Stark and Sherman and Anor (SSAT Appeal)

[2013] FMCAfam 40

FEDERAL MAGISTRATES COURT OF AUSTRALIA

STARK & SHERMAN & ANOR (SSAT APPEAL) [2013] FMCAfam 40

CHILD SUPPORT – SSAT Appeal – costs application – application for costs by successful appellant against second respondent – where first respondent did not oppose the Appeal or participate in the proceedings – order for costs against the second respondent.

Child Support (Registration and Collection) Act 1988, s.110D
Family Law Act 1975, s.117
Federal Magistrates Court Rules 2001, Sch.1, Part 2, Division 2.

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 119
Dias Aluminium Products Pty Ltd v Aluminium Pty Ltd (No 2) [2005] FCA 1400
Polec & Staker & Anor [2012] FMCAfam 19
Stark & Sherman & Anor [2012] FMCAfam 1184

Applicant: MR STARK

First Respondent: MS SHERMAN

Second Respondent: CHILD SUPPORT REGISTRAR

File Number: SYC 2043 of 2012

Judgment of: Scarlett FM

Hearing date: 11 December 2012

Date of Last Submission: 11 December 2012

Delivered at: Sydney

Delivered on: 30 January 2013

REPRESENTATION

Counsel for the Applicant: Mr Dura

Solicitors for the Applicant: Clinch Long Letherbarrow

Solicitors for the First Respondent: No appearance

Solicitors for the Second Respondent: Program Litigation Review Branch

ORDERS

1. No order for costs as between the Appellant and the First Respondent.

2. The Second Respondent is to pay the Appellant’s costs fixed in the sum of $14,663.49.

IT IS NOTED that publication of this judgment under the pseudonym Stark & Sherman & Anor (SSAT Appeal) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 2043 of 2012

MR STARK

Applicant

And

MS SHERMAN

First Respondent

CHILD SUPPORT REGISTRAR

Second Respondent

REASONS FOR JUDGMENT

Application

1. This is an application for costs by the Appellant against the second Respondent, the Child Support Registrar, arising from the decision of this Court on 13 November 2012, allowing the Appeal against the decision of the Social Security Appeals Tribunal made on 28 February and despatched on 9 March 2012[1].

   [1] Stark & Sherman & Anor [2012] FMCAfam 1184

2. The Second Respondent, Ms Sherman, played no part in the Appeal.

3. The Appellant claims that he has incurred costs of $43,403.37 in appealing the decision of the Social Security Appeals Tribunal. Of that amount, he claims that $34,722.70 is attributable to the proceedings against the Child Support Registrar, the Second Respondent, and $8,680.67 is attributable against Ms Sherman, the First Respondent.

4. The Child Support Registrar opposes the application for costs. The Child Support Registrar submits that:

   a)No order for costs should be made;

   b)If a costs order is to be made, costs should be awarded according to the scale set out in Schedule 1, Part 2, Division 2 of the Rules;

   c)If a costs order is to be made, the court should consider that the Appellant’s appeal was not wholly successful, as two of the Appellant’s three grounds of Appeal were not made out.

5. It is accepted by the parties that the law to be applied is section 117 of the Family Law Act. Subsection (1) sets out the general rule that each party to proceedings should pay their own costs. However, if the Court is of opinion that there are circumstances that justify it in doing so, the Court may make such order for costs as the Court considers just (see s.117(2)).

6. In considering what order (if any) should be made, the Court must have regard to the matters set out in subsection 117(2A).

Submissions

1. The Appellant submits that the costs being sought are not in the way of indemnity costs, but party and party costs.

2. Mr Dura of counsel, who appeared for the Appellant, submitted that the Appellant’s financial circumstances can be taken from his Financial Statement filed on 10 April 2012. This shows that his weekly income amounts to $4,230.00 but his expenditure amounts to $10,804.00 per week. This evidence is unchallenged.

3. As to the conduct of the parties to the proceedings, Mr Dura refers to the First Respondent’s failure to acknowledge or participate in the proceedings. Otherwise, he submits, no complaint can be made about the conduct of the Appellant or the Second Respondent.

4. It was submitted that the Respondents were wholly unsuccessful in defending the appeal. The First Respondent mounted no opposition and refused to participate in the proceedings. However, the Second Respondent opposed the relief sought by the Appellant and sought orders that the Appeal should be dismissed with no order for costs.

5. Mr Dura submitted that the Appeal was successful because the Tribunal relied on wholly irrelevant material in making its findings. As he submits:

   The Second Respondent could have conceded the appeal. They did not. They actively opposed it. If the Second Respondent had conceded the appeal the decision would have been remitted for hearing by the Tribunal and the costs of the appeal in this Court would have been avoided.

   In circumstances where the First Respondent was not participating in the Appeal proceedings, the approach adopted by the Second Respondent determined whether or not the Appellant was to be put to expense in pursuing the Appeal.[2]

   [2] Cost Submissions on behalf of Appellant, page 3

6. Mr Dura referred the Court to the decision of Hughes FM in Polec & Staker & Anor[3], where her Honour held at [22]:

   The Child Support Registrar could have conceded the appeal. In that case the decision would have been remitted to the Tribunal for a re-hearing and the costs of the appeal in this Court would have been saved.

   [3] [2012] FMCAfam 19

7. The Child Support Registrar submitted that a costs order is not warranted because:

   a)The Appeal was properly responded to by the Department of Human Services on behalf of the Registrar who is obliged to respond to appeals against SSAT decisions under s.110D of the Child Support (Registration and Collection) Act 1988.

   b)The Registrar properly conducted the proceedings and is the proper contradictor for challenges against decisions from a federal tribunal.

   c)The Appellant was successful in obtaining the order he sought, but he relied on three grounds of appeal only one of which succeeded;

   d)The Court should consider the decision of the Full Court of the Federal Court in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3)[4], where Black CJ, Emmett and Middleton JJ held at 11:

   It is appropriate that, where one party, although successful overall, raised and pursued unsuccessful grounds or abandoned grounds that the other party was expected to meet in preparation of and in the course of the hearing, and as consequence costs have been thrown away or incurred, such costs should be paid by the successful party.

   [4] [2007] FCAFC 119

8. It was further submitted that the Court should consider apportioning the costs in the Schedule against the successful grounds. The Child Support Registrar referred the Court to Dias Aluminium Products Pty Ltd v Aluminium Pty Ltd (No 2)[5], where Crennan J ordered the respondent to pay 40 per cent of the applicant’s costs of the claim and cross-claim to be taxed as one set of costs reflecting “the proportional success of the Applicant on its claims, without ignoring the Respondent’s proportional success in its defence and cross-claim”[6].

   [5] [2005] FCA 1400

   [6] [2005] FCA 1400 at 9

9. It was further submitted that, as costs are discretionary and ought not to be awarded with mathematical precision, and, further, that are costs are compensatory and not a punishment, if the Court were minded to award costs then costs should be awarded according to the Schedule in the Federal Magistrates Court Rules 2001.

Conclusions

1. Costs do not follow the event in dealing with appeals against the decision of the Social Security Appeals Tribunal. The Court is required to consider the matters in s.117 of the Family Law Act in deciding whether to award costs and, if so, in what amount.

2. The Court must consider the relevant factors set out in s.117(2A) of the Act.

3. It is unchallenged that the evidence of the Appellant’s financial circumstances can be found in his Financial Statement filed on 10 April 2012. In that document:

   a)the Appellant’s total average weekly income is shown as $4,230.00;

   b)his total personal expenditure is shown as 410,804.00;

   c)the total value of his property is shown as $846,928.00;

   d)the total gross value of his superannuation is shown as $50,000:00;

   e)the total of his liabilities is shown as $661,695:00; and

   f)he discloses no financial resources.

4. Mr Dura submitted that the Appellant’s expenditure exceeds his income, which it does, although not by as great a margin as his Financial Statement would suggest. The Appellant has arrived at a total weekly personal expenditure of $10,804.00, which is arrived at by adding the figures in items 19 to 32 in the Financial Statement. However, an examination of the figures shows that the sum of $407.00 per week lease payment on his Mitsubishi Pajero motor vehicle has been counted twice. It is shown in item 28, but it also appears in the schedule of weekly expenses which go to make up a total of $3,847.00 in item 32, characterised “total of all other expenditure”. As the evidence appears to be that the Appellant has only one motor vehicle, he can only claim the $407.00 lease payment once.

5. The Appellant’s total personal expenditure in item 33 of the Financial Statement should therefore read $10,397.00 rather than the claimed amount of $10,804.00.

6. There is no information about the First Respondent’s financial circumstances.

7. The Child Support Registrar is funded by the Australian taxpayer.

8. No party is legally aided.

9. The First Respondent did not participate in the proceedings at all. The Appellant and the Child Support Registrar conducted the proceedings in the way expected of them by the Court.

10. There was no failure by any party to comply with an earlier order of the Court.

11. The Appellant was successful in the proceedings. The First Respondent did not oppose the Appeal at all and took no part in the proceedings.

12. The Appellant claims that the Second Respondent was wholly unsuccessful, but the Second Respondent claims that only one of the Appellant’s three grounds of Appeal succeeded. That is so, but the Appellant only needed to succeed on one ground of Appeal for the Appeal to be successful. The Second Respondent was unsuccessful in seeking a dismissal of the Appeal.

13. There is no evidence of any written offer of settlement.

14. In my view, there is no basis in making an order for costs against the First Respondent.

15. I am of the view that an order should be made that the Second Respondent, the Child Support Registrar, should pay the Appellant’s costs of the Appeal. The Appeal could have been conceded. As in Polec & Staker & Anor[7], the Child Support Registrar’s hands were not tied by the First Respondent. The First Respondent never at any time opposed the Appeal.

    [7] supra

16. The Appellant seeks an amount of $34,722.70 against the Child Support Registrar. This amount is arrived at, according to the Appellant’s written submission, by fees billed or work in progress of $31,776.55, together with disbursements particularised as follows:

    soft disbursements[8] billed as at 27.11.2012             $1,797.60

    Hard disbursements billed/paid as at 27.11.2012

    (i) Transcript fees (x 3 days)  $1,012.22

    (ii)     David Dura – counsel’s fees                $8,622.00

    (ii)     combined investigations  $165.00

    [8] Whatever they are

    (iii)   conduct monies  $30.00

17. Disbursements, however “hard” or “soft” they may be, amount to $11626.82.

18. It is conceded that$8,680.67 is attributable against the First Respondent. It is also relevant that there was a separate Application against the First Respondent, filed on 12 July 2012, which sought:

    (a)     That the Deed dated 23 October 2002[9] be set aside; or

    [9] Which was the document that the Court found to be irrelevant in deciding the Appeal

    (b)    

    (i)     a declaration that the Deed dated 23 October 2002 does not bind the parties and had not been binding as and from the date of execution; or in the alternative

    (ii)     a declaration that the Deed dated 23 October 2002 does not bind the parties and had not been binding as and from May 2005.

19. This Application was never argued and on 11 December 2012 the Appellant was granted leave to discontinue the Application.

20. It is unsurprising that, on receipt of this submission, the Registrar’s lawyers formed the view that what was being sought was an order for costs on an indemnity basis, although Counsel for the Appellant told the Court at the beginning of the costs hearing that this was not the case.

21. The costs in this matter should be calculated on a party and party basis, having regard to the scale set out in Division 2 of Part 2 of Schedule 1 of the Rules, which specifically deals with the costs of an appeal of a decision of the SSAT. The scale provides that if the proceeding is concluded at a final hearing, the amount allowed for costs should be $6,240.00.

22. This does not take into account disbursements reasonable incurred, nor does it take into account the costs of a costs hearing, which in this case was conducted on the basis of written submissions ordered by the Court when the substantive decision was handed down on 13 November 2012.

23. I have had recourse to the scale for Applications for enforcement in relation to child support proceedings set out in Division 1 of Part 2 for guidance in respect of those matters.

24. Accordingly, I propose to allow the sum of $12,323.00 for costs, made up as follows:

    a)Lump sum plus 50% advocacy loading  $9360.00

    b)Costs Application lump sum plus daily hearing with 50% advocacy loading  $2963.00

25. In my view, the advocacy loading makes it inappropriate to add counsel’s fees as a separate disbursement.

26. I propose to allow $2340.49 for disbursements, made up of:

    a)The transcripts fees in full  $1,012.22

    b)Two thirds of the other disbursements  $1,328.27.

27. In my view, the proper figure for costs on a party and party basis is a total of $!4,663.49. I do not propose to allow any discount or apportionment as discussed in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd or Dias Aluminium Products Pty Ltd v Aluminium Pty Ltd (No 2)[10] as the difference between arguing one ground of appeal and three grounds in a well-focused and tightly-argued half day hearing as this was appears to me to be relatively minor. It should not be assumed that this will always be the case.

    [10] Both supra

28. The Second Respondent is to pay the Appellant’s costs in the sum of $14,663.49.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Date:  30 January 2013.