Spencer and Speight (No 2)
[2014] FamCA 1032
•19 November 2014
FAMILY COURT OF AUSTRALIA
| SPENCER & SPEIGHT (NO 2) | [2014] FamCA 1032 |
| FAMILY LAW – COSTS APPLICATION – application for costs where respondent substantially unsuccessful – costs allowed on party/party basis not on an indemnity costs basis |
| Penfold v Penfold (1980) FLC 90-800 Cachia v Hanes (1994) 179 CLR 403
|
| Family Law Act 1975 (Cth) |
| APPLICANT: | Mr Spencer |
| RESPONDENT: | Ms Speight |
| FILE NUMBER: | MLC | 8481 | of | 2013 |
| DATE DELIVERED: | Hobart |
| PLACE DELIVERED: | 19 November 2014 |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 13 August 2014 & pursuant to directions made that day that the parties lodge written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Chris Nehmy |
| SOLICITOR FOR THE APPLICANT: | Barbayannis Lawyers |
| COUNSEL FOR THE RESPONDENT: | In person |
| SOLICITOR FOR THE RESPONDENT: |
Orders
Ms Speight pay the costs and disbursements of Mr Spencer in respect of the substantive proceedings and the costs application as agreed between the parties and in the absence of agreement to be assessed in the Family Law Rules 2004 on a party/party basis.
Such costs agreed or determined on a party/party basis and shall not exceed $31,125.41.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Spencer & Speight (No 2) 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 8481 of 2013
| Mr Spencer |
Applicant
And
| Ms Speight |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Mr Spencer (‘the applicant’) seeks costs orders against Ms Speight (‘the respondent’) following property orders made on 23 June 2014 (‘the property orders’).
In the property orders the respondent was required to pay to the applicant the sum of $75,000 and the question of any costs application was to be dealt with under the Family Court Rules 2004 (Cth).
The applicant filed a costs application on 15 July 2014 seeking orders as follows:-
1.The respondent pay the costs of the applicant on an indemnity basis in accordance with a costs agreement, between the applicant and his lawyers, dated 15 August 2013.
2.The respondent pays the applicant the costs of the costs application on an indemnity basis.
3.Any other order that this honourable Court may deem appropriate.
In clarifying his position the applicant set out in his costs submissions.[1]
[1] Costs submission prepared by counsel for the applicant filed 29 August 2014.
1.The applicant seeks an order that the respondent pay his costs in this matter having regard to the relevant subsections of s 117(2A) of the Act. The applicant seeks an order that the respondent pay his costs as follows:
a)In the sum of $31,125.41 being the applicant’s costs assessed on an indemnify basis from 14 March 2014, or (emphasis added) in the alternative;
b)The applicant’s costs of the proceeding as assessed on a party/party basis as agreed and failing agreement as assessed by a Registrar pursuant to Chapter 19 of the Family Law Rules 2004.
2.The quantum of the costs sought by the applicant, in so far as they are sought on an indemnity basis, are calculated on the following basis:-
a)The applicant’s indemnity costs application is calculated on the basis of the costs and disbursements incurred by the applicant pursuant to the Costs Agreement entered into between the applicant and Barbayannis Lawyers dated 15 August 2013;[2]
b)The applicant seeks that indemnity costs be calculated from 14 March 2014, being the date of his Calderbank Offer to the respondent seeking a payment of $75,000 in full and final settlement of the proceedings.[3] This is in addition to the monies paid to the applicant pursuant to the order of 12 November 2014.
c)The sum of $31,125.41 comprises the following:-
i) costs incurred by the applicant between 14 March 2014 and 23 June 2014 in the sum of $25,218.66 as evidenced by the Tax Invoices rendered by Barbayannis Lawyers to the applicant dated 14 February 2014, 14 April 2014 and 6 May 2014;[4]
ii) costs incurred by the applicant between 6 May 2014 and 8 July 2013 in the sum of $2,906.75 as evidenced by the Tax Invoice rendered by Barbayannis Lawyers to the applicant dated 24 June 2014;[5]
iii) counsel’s fees for the preparation and drafting of these written submissions in the sum of $3,000.00 calculated at 10 hours work at Counsel’s hourly fee of $300.00 per hour (including GST).
d)The total costs billed to the applicant to date in these proceedings pursuant to the costs agreement between the applicant and Barbayannis Lawyers are $67,551.55. The applicant has paid this in full.
[2] Applicant’s Affidavit filed 15 July 2014, annexure “B”.
[3] Applicant’s Affidavit filed 15 July 2014, paragraph 11 and annexure “F”.
[4] Applicant’s Affidavit filed 15 July 2014, annexure “I”.
[5] Applicant’s Affidavit filed 15 July 2014, annexure “J”.
On reading of that application it appears that the applicant seeks an indemnity costs order of $31,125.41 being the costs from 14 March 2014 or in the alternative costs of the proceedings assessed on a party/party basis. Presumably this includes the costs of the costs application.
The respondent filed her submissions[6] in which she said that there ought not to be any costs order. In the alternative, she said that if there was to be a costs order it should not be on an indemnity basis.
[6] The Respondent’s submissions 25 September 2014.
The applicant relied upon the following documents:-
1.Orders made by this Court that the respondent pays to him $75,000 within sixty (60) days from the 23 June 2014;
2.The Reasons published 23 June 2014;
3.Application in a case filed 15 July 2014;
4.Affidavit of applicant filed 15 July 2014; and
5.Applicant’s costs submissions filed 29 August 2014.
The respondent is now acting for herself and relied upon the following:-
1.Response to an application in a case filed 17 August 2014 simply seeking dismissal of the applicant’s application;
2.Affidavit of respondent filed 7 August 2014 and
3.Written submissions filed 25 September 2014.
BACKGROUND
In the Reasons published 23 June 2014 (‘reasons’) I noted the following background:-
10.The applicant is aged 49. He is [employed in a sales position] and currently earns about $1,300 per week in this employment. He is in good health save for his claim of depression. This health difficulty does not adversely impact upon his earning capacity.
11.The applicant’s property consists of his personal effects, the sum of $28,000 held in trust (being the balance of the $30,000 paid to him pursuant to the November 2013 order) and his superannuation entitlements of about $128,500.[7]
[7] The applicant relied upon his financial statement filed 4 April 2014 and was not challenged in relation to the material in that financial statement.
12.The respondent is aged 43. She has two adult children who live with her. In her recent financial statement she describes herself as a self-employed counsellor who earns about $1,000 per week. She owns property at B Street, Town C (which is subject to a mortgage) a Japanese motor vehicle, a Model D motor vehicle, household effects and superannuation.
13.The parties met in June 2009 and soon became friends through the context of their mutual enjoyment of golf. In June 2011 the applicant and respondent travelled to Country E with a group of other golfers. The parties had separate rooms and described their relationship, at that time, as platonic. The applicant spent three weeks in Country E and the respondent stayed for one week.
14.Each of the parties had been twice previously married. The applicant has no children of any of his previous relationships, nor were there children of his relationship with the respondent.
15.The respondent’s second husband was Mr F who gave evidence for the respondent in these proceedings. That marriage terminated some years before the applicant and respondent met.
16.The respondent earns her income from dealing with people who have lost their driver’s licences through drink driving and need to attend courses to have their licences restored at the end of the suspension or disqualification period. The respondent’s business is called Business G and her business is accredited to provide such services in the state of Victoria.
17.In September 2011 the applicant’s Victorian driver’s licence was suspended from 25 October 2011 until 25 April 2012. This was as a consequence of a loss of demerit points and not as a consequence of drink driving. In September 2011 the applicant travelled to New South Wales and obtained a New South Wales drivers licence and purported to use this licence for the period of time his Victorian licence was suspended. I have made findings in relation to this issue elsewhere in the reasons.
18.The respondent asserted that after the applicant’s Victorian driver’s licence was suspended she was contracted by him to be his driver.
19.The respondent and the applicant travelled to Country E in about October 2011. The respondent claims that during the trip they entered into an oral agreement that she would drive the applicant or be available to drive him for the six month suspension period. She says that in consideration of her driving or being available to drive the applicant he would pay her $500 per day making a total of $91,000. The respondent produced a letter which she claims is evidence of the agreement.
20.The applicant denied the existence of that agreement and that he created or in any way participated in the creation of the confirmatory letter. He claims that he drove himself over that period and that the respondent only drove him about four times on an altruistic basis. The respondent deposes that she regularly drove the applicant and ceased operating her business to do so.
21.In February 2012 the applicant came to the notice of Victoria police when driving a car or van in Victoria whilst his licence was suspended. Later that year he faced court and entered a plea of guilty to driving while he was suspended. And he was fined about $500.
22.The applicant asserted that as at the beginning of 2012 he was living in his home at Suburb I, which he shared with a friend and the friend’s daughter. The friend was paying him about $150 board per week. The applicant said that from February 2012 he spent most of his time at the respondent’s home. The respondent denies that assertion.
23.In April 2012 the applicant’s Victorian driver’s licence was restored to him.
24.In August 2012 the applicant’s marriage to his second wife was dissolved and the respondent was made aware of that divorce. There is an issue as to how she became aware of that circumstance.
25.In August 2012 the applicant sold his home at Suburb I and received net proceeds of about $144,500. Of that sum the applicant said he transferred $142,000 to the respondent’s home loan. This was done in four transactions, one of $100,000 one of $20,000 another of $20,000 and one of $2,000.
26.The applicant said that this payment was to help reduce the respondent’s mortgage to a much lower amount.
27.The respondent said that it was the $91,000 payable to her for the driving services she rendered to the applicant. She said the balance was to be held to enable the applicant to access those funds for a putative investment in Country E.
28.It is not in issue that the parties travelled to Tasmania in October 2012 and spent that time together. The respondent says that the applicant moved into the home at Town C in early November 2012 and remained there until about 2 June 2013. The respondent says there were two brief periods of separation over that time. The respondent does not admit that this was a de facto relationship over that seven month period. For the reasons set out later, I have determined that the parties were in a de facto relationship for at least that period of time.
29.In June 2013 the parties travelled to Country E as a couple to endeavour to work out their relationship.
30.The applicant asserts that the parties had an ongoing sexual relationship from early July 2011 which continued until July 2013. The respondent claims that the parties were unable to engage in a physical sexual relationship.
31.In June 2013 the respondent paid $20,000 to the applicant and in October 2013 these proceedings were commenced by him.
The $75,000 ordered to be paid by the respondent to the applicant was in addition to the amount of $20,000 paid in June 2013.
I made significant criticisms of the quality of the evidence of the respondent in the reasons.
I determined that the parties lived together in a de facto relationship from about February 2012 until June 2013.[8]
[8] Paragraph 113 of the reasons.
One of the issues for me to determine in those proceedings was as to whether there was a commercial agreement between the parties for the provision of driving services to the applicant between October 2011 and April 2012. I determined that there was no such agreement between the parties.[9]
[9] Paragraph 164 of the reasons.
In the reasons I identified the property and financial resources of the parties. They were:-[10]
[10] Paragraph 177 of the reasons.
B Street, Town C – owned by respondent – agreed value.
$410,000
Respondent’s Japanese motor vehicle – agreed value
$25,000
Respondent’s Model D motor vehicle – agreed value.
$10,000
Respondent’s cash at bank and household contents – agreed value
$7,000
Applicant’s cash at bank – agreed value.
$28,000
Total
$480,000
Liabilities
Respondent’s mortgage liability on Town C property – agreed value
$123,000
Total net assets
$357,000
Superannuation
Applicant’s superannuation – agreed value
$128,515
Respondent’s superannuation – agreed value
$19,827
Total superannuation
$148,342
The issues to be determined by me were set out in paragraphs 6 to 9 in the reasons. In respect of those issues I determined:-
(a)That there was a de facto relationship between the parties.
(b)There was not a commercial agreement between the parties.
(c)There was an issue as to whether a property order ought to be made given the relationship was less than two years. I determined that in accordance with the submissions of the applicant.
(d)I then exercised jurisdiction according to legal principals.
THE LAW
There are two areas in which I need to address the law. The first in relation to whether a costs order ought to be made at all. The second in relation to whether it ought to be determined on an indemnity costs basis.
The power to make costs orders are set out in s 117 of the Family Law Act 1975 (Cth) (‘the Act’) which provides:-
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(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.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(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;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.
There is no threshold in the determination; however the subsection requires that I identify the circumstances which enliven the power under ss 117(2). In this case those factors equate to the matters to which I have referred under 117(2A) of the Act, and I am satisfied that there are circumstance which may give rise to a costs order.
The next step is to consider the matters set out in s 117(2A). In Brown v Brown (1998) FLC 92-822 Kay J said when determining whether a costs order ought to be made:-
9. Mr Sweeney sought an order for costs of ''the pre-trial and the proceedings since the pre- trial''. That appears to be a reference to an earlier mention before the matter came on before Mushin J as well as any costs that had been incurred since that time. His Honour invited some submissions about the matters and then his Honour said as follows:
`` Yes. There is no question that costs will be paid for the reason that this matter should have been raised on the wife's side a long time ago. The fact that it has not, has occasioned an adjournment which could have been avoided. The whole thing could have been done administratively by way of inquiry through the List Registrar to me and the matter could have been determined straight away. I do not know how you quantify your costs Mr Sweeney.''
There is nowhere in s 117(2A) that says one factor is providing any hierarchy in relation to the factors. One factor may be enough. As such the Court has a wide discretion.
I considered the difference between the various types of unquantified costs orders available under the Act. There are various types of costs orders, but they generally fall into three categories:-[11]
a)Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);
b)Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair and reasonable; and
c)Indemnity costs[12] - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable, that is the reversal of the onus of proof.
[11] Rule 19.18(1)(b).
[12] See also Rule 19.08(3).
Costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred. They are an indemnity or partial indemnity, see Cachia v Hanes (1994) 179 CLR 403, where the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:-[13]
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.
[13] At pages 414 and 415.
In determining the relative submissions under s 112A I have considered the relevant factors.
In terms of s 117(2A):-
Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings;
The amount of costs each party has expended in these proceedings is a matter of grave concern. The amount of property sought was some $90,000 and yet each party deposes or asserts that they have expended considerable sums given the amount of the claim.
The applicant contends that he has paid legal expenses of some $67,551.55 and the respondent submits that she incurred legal costs of $83,441 If these amounts are correct, and that evidence was not disputed, the parties spent about $151,000 over a $90,000 dispute.
Proportionality flew out the window.
There were no submissions as to why these proceedings were commenced in the Family Court and not the Federal Circuit Court. However, even in this Court the matter was processed quickly with the proceedings commenced in October 2013 and heard over three days in April 2014.
The applicant has assets, including superannuation, totalling $231,515. The respondent has retained assets of some $273,827.
During the hearing the respondent said she had an income of $1,000 per week but now says she has an income of between $500 to $800 per week.
This is inconsistent with what she asserted to Aussie Home Loans in her application for funding.[14] For the purpose of the costs determination I have assessed her income at $1,000 per week.
[14] Affidavit of respondent Exhibit NS1.
The respondent asserts that she has the responsibility to care for her son Mr CC, an adult child. Quite properly the applicant took me to the reasons[15] in relation to the lack of objective evidence in respect of that adult child. I accept the submissions of the applicant that I should reject that submission.
[15] Paragraph 201
The respondent asserts that she has personal loans of $35,000. One of those loans was for $15,000 allegedly contracted in February 2009. It was not a liability included in the asset pool and I give it no weight in relation to the costs aspect.
The second personal loan was an amount of $25,000 lent to the respondent by Mr F. It is not clear whether this liability is to the respondent’s former husband or a member of his family.
For the purpose of this cost determination I have had regard to that interest free loan.
Section 117(2A)(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
Neither party was in receipt of legal aid.
Section 117 (2A)(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;
In terms of this aspect counsel for the applicant made the following submissions:-[16]
[16] The applicants written submissions filed 29 August 2014.
12.The applicant contends that His Honour made a number of findings with respect to the unreliability of the respondent’s evidence and in his judgment, referred to the respondent’s evidence being ‘impeached’ with respect to a number of fundamental matters of disputed fact as between the parties. The two key elements of the dispute between the parties as at trial where:
a.Whether or not there was a commercial agreement between the parties for the applicant to pay the respondent $91,000 to provide driving services for him between October 2011 and April 2012; and
b.Whether the relationship of the parties constituted a de facto relationship within the meaning defined by s4AA of the Act.
13.For the purpose of determining these two questions the court was required to make findings on a number of disputed facts and the applicant asserts that the Court’s findings suggest that the respondent was dishonest in her evidence. The applicant asserts that these matters support the applicant’s application for an order as to costs against the respondent and the applicant notes as follows:
a.His Honour described that the respondent’s evidence as to why she held hands and cuddled the applicant in [Country E] as having a “sense of recent invention”;[17]
b.The respondent’s evidence that her relationship with her previous partner, Trent, ended in December 2011, was not accepted by the court;[18]
c.His Honour described the respondent’s evidence that she was a full time driver for the applicant from October 2011 to April 2012 as “unconvincing and inconsistent”;[19]
d.His Honour stated in his judgment that “The respondent was cross-examined as to the reason the additional sum of about $51,000 was paid into her account. Her explanation was unsatisfactory in terms of her holding those funds for almost a year. Similarly her explanation as to the calculation of the $91,000 was unsatisfactory and had an air of artifice.”;[20]
e.His Honour held that the respondent’s evidence as to the alleged declaration of income in her taxation return as asserted by her was not accurate and that the subsequent “lodgement of the amended tax return which occurred after these proceedings were commenced was more for strategic tactical reasons than to reflect her real income.”;[21]
f.The respondent’s evidence that she ceased running her business to drive the applicant full time was rejected. His Honour held that “I am satisfied that over that period she is likely to have taken on 35 new clients notwithstanding her evidence to the contrary”;[22]
g.With respect to the ‘letter’ which the respondent asserted was evidence of a commercial agreement, His Honour stated in his judgment as follows:
“I accept and adopt the submission made by counsel for the applicant that there had been some interference with the letter and given the nature of who had access to the document, I am satisfied that the only person able to interfere with it, was the respondent or someone on her behalf …
I accept the evidence of the applicant that it was not a document created by him. In the circumstances the only inference available to me is that the document was created by the respondent. That finding largely impeached the veracity of the evidence of the respondent.”[23]
h.Ultimately, His Honour held that the evidence of the respondent was unreliable.[24]
[17] Reasons paragraph 66.
[18] The Reasons, paragraph 67.
[19] The Reasons, paragraph 68.
[20] The Reasons, paragraph 73.
[21] The Reasons, paragraph 76.
[22] The Reasons, paragraph 79.
[23] The Reasons, paragraph 82 and 83.
[24] The Reasons, paragraph 86.
In response to these submissions the respondent acknowledged the findings and the conclusions then went on to engage in arguments in respect of those findings.
I accept the submissions made by the applicant in that respect.
Section 117(2A)(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
There were no submissions made in relation to this aspect of s117(2A) of the Act.
Section 117(2A)(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
I note the submissions made by the applicant in relation to this aspect. He was successful in many aspects of the proceedings including the alleged commercial agreement between the parties, whether this was a relationship to which the Act applied and that there ought to be a property adjustment.
The applicant sought payment of $90,000 but received an adjustment of $75,000. He was not wholly successful however I have had regard to this aspect in relation to s 117(2A)(g).
Section 117(2A)(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
In this regard counsel for the applicant referred to the offer of $75,000 made by way of letter dated 14 March 2014.
The offer was contained in the letter of 14 March 2014[25]. The offer was clear, unambiguous and in an endeavour to sensibly resolve the proceedings.
[25] Annexure F to costs affidavit of applicant.
That offer was rejected on 18 March 2014.
In her submissions about this offer, the respondent dissembles as to the nature of it. She seems to blame her then legal advisors. That is a matter between the respondent and those advisors. I have given significant weight to that offer and the rejection of it in determining these costs.
Section 117(2A) (g) such other matters as the court considers relevant.
As I indicated the applicant sought $90,000 but received $75,000. He was not wholly successful, however, I have had regard to the outcome, vis a vis his case as against that of the respondent.
CONCLUSION AS TO COSTS
I am conscious of the imperative that costs orders ought not generally be made in proceedings under the Family Law Act.
In this case, however, given the circumstances, the submissions, the evidence, the discussion and matters set out earlier, and exercising the broad discretion I have regarding costs, I determine that there ought to be a costs order.
Indemnity costs
The principals when considering costs being assessed and determined on an indemnity basis and as summarised in Muldoon v Carylye (2012) FLC 93-513 where the Full Court said:-
115.It is beyond doubt that in order to justify an award of indemnity costs, it must be demonstrated that there are exceptional circumstances, such that the usual order for party-party costs should be departed from (Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; Kohan and Kohan (1993) FLC 92-340; Munday v Bowman (1997) FLC 92-784; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; Limousin & Limousin(Costs) (2007) 38 Fam LR 478; Fennessy &Gregorian (2009) FLC 93-399; D & D (Costs) (No 2) (2010) FLC 93-435, Stephens v Stephensand Anor (2010) 44 Fam LR 117). As was said by the Full Court in Stephens (at [67]):
An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages …
116.In support of the application for indemnity costs, counsel pointed only to the fact that it was always apparent there was no merit in the appeal. This is in our view not an exceptional circumstance as would justify an order for indemnity costs.
The Full Court in Prantage v Prantage [2013] FLC 93-544 confirmed that there needed to be exceptional circumstances to justify an order for indemnity costs.
I have before me the terms of the costs agreement and the limitation sought by the applicant as to costs, vis $31,125.41.
I accept that it was imprudent, at best, for the respondent to reject the offer of settlement. However given the amount involved, that these proceedings were commenced in the Family Court and having regard to the warning made clear in Prantage and Prantage (supra) I am not satisfied that this is a matter to which an indemnity costs order should, in all the circumstances, be made.
Limiting the costs not to exceed $31,125.41
Given that the primary position of the applicant was that the respondent should pay his indemnity costs in the sum of $31,125.41 and the alternative being party/party costs, it would be obtuse to adopt the alternative and allow it to be greater than that sum.
Accordingly, I will be making an order restricting the costs to that amount or less.
I certify that the preceding fifty six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 19 November 2014.
Associate:
Date: 19 November 2014
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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