Sora and Sora and Ors (No 2)

[2012] FamCA 1079

FAMILY COURT OF AUSTRALIA

SORA & SORA & ORS (NO 2) [2012] FamCA 1079

FAMILY LAW – Costs

APPLICANT: Ms Sora

RESPONDENT: Mr Sora

SECOND RESPONDENTS: Mr T Soratis, Mr S Soratis and Mr C Soratis

THIRD RESPONDENT: M Pty Ltd

FILE NUMBER: MLC 4287 of 2007

DATE DELIVERED: 20 December 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: By way of written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr North SC with Mr Sweeney

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Dr Pannam QC with Ms Vohra

SOLICITOR FOR THE RESPONDENT: GSM Lawyers

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS Mr St John SC with Mr Greenberger

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS Dermenzies Lawyers

Orders

IT IS ORDERED THAT

1. The husband make a contribution to the costs of the second named respondents of and incidental to the interim applications determined on 16 August 2012 fixed in the sum of $12,513.

2. The husband make a contribution to the costs of the wife of and incidental to the interim applications determined on 16 August 2012 fixed in the sum of $8,608.

3. The payments made by the husband be made in clear funds to the solicitors for the party entitled to such costs by not later than 12 noon on Monday 21 January 2013.

IT IS DIRECTED THAT

1. The revised submission of the second respondents dated 10 October 2012 be marked Exhibit “I1” and remain on the Court file.

2. The wife’s submission dated 1 October 2012 be marked Exhibit “W1” and remain on the court file.

3. The husband’s submission dated 12 November 2012 be marked Exhibit “H1” and remain on the Court file.

4. The second respondents’ submission dated 26 November 2012 in reply to the husband’s application for costs be marked Exhibit “I2” and remain on the Court file.

IT IS NOTED that publication of this judgment under the pseudonym Sora & Sora & Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER:

Ms Sora

Applicant

And

Mr Sora

Respondent

And

Mr T Soratis, Mr S Soratis and Mr C Soratis

Second Respondents

And

M Pty Ltd

Third Respondent

REASONS FOR JUDGMENT

Introduction

1. On 2 and 8 September 2011 I heard proceedings arising out of the second respondents’ application for leave to intervene filed 14 April 2011 and reserved my decision.  I made orders and delivered reasons for judgment on 16 August 2012 which found, essentially, that the claims of the second respondent would remain in, and be dealt with by, this Court. In doing so I rejected the contention of the husband that the second respondents’ claim fell outside the court’s accrued jurisdiction. However, I went on to make orders which ensured, as best I could, that the claim of the second respondents was articulated as contentions of fact and law so that the husband and wife know what case he or she has to meet.

2. My orders included:-

   (3)Any party wishing to make an application for costs file and serve by not later than 12 noon on Monday 1 October 2012 a written  submission to that effect, such submission to be of not more than 6 pages in length and include (but not be limited to) details of:-

   (a)the sum at which such costs could be fixed on a party/party basis;

   (b)an itemisation of professional fees for solicitors, counsels’ fees to prepare and counsels’ fees to appear, and

   (c)a statement as to whether that party wishes, at this stage, for the matter to be listed for oral argument as to costs.

   (4)Any party against whom an application for costs is made file and serve by not later than 12 noon on Monday 5 November  2012 a written submission in response, such submission to be of not more than 6 pages in length and include (but not be limited to) details of:-

   (a)the sum at which the costs claimed should be fixed on a party/party basis in the event that a costs order is to be made;

   (b)a statement as to whether that party wishes, at this stage, for the matter to be listed for oral argument as to costs.

   (5)Any party who is served with a response pursuant to the preceding paragraph of this Order may, within 14 days of service upon them of that response, file and serve a written submission in reply, of not more than 3 pages, confined to alleged errors of fact and law and say, finally, whether that party wants the matter to be listed for oral argument. 

   (6)If no party seeks to have the matter listed for oral argument on the issue of costs, the Court may proceed to determine the applications for costs based on written submissions.

   (7)If any party does seek to have the matter listed for oral argument on the issue of costs, counsel for that party confer with counsel who will be briefed to appear for the other party(s) to ascertain mutually convenient dates on which the matter can be listed before me at 9 a.m. estimated to take not more than one hour.

   (8)Subject to further order of the court, the times for filing and service of submissions as to costs may be varied by agreement between the applicant for costs and the party against whom costs are sought and any such agreement should be referred to in the submissions or evidenced by correspondence attached to any submission which is filed and served.

   (9)That pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) I certify that it was reasonable to engage counsel including Queen’s Counsel and Senior Counsel.

3. Further orders were made on 3 October 2012 which permitted the second named respondents to particularise the costs sought and extending the time for the husband’s response.

4. On 23 October 2012 I ordered, inter alia, that the husband be at liberty to include in the cost submissions which he files pursuant to paragraph 20 of the Order made on 3 October 2012 any application for costs he makes against any other party to the proceeding arising out of the matter which was determined by me on 16 August 2012 and any person against whom the husband seeks such costs has 14 days thereafter in which to file any submissions in response.  The husband seeks costs and an indemnity as to costs against the second respondents.

5. I have regard to:-

   a)The revised submission of the second respondents dated 10 October 2012[1];

   b)The wife’s submission dated 1 October 2012[2];

   c)The husband’s submission dated 12 November 2012[3];

   d)The second respondents’ submission dated 26 November 2012 in reply to the husband’s application for costs[4].

   [1] Exhibit “I1”

   [2] Exhibit “W1

   [3] Exhibit “H1.”

   [4] Exhibit “I2”

6. I note that the parties complied with the direction that the submissions be confined to no more than six pages save that the second respondents’ submission dated 26 November 2012 ran half a page over but I have regard to the entirety of the submission in any event.

7. There is no issue about filing submissions out of time.

Orders sought

1. No party seeks to be heard for oral argument.

2. All parties are content for the costs to be fixed by me rather than have the matter proceed to a taxation of costs, latterly called assessment.

3. The second respondents seek that the husband pay their costs on a party/party basis in the sum of $45,149.23 which comprises fees to the lawyers of $15,727.68 and counsels’ fees of $29,421.55.

4. The wife seeks that the husband pay her costs on a party/party basis in the sum of $25,631.58 which comprises fees to the lawyers of $9,887.18 and counsels’ fees of $15,744.40.

5. The husband seeks that the second respondents pay:-

   a)his costs on an indemnity basis in the sum of $78,219.38 which comprises fees to lawyers of $13,819.38 and counsels’ fees of $64,400;

   b)as an alternative to costs on an indemnity basis, the husband seeks costs from the second named respondents on a party/party basis in which case the lawyers’ fees are reduced by $2,303.23 to $11,516.15 and the total is $75,916.15; and

   c)and indemnify him for any costs which he may be ordered to pay the wife in this set of interim proceedings.

Legal principles

1. Section 117 of the Family Law Act1975 contains the general rule that each party to proceedings under the Act shall bear his or her own costs.  The object of the rule is to ensure that spouses are not deterred from bringing or maintaining legitimate applications for fear of incurring an intolerable financial burden if they lose.[5]  However, the Court has a discretion to make an order for costs if it is of the opinion there are circumstances that justify that course and it would be just to do so. 

   [5]  In the Marriage of Kohn (1977) 30 FLR 175 at 177.

2. In considering whether to make an order in the exercise of its discretion, I must have regard to the matters set out in s 117(2A). The weight to be attached to any of the considerations in sub-s (2A) is wholly discretionary. However, while no single factor out-ranks any other, there is nothing to prevent one or other of them from being the sole foundation for a costs order.[6]  As Kay J observed in Brown & Brown[7] :

   In many cases there will be an outstanding feature . . . that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other s 117(2A) considerations.

   [6]  LAC and TRF and LKL [2005] Fam CA 158 at [41].

   [7] (1998) FLC 92-822 at 85,347.

3. The second respondent contends that this application raises for consideration the matters in paragraphs 117(2A)(a), (c), (e) and (g).  The wife contends that the most relevant matters are sub-paragraphs (a) and (e). The relevant provisions are:-

   (a)  the financial circumstances of each of the parties to the proceedings;

   (c)  the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters; 

   (e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (g)  such other matters as the court considers relevant.

Financial circumstances of the parties (s117(2A)(a)) 

1. Both applicants for costs submit that the husband has access to substantial income and control over significant assets. I accept that is the case. By community standards all parties are financially comfortable. However, it is not necessary for me to conclude that the husband has the means and ability to pay the other parties’ costs before making an order that he pay their costs or some of them.

2. I am satisfied that none of the parties are so well off financially that he or she can afford to pay costs which ought not to have been incurred or which were incurred in circumstances in which they should not have been and the money has been wasted. Moreover, the proceedings are only at an interim stage and all parties will face very significant legal costs over the next six months or so for which they must make provision.

Conduct of the parties (s117(2A)(c)) 

1. The second respondents contend that they are “drawn into a dispute between the Husband and the Wife which inter alia requires determination of a commercial dispute between them and the Husband.” It is more accurate to say that, with the concurrence of the wife, the second respondents have availed themselves of an opportunity to ventilate a commercial dispute in the midst of the marital dispute and will do so in this Court.

2. I do not understand how the fact that the husband seeks costs on an indemnity basis sounds within ss.117(2A)(c). The submission of the husband and the submission in reply of the second named respondents are more pertinent. Both are very well expressed.

3. I accept that the second respondents’ case has always been for an equal division of the business interests. However, the means by which they are to achieve that result appeared to be expressed in an intentionally, if not purposefully, vague manner. The reference by Mr St John SC to the Dog Act (which I accept was an attempt at levity) and by Mr O’Bryan SC to relying on each and every point they can (or words to that effect) encapsulate that, at those stages, senior counsel for the second respondents were unable or unprepared to articulate the basis upon which the relief was sought. It was not until compliance by the second respondents by the requirement, imposed by the Order of 16 August 2012, to file contentions of fact and law that it is now apparent that they seek relief under the court’s original jurisdiction in corporations law as well as family law in addition to such jurisdiction as accrues to either or both.

4. To the extent that the second respondents were imprecise, occasionally to the point of appearing cavalier, about specifying the cause(s) of action upon which they rely, the husband’s submission as to a case which has undergone several incarnations rings true.

5. Contrary to the submission of the husband, I do not accept that the eventual statement of the relief sought under corporations law rendered all of the interim proceedings on this issue redundant in the sense that the fact that it occurred is supportive of the husband’s application for costs and an indemnity in respect of costs. The fact of relief being sought under corporations law may well have rendered the husband’s then extant appeal useless but, at the interim hearing, the husband’s case was not confined merely to eschewing a common sub-stratum of facts but included whether the relief sought was necessary at all as well as other arguments.

6. My impression is that the interim proceedings in respect of which the three parties now seek orders for costs were arguments and determinations which were in every sense necessary and unlikely to be avoidable in this litigation but which were pitched under existing applications and responses because they thought it convenient to do so. It may have been prudent for the husband to seek specifics of the case of the second respondent prior to framing his case as an opposition to accrued jurisdiction. By the same token, if the second respondents had articulated their case in the beginning as they have now articulated it, the interim proceedings would have been relatively easy to curtail and would not have required the multiple days of hearing, the long and the detailed and sometimes repetitive submissions or the deliberation which, ultimately, the interim case did require.

Whether any party has been wholly unsuccessful (s117(2A)(e) and other relevant matters (s117(2A)(g)) 

1. The husband’s case to have the second respondents removed from the proceedings was wholly unsuccessful.

2. Frequently it is convenient to discuss in the context of ss117(2A)(e) whether the case of the party who has been wholly unsuccessful had merit nonetheless and that is the case here. As I stated above, the interim hearing resulted in the second respondents remaining joined as parties but being required then to state the contentions of fact and law upon which they rely. The latter was an essential and productive step to progress the litigation to a point that it can be (and was) set down for trial.

3. Whilst I was satisfied that the husband’s case vis a vis accrued jurisdiction lacked merit, I accept that the interim proceeding was a proceeding in which the parties needed to participate in order for the second respondents to define their position and for others to do likewise in response and substantively.

4. I accept that there were no new or novel points of law raised in the interim proceedings.

Exercise of discretion as to costs

1. The discretion which I exercise is broad. The husband mounted a case which was ultimately unsuccessful. However some good was salvaged from the proceedings, namely an articulation of the case of the second respondents for the benefit of the husband and the wife. Whilst one factor may be sufficient to justify an order for costs, the fact that the husband was wholly unsuccessful does not mean that necessarily or inevitably an order for costs will be made in favour of the other parties.

2. Taking all matters into account, I find that there is no justification for a costs order in favour of the husband. Accordingly, I will make no order in his favour.

3. Given that I will make no order in favour of the husband and nor will I notionally offset any of his costs against other orders, it is not necessary for me to consider the issue of indemnity costs as sought by the husband. That said, my impression is that the circumstances of this case did not come within a bull’s roar (and were far distant from) a case in which an order for indemnity costs would be proper or appropriate.

4. I conclude that the husband should make some meaningful contribution to the costs of the second respondents and I put that at 35 per cent of their party/party costs.

5. I conclude that the husband should also make some meaningful contribution to the costs of the wife and put that at 35 per cent of her party/party costs. The wife has also been a casualty of the imprecise way in which the second respondents’ framed their case.

Quantum of costs

1. The parties are disinclined to send the matter to taxation and sought that I fix any amount of costs.  In costs disputation, there I much to be said for valuing finality over precision. 

2. In fixing the quantum of costs I have had regard to the itemised scale of costs set out in Schedule 3 of the Family Law Rules 2004.

3. The submission for the husband does not cavil with calculation of costs by either the wife or the second respondent. However, I am satisfied that some of what is claimed by the wife and second respondents does not come within the scope of a party/party costs order.

4. The definition of party/party costs is a well established one.  Party/party costs have often been described as the “costs, charges and expenses that are necessary or proper for the attainment of justice or for defending the rights of any party, but save as against the party who incurred the same no costs shall be allowed which appear to the taxing officer to have been incurred or increased through over-caution, negligence, or mistake, or by payment of special fees to counsel or special charges or expenses to witnesses or other persons, or by other unusual expenses”.[8]  It is also established that there is a difference between the quantum of costs recoverable on a party/party basis and the quantum of costs properly chargeable and recoverable on a solicitor/client basis.  See Lord Henworth M.R. in Frankenburg v Famous Lasky Film Service, LD. (1931) Ch.D. 428 at p. 436 wherein it states:-

   The difference between party and party and solicitor and client costs is undoubtedly this.  That the solicitor and client costs are intended to embrace a more generous allowance for the actual costs which have been incurred

   [8]          Re. Malleson, Stewart, Stawell and Nankivell (1931) VLR 127 at p. 129

5. In my perusal of the schedule of costs sought by the wife and the second respondents for professional fees I note that there are claims included for attendances upon the client, “conversational attendances” upon counsel, letters and telephone attendances which do not fall within the ambit of a party/party calculation of liability for costs.

6. Of the $15,727.68 claimed for professional fees on behalf of the second respondent, I allow only $12,250 of which 35 per cent is $4,287.50.

7. In respect of the professional fees sought by the wife I allow $8,850 of which 35 per cent is $3,097.50.

8. In my perusal of counsels’ fees claimed by the wife and the second respondents I note that fees of senior counsel for the second respondent are charged at $700 per hour which is the upper range of the scale which is $409.35 to $701.75. Likewise, the fees for appearance by senior counsel are $5,848 per day when the scale is $760.20 (item 204) or $1,929 (item 205) to $5,848.15 per day.

1. In my perusal of counsels’ fees claimed by the second respondents I note that fees of junior counsel are charged at $348 per hour which is the upper range of the scale which is $244.40 to $348.55. Likewise, the fees for appearance by junior counsel are $1,675 per day when the scale (item 205) is $724.85 to $1,675.50 per day.

2. I consider it appropriate that counsel’s fees in this matter are properly fixed at the rate claimed.  This rate gives proper recognition to the standing and experience of the counsel briefed in this matter together with the relative complexity of the issues raised in the litigation. 

3. I accept that the counsel’s fees incurred by the wife in the sum of $15,744.40 should be allowed in full of which 35 per cent is $5,510.55.

4. In respect to the counsel’s fees incurred by the second respondent I note that included herein are significant charges for preparation and conferences.  All such fees are not always recoverable in full on a party/party basis and in an assessment of costs on a party/party basis those charges must be considered in the context of the particular matter.  This was considered by the Full Court in the matter of Saathoff & Saathoff where their Honours said[9]:-

   In ordinary circumstances a brief fee represents the allowance for the time expected to be occupied in Court, up to one day, and for the preliminary work in mastering the facts, the law, and preparing for the hearing.  Where the case is of great complexity or the material is voluminous, a reading fee or a preparation fee may be appropriate, either as a separate fee or as an additional component of the brief to appear: see Magna Alloys & Research Pty. Ltd. V Kevin Lindsay Coffee & Ors (No. 2) (1982) V.R. 97 esp. at pp. 109 – 111 and the cases therein referred to.

   [9]          Saathoff & Saathoff (1987) FLC 91 - 187

5. Counsel have been retained in this matter since before it was docketed to me. Mr St John is familiar with the matter.

6. After considering the fees charged in the context of this matter I have fixed the second respondent’s counsel’s fees at $23,500 of which 35 per cent is $8,225.

Conclusion

1. For the above reasons, I am satisfied that the orders set out at the commencement of these reasons are proper.

2. I calculate the second respondents’ costs and disbursements at $35,750 of which 35 per cent is $12,512.50.

3. I calculate the wife’s costs and disbursements at $24,594.40 of which 35 per cent is $8,608.05

4. The husband did not ask for time to pay.  In the absence of time to pay the costs are due forthwith.  It seems more orderly to provide, instead, that they be paid by 21 January 2013 and I will order that accordingly.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 20 December 2012.

Associate:

Date:  20 December 2012.