Stanton & Crawford (No 2)
[2023] FedCFamC1F 1055
•12 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Stanton & Crawford (No 2) [2023] FedCFamC1F 1055
File number: WOC 944 of 2017 Judgment of: REES J Date of judgment: 12 December 2023 Catchwords: FAMILY LAW – COSTS – Practice and procedure – Where the respondent discontinued an application seeking costs – Where the applicant seeks costs of the discontinued application on an indemnity basis – Where the application for costs is dismissed on the basis that there is a significant disparity between the applicant’s and respondent’s financial positions – Where the respondent’s solicitor is named as the second respondent – Where the applicant asserts unreasonable or improper conduct by the solicitor – Where the application for costs against the solicitor is dismissed Legislation: Family Law Act 1975 (Cth), s 117(2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021, Rules 10.03, 12.13(4), 12.15
Cases cited: Candsall & Candsall [2021] FamCAFC 162
Cassidy v Murray (1995) 124 FLR 267
Hawkins & Roe [2012] FamCAFC 77
NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2011] NSWLEC 98
Ridehalgh v Horsefield [1994] 3 All ER 848
White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) (1998) 156 ALR 169
Wrenstead & Eades [2016] FamCAFC 46
Division: Division 1 First Instance Number of paragraphs: 40 Date of last submission/s: 8 December 2023 In Chambers: 11 December 2023 Counsel for the Applicant: Mr Stapleton Solicitor for the Applicant: Operational Legal Australia Solicitor for the First Respondent: Access Law Group Solicitor for the Second Respondent: Mullane & Lindsay ORDERS
WOC 944 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR CRAWFORD
Applicant
AND: MS STANTON
First Respondent
MS TIPPING
Second Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
12 DECEMBER 2023
THE COURT ORDERS:
1.That the application for costs filed 20 November 2023 as amended on 1 December 2023 is dismissed.
2.That the application for the appointment of a litigation guardian filed 8 December 2023 is dismissed.
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 a pseudonym Stanton & Crawford has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
Proceedings for parenting orders and property settlement between Mr Crawford ("the applicant") and Ms Stanton ("the respondent") were heard over six days in April and August 2023 and reasons for judgement were delivered and orders made on 17 August 2023.
On 25 September 2023, the respondent filed an application for costs (“the first costs application”). Her primary application was for indemnity costs of the entire proceedings since 2017. That application was filed out of time.
Directions were made for the filing of a response and affidavit by the applicant by 4pm on 13 October 2023 and for each party to file any written submissions by 4pm on 20 October 2023. The parties agreed to extend the timetable for filing the applicant's affidavit to 23 October 2023. The applicant did not file in compliance with my directions.
The respondent filed a Notice of Discontinuance at 4.01pm on 20 October 2023. By that time, the applicant had filed no material in response.
On 20 November 2023, the applicant filed an application seeking the following orders:
1.That the Respondent and the Respondent’s solicitor be jointly and severally liable for the Applicant’s costs on an indemnity basis arising from the Application in a Proceeding filed 20 September 2023 in the fixed sum of $16,879.50.
2.That the Respondent pay the Applicant’s costs of and incidental to this application as assessed or in accordance with the scale costs contained in schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
Rule 10.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 provides that an application for costs of a discontinued application must be made within 28 days of the service of the Notice of Discontinuance.
This application is filed out of time. No application is made to extend the time for filing and no explanation is given for the delay.
Directions were made for the respondent to file a response and any affidavit by 4pm on 8 December 2023 and for each party to file written submissions.
On 1 December 2023, the applicant filed an Amended Application in a Proceeding, naming the respondent’s previous solicitor as a respondent, seeking orders in the following terms:
1.That the First and Second Respondents to this Application in a Proceeding be jointly and severally liable for and pay within 28 days the Applicant’s (in this Application in a proceeding) costs arising from the discontinuance on 24 November 2023 of the First Respondent’s (to this Application) Application in a Proceeding filed 20 September 2023 in the fixed sum of $16,879.50, being on an indemnity basis.
2.Alternatively to Order 1 above, such other order for costs in favour of the Applicant (in this Application) that the Court determines is just within that meaning in s.117 of the Family Law Act 1975.
3.Further Order, that the First and Second Respondents (to this Application) be jointly and severally liable and pay within 28 days the Applicant’s (to this Application) costs of and incidental to this Application as assessed or in accordance with the scale costs contained in schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
On 8 December 2023, an application was filed for the appointment of a litigation guardian for the respondent.
Also on 8 December, the Second Respondent filed an affidavit sworn on 6 December 2023 and written submissions.
The applicant filed written submissions on 8 December 2023.
I do not propose to grant leave to file the application out of time as, for the reasons I will give, I would not make the orders sought by the applicant against the respondent. Consequently, I will also dismiss the application for the appointment of a litigation guardian for the respondent.
APPLICATION FOR COSTS AGAINST THE RESPONDENT
Costs applications are governed by the provisions of s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) which are set out below:
(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
(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.
There is a significant disparity in the financial positions of the parties. As a result of the orders made in the substantive proceedings, the applicant retained assets worth in excess of $3,000,000 from which he has paid the respondent $332,000. In addition, he retained his superannuation entitlements of more than $650,000.
There is also a disparity in their respective incomes. The respondent's income at the time of the hearing was $413 per week. In his Financial Statement relied upon at trial, the applicant deposed to income of $5,461 per week.
Neither party was in receipt of legal aid.
The respondent was wholly unsuccessful in that she withdrew her application.
I note that the applicant's affidavit, of some 25 pages, deals at length with the merits of the respondent's withdrawn costs application rather than with the application at hand.
The applicant has not complied with Rule 12.13(4) which provides:
(4)A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement or costs agreements in relation to those costs and, if so, the terms of the costs agreement or costs agreements.
In any event, the circumstances in which the respondent discontinued her application could not be held to be exceptional within the parameters of settled case law.
I am satisfied, however, that the disparity in the financial positions of the parties is sufficient reason to dismiss the application.
Before leaving the application for costs against the respondent, I point out that the decision in Hawkins & Roe [2012] FamCAFC 77, upon which the applicant relied, was overturned by a subsequent Full Court in Wrenstead & Eades [2016] FamCAFC 46.
APPLICATION FOR COSTS AGAINST RESPONDENT’S SOLICITOR
Rule 12.15 provides:
12.15 Costs order against lawyer
(1)The court may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs to be incurred by a party or another person, or to be thrown away, because of:
(a) a failure to comply with these Rules or an order; or
(b) a failure to comply with a pre‑action procedure; or
(c) improper or unreasonable conduct; or
(d) undue delay or default.
(2)A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
(a) to attend, or send another person to attend, the hearing; or
(b) to file, lodge or deliver a document as required; or
(c) to prepare any proper evidence or information; or
(d) to do any other act necessary for the hearing to proceed.
(3)An order under subrule (1) may be made on the initiative of the court, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) An order under subrule (1) may include an order that the lawyer:
(a) not charge the lawyer’s client for work specified in the order; or
(b) repay money that the client has already paid towards those costs; or
(c)repay to the client any costs that the client has been ordered to pay to another party or another person; or
(d) pay the costs of a party; or
(e) repay another person’s costs found to be incurred or wasted.
The applicant relies on the asserted unreasonable or improper conduct of the solicitor.
The solicitor properly referred the respondent to another legal practitioner when this application was served, recognising the conflict of interest that immediately arose.
However, the solicitor is hindered in the defence of this application by the fact that the legal professional privilege that protects communications between the solicitor and the respondent for the purpose of legal advice, is the privilege of the client and cannot be waived by the solicitor. The privilege has not been waived by the client. Thus the solicitor is restrained from adducing evidence about the advice which was given when the original costs application was brought and then withdrawn or of the instructions given by the client.
I adopt, with respect, the statements of Pain J in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2011] NSWLEC 98 where his Honour said:
[131] Where the Court is precluded by legal professional privilege from knowing the full circumstances, the lawyer must have the full benefit of any doubt in order to avoid unfairness: Medcalf v Mardell at [23] (Lord Bingham, with whom Lord Hoffmann and Lord Rodger agreed), at [42] - [44] (Lord Steyn) and at [61] - [62] (Lord Hobhouse); Lemoto at [92(f)]; and Re The Black Stump Enterprises Pty Ltd at [10] - [12] . Penal orders are being sought. The Court must proceed with extreme care and must not make a wasted costs order unless it is satisfied that:
(a)there is nothing the lawyer could say, if unconstrained, to resist the order; and
(b)there is nothing the lawyer could say, if unconstrained, on the question of discretion: Medcalf v Mardell at [23] (Lord Bingham) and at [63] (Lord Hobhouse) and Lemoto at [92(f)].
[132] For this reason, where legal professional privilege intervenes, the scope for making a wasted costs order is "very limited": Medcalf v Mardell at [24] (Lord Bingham) and Treadwell v Hickey [2010] NSWSC 1119 at [32] (Barrett J) . In this case, Mr Taylor and T&W are prejudiced by their inability to adduce evidence of advice given to the Hutchins and communications with counsel. In those circumstances, it is an error of principle to condemn them unheard: Medcalf v Mardell at [2 5] (Lord Bingham).
In Cassidy v Murray (1995) 124 FLR 267, the Full Court, in approving the decision of Sir Thomas Bingham MR in Ridehalgh v Horsefield [1994] 3 All ER 848 set out the principles relevant to an award of costs against a solicitor at 82, 364-82, 365, namely:
Whereas some of the cases say that there must be "a serious dereliction of duty" by the solicitor before a costs order can be made against that solicitor, in our view the matters identified by the Master of the Rolls in Ridehalgh v Horsefield accurately reflect the law, which, in its application to this jurisdiction, can be set out as follows:
1.Pursuant to s. 117(2) Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.
2.The [C]ourt should not make such an order without giving the person to be affected by the order an opportunity to be heard.
3.The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.
4.The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor's client.
5.A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.
6.The jurisdiction is compensatory.
Referring to that decision, Strickland J, sitting as the Full Court in Candsall & Candsall [2021] FamCAFC 162:
Subsequent authorities confirm that a solicitor commencing and maintaining proceedings on behalf of a client in the absence of consideration as to the legal merits may lead to an award of costs against that solicitor.
(Emphasis added).
Further his Honour cited with approval the statement in White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) (1998) 156 ALR 169 at 236:
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably. It is not clear what is encompassed by 'unreasonably' initiating or continuing proceedings if they have no or substantially no chance of success. It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with a disregard of any proper consideration of the prospects of success.
(Emphasis added)
On behalf of the applicant, it is submitted that the Court could infer that the solicitor either:
(a)Told [the client] not to make the application and received resistance, and supported the Wife in making the application but against her own advice, when she should not; or
(b)Failed to give any, or any property [sic] consideration to the prospects of success of the application and supported the Wife in making it and fostered in the Wife a belief that it had merit, when it did not.
I do not accept either of those propositions. Whether the first costs application had merit or demonstrated an arguable case has not been determined and cannot be determined on the material before me.
The proceedings were commenced in 2017 in the Federal Circuit Court as it then was named.
There was cross-examination of both parties at the hearing, by counsel for the respondent of the applicant primarily about alleged misfeasance in relation to the property proceedings and by counsel for the applicant of the respondent about her alleged misfeasance in relation to the parenting proceedings.
There was justifiable criticism of both parties about the way he or she conducted the proceedings.
In the affidavit filed by the solicitor, reference is made to five separate occasions on which the court reserved the respondent’s costs. Eighteen paragraphs of the respondent’s trial affidavit dealt with her assertions that the applicant should pay her costs by reference to things he was alleged to have done, or left undone.
Further, the solicitor is constrained from explaining in evidence the basis on which the view may have reasonably been formed that the case was arguable and, in those circumstances, the solicitor must be given the benefit of the doubt.
The application for costs against the solicitor will be dismissed.
COSTS OF THIS APPLICATION
The applicant has been wholly unsuccessful and I do not propose to make any order in relation to the costs of this application.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 12 December 2023
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