Smith & Fields (Third Party Costs)

The Family Court of Australia considered an application for costs in proceedings between Mr Smith (applicant husband) and Ms Fields (respondent wife). The substantive property settlement orders between the parties had already been made. The wife had also sought orders against her former legal practitioners, Ms D and Mr E (the first and second other parties), seeking to hold them personally responsible for her costs. However, the wife subsequently filed a Notice of Discontinuance against these third parties shortly before their costs hearing. Both Ms D and Mr E sought their costs on an indemnity basis.

The primary legal issues before the court were whether costs should be awarded on an indemnity basis against the wife in favour of the third parties, and if so, from what date. The court also considered the wife's contention that any costs order should be made on a party-party basis. The third parties argued that their involvement in the proceedings was as strangers to the matrimonial dispute, and that the wife's claims against them were significantly different from representations made to the court, involving common law and equitable causes of action that required the court to have accrued jurisdiction.

The court reasoned that while costs orders on an indemnity basis are exceptional, they are permissible in circumstances that warrant such an approach, particularly where conduct amounts to an abuse of process. The court noted that the wife's conduct, including the issuance of subpoenas that were considered plainly too wide and tantamount to an abuse of process, justified an order for indemnity costs for a portion of the proceedings. The court also acknowledged that the wife had conceded that costs were warranted against her.

Ultimately, the court ordered that the wife pay the costs of the first and second other parties. These costs were to be assessed on a party-party basis from the date of the wife's response seeking relief against the third parties up to a specified date, and thereafter on an indemnity basis from that date until the discontinuance of the proceedings against them.