; and
(c)the application under s 44(6) which was discontinued.
Apart from the three applications, the following further material has been filed, is relied upon by the parties and has been considered, namely:
(a)For the Applicant for costs Mr Hale:
(i)affidavits by Mr Hale filed 17 March 2020, 4 September 2020 and 16 October 2020;
(ii)affidavits of Susana Staka (Mr Hale’s solicitor) filed 23 April 2020 and 16 October 2020; and
(iii)written submissions filed 23 April 2020; 23 October 2020 and 20 November 2020.
(b)For the Respondent and cross-Applicant for costs Ms Shee:
(i)affidavit by Ms Shee filed 17 August 2020 and 16 November 2020;
(ii)Financial Statement filed 17 August 2020; and
(iii)written submissions filed 17 August 2020 and 6 November 2020.
Ms Shee’s written submissions filed 17 August 2020 curiously refers to an application for Mr Hale to pay for her costs of the substantive proceedings (ideally fixed in the sum of $313,772) which was first formally filed in the Response filed 6 November 2020.
Mr Hale’s written submissions of 20 November 2020 sets out a chronology at paragraphs 1 to 9 before contending that:
10.In these circumstances, Mr [Hale] (the cost applicant) requests the Court give consideration to the following;
10.1That the Court aught not accept the Response to an Application in a Case dated 6 November 2020 (headed H’s Appl 17.3.2020) due to the lateness of same.
10.2That the Court aught not read the Affidavit and Financial Statement of Ms [Shee] filed on 17 August 2020 as they were not filed in support of an application and nor were they filed in accordance with a direction of the Court in respect to the cost applications of Mr [Hale].
10.3In the event the Court does read the affidavit of Ms [Shee] and her Financial Statement filed 17 August 2020, the Court will also need to read the Affidavit of Mr [Hale] filed 4 September 2020.
I accept the material of Ms Shee was both late; outside the timetable set for filing and somewhat disjointed. It was not appropriate for her lawyers to write to my chambers in the manner they did. I take into account that after the delivery of Reasons in February 2020, for a time Ms Shee was unrepresented, and further, that English is not her first language. By reading the affidavit of Mr Hale filed on 4 September 2020, I do not believe that he will suffer prejudice if I allow, in the exercise of my discretion, Ms Shee to rely upon her material set out above. I therefore proceed on that basis
Principles
Section 117(1) of the Act prescribes that each party to proceedings shall bear their own costs, however if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may (subject to subsection (2A)), make such order as to costs as the Court considers just (s 117(2)).
In considering whether circumstances justify an order for costs, I propose to analyse the relevant s 117(2A) factors for the three separate events although as will be observed, some overlapping occurs.
The substantive proceedings
Financial circumstances of the parties
Whilst Mr Hale concedes he is in a stronger position than Ms Shee (albeit that he is aged 70 years and has retired), at the time of the final hearing the evidence was that Ms Shee had nett assets of around $1.76 million and an income that was surplus to her needs.
Whilst I accept (like Mr Hale) she has been required to fund her legal expenses (which exceeded $300,000), her Financial Statement filed 17 August 2020 revealed cash invested exceeding $1 million, together with business interests (Item 41). She revealed, at that time, a modest income.
Legal aid
Neither party was in receipt of legal aid.
Conduct of the parties to the proceedings
Mr Hale contends that the manner in which Ms Shee conducted herself up to the Final Hearing “has made it more onerous, expensive and time consuming for the Respondent” and points to:
(a)her affidavits being “unnecessarily voluminous” including seven years of work diaries etc. with over 800 pages of annexures (including some 274 emails);
(b)reliance on a telephone call summary for around 600 calls; and
(c)disclosure issues and excessive filing of subpoena.
Ms Shee submits that Mr Hale initially failed to accept the Court had jurisdiction, but then by November 2017 (six months after his initial Response), Mr Hale conceded a de facto relationship existed between 2007 and 2010. At paragraph 4 (page 7) of the written submissions, Ms Shee contends:
It is submitted that the Applicant did not conduct this matter in a way that has increased the legal fees in this matter as contended by the Respondent. The matter was listed for a threshold argument in relation to the length of the parties’ relationship and whilst the matter was originally fixed for two (2) days of hearing, the matter clearly could not be contained within 2 days of hearing having regard to the significant evidence filed by each of the parties, not only by the Applicant.
and further asserts that:
(a)response material by the Applicant was required and arose from late material (including further witnesses) relied upon by Mr Hale;
(b)as Ms Shee bore the onus, she engaged “in the forensic exercise required to run her case”, including issuing a number of subpoena; and
(c)Mr Hale “reneged on the agreement reached between the parties on 8 May 2018” – an issue dealt with specifically below in these Reasons.
When the jurisdictional question enlivened for determination is so “fact centric”, discussions with litigants as to how much detail might be necessary to put before the Court should take place. Considering the blurred connection between the parties continuing business relationship and the personal relationship, I am not persuaded that the Applicant Ms Shee can be accused of inappropriate conduct in the preparation and prosecution of her case. She was initially represented by Senior Counsel (as was Mr Hale throughout the hearing), and the volume of material and disputed allegations necessitated four days of hearing, to test the evidence. The costs to both parties of a longer hearing than initially anticipated is a mere consequence of the Court’s obligation to permit a fair hearing to be held.
Whether the proceedings were Necessitated by any non-compliance with orders
This factor is not relevant.
Whether any party to the proceedings has been wholly Unsuccessful in the proceedings
The trial was not focused on the conceded existence of a short de facto relationship between 2007 and 2010 (although s 44(6) applied to that period), but rather the assertion by Ms Shee that she was in a genuine domestic relationship in the nature of a de facto relationship, from 2010 and continuing until 2016.
In respect of this issue, the Applicant Ms Shee was wholly unsuccessful. As Senior Counsel for Mr Hale correctly observed, in a case like this (where a discrete threshold hearing as to jurisdiction was held), there are “generally limited yes/no results” and by continuing with her application “the Applicant took the risk and forced the Respondent to incur costs defending his position, costs that he should not have been required to incur”.
The Applicant in her written submissions (at paragraph 2, page 9) accepted that she was wholly unsuccessful, however then contends “however this of itself is not sufficient reason to depart from the usual position of each party paying their own costs”.
Authority makes it clear that all relevant factors must be considered under s 117(2A) of the Act, however in a proceeding such as this, the fact is that from at least November 2017 (when the concession about a short relationship having existed to 2010 was made by Mr Hale), Ms Shee pursued her proceedings and was wholly unsuccessful. She had the benefit of experienced legal representation. This factor is a highly persuasive factor in favour of a costs order against Ms Shee.
such other matters as the court considers relevant
The Respondent to the costs Application, Ms Shee, relies upon paragraph 30-48 of her affidavit filed 17 August 2020 to frame an argument that the parties not only exchanged offers, but in fact reached final agreement to resolve the threshold issue as well as the totality of the property proceedings.
Ms Shee clearly seeks to rely upon this “agreement” as a basis for her cross-application that Mr Hale should pay her costs of her unsuccessful litigation.
The argument advanced by Ms Shee is fundamentally flawed for the simple reason that there was no “final agreement”. If there had been, no doubt with the benefit of the skilled lawyers advising her (including Senior Counsel), she would have tried to commence an action based on the alleged final agreement.
However, as Mr Hale deposes to at paragraphs 17 to 33 of his affidavit filed 4 September 2020, extensive negotiations did take place; he did make an offer on 8 May 2018 to settle the action by a payment to her of $1,150,000 (see Exhibit 8 to Ms Shee’s affidavit), however there is no evidence it was either accepted or certainly documented as would be required. When it was not accepted, the offer by Mr Hale was withdrawn at 7.02am on 9 May 2018 which caused a response from Ms Shee to Mr Hale by text message at 8.13am on 9 May 2018 which said to the affect – “if you want to withdraw the offer, that is fine by me, we can go on fighting!!!” Later that same day, Ms Shee sent a further text in these terms:
Ok. We go on fighting! $1.15M ur offer is off the table now.
Naturally it is a course for regret by both parties that this costly litigation proceed to trial over four days and judgment thereafter. If as Mr Hale alleges (at paragraph 34 of his affidavit), he offered Ms Shee $250,000 to settle the proceedings at 1.00pm on the first day of the hearing, she should have accepted such an offer rather than, as Mr Hale alleges, counter-offering for settlement of $950,000.
conclusion
I am satisfied on the findings above that circumstances exist which justify the unsuccessful Applicant, Ms Shee, making a significant contribution to the costs incurred for the trial by Mr Hale.
I note the final written submissions made 17 August 2020, was in these terms:
6.Given the Applicant’s limited resources in the form of about $1million which she intends to use the majority of to buy a home and the balance to fund her litigation referrable to the s.44(6), any cost order made against her will visit injustice upon her and affect her quality of living in her ageing years.
The costs consequences that flow from Ms Shee pursuing this unsuccessful proceeding was a risk she seemed prepared to take, no doubt hoping to achieve a different outcome. For completeness, I observe that Ms Shee (as she was perfectly entitled to do), launched an Appeal against my decision; was represented at the Appeal by Senior Counsel and was unsuccessful, with an order for costs made against her (see Shee & Hale [2020] FamCAFC 140).
Before dealing with the assessment of costs, I will now deal succinctly with the two other events which Mr Hale seeks to have a costs order in his favour.
Recusal application
I rely upon the earlier findings. In this application, the Applicant, Ms Shee, was wholly unsuccessful.
The fact that Ms Shee says that the Application “was not a frivolous application nor did it lack merit” is best answered by reading my judgment. It lacked merit.
Ms Shee was not unrepresented when she pursued her application for disqualification and she was represented by a solicitor who says he “is a specialist family law solicitor with considerable experience”. This contention (paragraph 11 of Ms Shee’s second written submissions filed 6 November 2020), appears to be made to support the submission that Mr Hale should not be entitled to engage Senior Counsel.
I disagree. Mr Kirk SC was Counsel at the hearing for Mr Hale and it was, in those circumstances, perfectly appropriate for Mr Kirk SC to appear, without I note, Junior Counsel. I will deal with the assessment of costs later in this judgment.
The discontinuance
At paragraphs 17 to 20 of the second written submissions of Ms Shee, she sets out the reasons why she brought these proceedings to an end, despite apparently “wanting to continue.”
Every litigant must undertake a “cost/benefit” analysis about pursuing litigation. I accept that the time to consider her s 44(6) Application, only referable to the de facto relationship found to exist which ended in March 2010, was after the threshold decision about a longer de facto relationship was delivered.
The matter was listed for trial, however the decision by Ms Shee to discontinue was made before substantial extra costs to oppose the s 44(6) Application would have been incurred.
In the circumstances, I am not satisfied circumstances exist to justify an award of costs to Mr Hale arising from and incidental to the Notice of Discontinuance.
Costs payable for the substantive final hearing; the recusal application and the application for costs.
A fair concession can be found in respect of costs of the trial, at page three of the written submissions prepared by Mr Kirk SC that “[w]hilst on the authorities there can be no claim for indemnity costs…” nonetheless, it is contended that Mr Hale, as the successful litigant, “should not be required to bear the entire burden of costs that he should not have been required to incur.”
Reference was made to the decision in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 and the comments of the Honourable Justice Bennett in Krach & Krach (No. 2) [2009] FamCA 886 at [40]. More recent authorities reveal the growing trend to use the power under rule 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), to fix costs rather than to have the parties incur the additional costs and delay in having an assessment made or taxation of costs undertaken.
Ms Shee adopted the preference for costs to be fixed, if costs were to be awarded at all.
The evidence of Ms Susana Staka, solicitor for Mr Hale, contended in her affidavit filed 23 April 2020 that:
(a)Mr Hale’s costs incurred in the proceedings were $319,895, being $160,047 (solicitor’s fees) and $158,902 (Counsel’s fees) together with disbursements of $946. This total estimate of $319,895 was similar to the costs identified as paid by Ms Shee ($313,772); and
(b)On a party and party basis, Ms Staka’s estimate was $80,969 for solicitor’s costs and disbursements. The opinion of a costs assessor with experience in assessment of costs was sought by Ms Staka; which enabled her to express the opinion (which I accept) that 50% of the professional costs prepared was a fair discount for party/party costs.
Mr Kirk SC’s submissions concluded with the following contention:
…that the costs of Queens Counsel ought, in the circumstances, be allowed in full in recognition of the fact that the Applicant obviously considered the voluminous material required both Senior and Junior Counsel, whilst the Respondent was prepared to take the risk with only one Counsel.
In respect of the legal costs incurred in the proceedings since judgment was delivered on 18 February 2020, the evidence of Ms Staka, using the same methodology was that:
·Mr Hale incurred costs of $38,027, being $23,276 (solicitor’s fees) ad $14,751 (Counsel’s fees); and
·with a discount of 50% on the solicitor’s fees (to equate to an estimate of party and party costs) plus the Counsel’s fees as paid, the sum of $26,389 was at least appropriate.
conclusion
Doing the best I can on this evidence, I will order that the Applicant, Ms Shee, make a contribution to the costs of the Respondent, Mr Hale, fixed in the total sum of $230,000 within 60 days of the date of this order, calculated as follows:
Allowance for solicitor’s costs of the hearing: $86,000 Counsel’s fees reduced to: $120,000 Costs of the recusal Application and this costs Application: $24,000 $230,000
I also, as sought, certify for Senior Counsel.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 18 March 2022
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