Starkey v Starkey

[2009] FamCA 54

FAMILY COURT OF AUSTRALIA

STARKEY & STARKEY (COSTS) [2009] FamCA 54

FAMILY LAW – COSTS – PROPERTY – Costs Case Guardians – Injunctive Relief – Application wholly unsuccessful – Application where court has no jurisdiction – Indemnity costs – Costs order against case guardians personally

Family Law Act 1975 (Cth) ss 4(e), 79, 114(1)(a), 117(1), 117(2A),
Family Court Rules 2004 Rule 6.13

Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
JEL v DDF (No 2) (2001) FLC 93-083
Johnson v Johnson (No 2) (Costs) (2000) FLC 93-040
Kohan (1992) 16 FamLR 245
Latoudis v Casey (1990) 170 CLR 534
Munday v Bowman (1997) 22 FamLR 321
Penfold v Penfold (1980) FLC 90-800
Vodeniciotis v Vodeniciotis (1979) FLC 90-61

APPLICANT: Mr Starkey

CASE GUARDIANS FOR APPLICANT: Mr C and Mr T

RESPONDENT: Ms Starkey

FILE NUMBER: LEC 245 of 2007

DATE DELIVERED: 5 February 2009

PLACE DELIVERED: Brisbane

JUDGMENT OF: Murphy J

WRITTEN SUBMISSIONS RECEIVED:

By husband 23 December 2008

By wife in reply 27 January 2009
By wife in further reply 1 February 2009

REPRESENTATION

SOLICITORS FOR THE APPLICANT: Somerville Laundry Lomax

SOLICITORS FOR THE RESPONDENT: S & P Lawyers

Orders

1)The applicant husband, through his case guardians, pay the respondent’s costs of and incidental to the application in a case filed by the husband on 12 November 2008 and dismissed by order of the Court on 16 December 2008 to be agreed or assessed on a party and party basis.

2)The applicant husband pay the respondent’s costs of and incidental to the application for costs, to be agreed or assessed on a party and party basis.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: LEC 245 of 2007

MR STARKEY

Applicant

And

MR C AND MR T

Case Guardians for the Applicant

And

MS STARKEY

Respondent

REASONS FOR JUDGMENT
COSTS

1. On 16 December 2009 I dismissed an application in a case and paragraph two of the Further Amended Application filed on 12 November 2008 each of which were filed on behalf of the husband through his case guardians.

2. The claims were dismissed by me for want of jurisdiction.

3. This is the determination of an application for costs made on behalf of the respondents. That application seeks costs on an indemnity basis. An order is also sought that the case guardians pay such costs personally.

4. This matter has been subject to significant litigation already. I have delivered previous reasons for Judgment in respect of aspects of that litigation.

5. The substantive proceedings are in respect of an application by the husband through his case guardians for property settlement pursuant to s 79 of the Act. As I have commented in previous reasons for Judgment, a significant undercurrent in that dispute, which has at its heart a very lengthy marriage between the husband and the wife, is an internecine family dispute involving various members of the family, including adult children of the husband and wife.

6. In very broad terms, the substantive proceedings involve, centrally, a business previously run by the husband and other members of the family. An adult son of the parties Mr D Starkey claims that he is owed money by his parents. The Further Amended Application by the husband through his case guardians filed 12 November 2008 joined Mr D Starkey as a second respondent.

7. That same application, by paragraph 2, sought injunctive relief against him. It was said that the injunctive relief was an order for the personal protection of the husband pursuant to s 114(1)(a) of the Act. Part of the dispute between them concerns alleged behaviour at the nursing home where the husband is currently a patient.

8. The application filed by the husband through his case guardians sought interim injunctive relief on the same basis as that just described.

9. On 9 December 2008 the solicitors for the respondent wrote to the solicitors for the case guardians.  That letter indicated that at the hearing of the application the wife would “raise the issue of the jurisdiction of the court to make the orders you seek”. The letter went on to say that “accordingly, you are on notice that our client will be seeking costs in the event your application is unsuccessful. The costs application will be directed against the case managers”.

The Reasons for Judgment

1. In ex tempore reasons for judgment delivered by me on the last occasion I said:

   It seems to be clear that this Court does not have jurisdiction pursuant to s 114(1)(a) to entertain the application sought.

2. I considered that the subject matter of the injunction did not ‘arise out of the marital relationship and, patently, the proceedings were not between the parties to a marriage.”

3. In those circumstances I considered that the proceedings did not come within the definition of “matrimonial cause” contained in s 4(e) of the Act.

4. As I indicated in those earlier reasons for judgment when, during the course of argument, a preliminary view to the effect just expressed was given, Mr Cameron, who appeared as counsel for the case guardians, submitted that the Court had accrued jurisdiction so as to determine the application.

5. In respect of that aspect of the application, in response to the oral submissions made by Mr Cameron, I determined that:-

   20.In terms of the material currently before the Court, the only part of the central controversy of the parties involving Mr [D Strakey] is the question whether [an alleged debt from his parents to him] is potentially owing or not.”

6. I determined that the justiciable controversy at the heart of the substantive proceedings between the parties to the marriage here (the claim under s 79 of the Act) did not include, as a common sub-stratum of fact, the issue the subject of the injunction determined that those issues were entirely divorced from the substantive proceedings the subject of the matrimonial cause.

7. I determined:-

   24…any such claim in respect of any such cause of action which the husband through his case guardians might have as against Mr [D Starkey] are not ‘attached’ and are ‘clearly severable’ or ‘disparate’ from the justiciable controversy confronting this Court in the substantive proceedings between the husband and the wife.

   25.Even on the assumption that this Court would have accrued jurisdiction to hear what is, as yet, an unformulated cause of action in another jurisdiction, I ought not exercise such jurisdiction for the reasons I have given.”

Relevant Principles

1. Parties to proceedings in the Family Court generally speaking bear their own costs (s 117(1)).

2. However, the Court has a discretion to award costs and, in exercising that discretion, is required to take into account a number of specified matters (s 117(2A)).

3. In Penfold v Penfold (1980) FLC 90-800 the High Court held (Stephen, Mason, Aicken and Wilson JJ in a joint judgment, at 75,053-4) that:

   It is an accurate description of s 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the section is not paramount to s 117 (2).  Subsection (1) is expressed to be subject to ss (2), the former must yield whenever a Judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.  Beyond this there is nothing in the subject matter or in the inter-relationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.

   Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117 (2) in a “clear case”.

   Subsection (2) does not in our view as a matter of law require the Judge to specify the circumstances which justify the making of an order…  Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue.  The absence eof reasons or findings, does not, in itself, indicate that a Judge has erroneously exercised his discretion toward costs, though it will place an appellate court in the position of examining the circumstances of determining for itself whether the circumstances show that the discretion was erroneously exercised…

4. An order for indemnity costs is sought.  There is no dispute that this Court has power to make such an order (see eg Kohan (1992) 16 FamLR 245; Latoudis v Casey (1990) 170 CLR 534, each cited by Holden CJ in Munday v Bowman (1997) 22 FamLR 321).

5. It is frequently been said that “exceptional circumstances” are needed to justify an order for indemnity costs (see eg Holden CJ, above, at 323); or that “ a very great departure from the normal standard” is required (see Kohan at 254).

6. The decision of Shephard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 is frequently cited in support of the type of considerations which might exercise a court’s mind in making an order for indemnity costs.

7. That decision referred to the fact that Courts “ought not usually make an order for the payment of costs on some basis other than the party and party basis”. The court went on to cite examples of situations in which Courts had made such orders. None of the cases referred to involved proceedings under the Family Law Act.

8. Generally, the types of considerations referred to by Shepherd J in the Colgate-Palmolive case have been applied in proceedings in this jurisdiction (see Johnson v Johnson (No 2) (Costs) (2000) FLC 93-040 and JEL v DDF (No 2) (2001)] FLC 93-083).

9. Included among the examples given by Shepherd J in Colgate-Palmolive, however, is:

   where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success.  In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts. (citation omitted)

10. Of course, those principles speak of the exceptional nature of indemnity costs orders, in so far as they emerge from common law jurisdictions.  The principles  also need to be seen, as it seems to me, against the starting point applicable in this jurisdiction but not theirs – namely that, in this jurisdiction, each party bears their own costs.

The Current Circumstances and Submissions

1. No submissions are made in respect of the financial circumstances of each of the parties (s 117(2A)(a). By reference to the matters which a Court must have regard to in exercising the discretion as to whether to award costs (s 117(2A)), it is submitted that subparagraphs (c), (e) and (g) are relevant.

2. It is submitted that conduct is relevant because, having been alerted prior to the hearing in respect of the problem relating to jurisdiction, the Case Guardians nevertheless proceeded.

3. It is argued that the husband, through his case guardians, has been “wholly unsuccessful” in the proceedings.  By way of corollary they assert that the respondents have been wholly successful. 

4. In respect of subparagraph (g) of the relevant subsection they submit that relief was potentially available to the applicants elsewhere (for example in the Supreme Court of New South Wales).

5. It is submitted that similarities exist between this case and the decision in Vodeniciotis v Vodeniciotis (1979) FLC 90-61 and the Case Guardians ought to have been aware of that decision; another pointer, it is said, to the imprudence of proceedings with the application.

6. It seems to me that the position, in so far as a part and party costs order is concerned, can be summarised succinctly by saying that, having been put on notice of an assertion that the application had no jurisdictional foundation, subsequently proceeding, and having the application dismissed, the respondents ought not be put to the cost of the applicants’ pursuit of an application which was found to be misconceived.

7. It is true, as submitted on behalf of the case guardians, that, merely because they have been unsuccessful in the action, it does not automatically follow the respondent should have their costs.  So much is clear from the terms of the section itself.

8. It is also true, as submitted for the case guardians, that the complete lack of success of the application is but one of the factors relevant to the exercise of the discretion.

9. It is submitted that, in effect, the finding of justifying circumstances which are an essential preliminary to the making of a costs order (see Penfold v Penfold, above) has not been made out here.  It is said that the application was made against a background of inappropriate conduct towards the husband.

10. The written submissions go on to say:-

    Notwithstanding the decision in Vodeniciotis it is contended that it was arguable that there was jurisdiction to make interlocutory injunctions sought against [D Starkey]; s 114 (3) (the proceeding being other than proceedings to which ss 114 (1) applied).  At the relevant time there were proceedings pending at the time, which came within the definition ‘matrimonial cause’ in sub paragraph (ca) of the definition s 4 (1): Deputy Commissioner of Taxation v Kilman & Kilman (sic) (2002) FLC 93-113 at 89,132 (para 130).

11. The case guardians go on to argue that it is not correct to say the application was made in contravention of clearly established law (being a reference to Vodeniciotis (1979) FLC 90-617). In Vodeniciotis it is submitted, the son was not a party to the property proceedings as is the case here.

12. Finally, it is argued that the decision in Vodeniciotis was distinguishable from that here, and, thus, here it was arguable that there was jurisdiction, either under s 114(3) or the Court’s accrued jurisdiction.

13. In reply, it is argued on behalf of the respondents that the argument there made was not argued during the hearing.  Further, for the purpose of the powers of the Court under s 114(1) it is immaterial that Mr D Starkey is a party.

14. It seems to me that, in circumstances where I have found that the application made by the case guardians is without jurisdiction, and where they were put on notice of that fact by the respondents, proceeding with the application was done at peril of an order for costs being made in the proceedings.

15. In respect of the last point, the written submissions by the case guardians argue that the letter by the respondent’s solicitors does not amount to an offer to settle within the meaning of s 117 (2A).

16. I do not consider that the submissions made by the respondent seek to argue that it is.  Rather, the point is made that the applicants were on notice of a clear assertion that the application was made in circumstances where there is no jurisdiction to make it. 

17. That the Case Guardians were “on notice” of the very point ultimately determined against them by the Court is, that it seems to me, a highly relevant matter which I am entitled to take into account in the exercise of my discretion pursuant to s 117 (2A) (g).

18. It seems to me that the respondents have made out circumstances justifying the award of an order for costs as referred to by the High Court in Penfold.

19. I am persuaded that the respondent should have an order for costs in their favour.

Indemnity Costs

1. The submissions made on behalf of the case guardians as to whether the case for jurisdiction, including accrued jurisdiction could be made out, are in my view relevant to the issue of indemnity costs.

2. In that respect, though, notice given by the solicitors for the respondents (although given without further amplification) - is also a relevant matter.

3. Ultimately, however, I am not persuaded that the facts and circumstances of the present case constitute such a degree of departure from the norm so as to justify an award of indemnity costs.

4. I do not consider that the actions of the case guardians were malicious or vexatious.

5. Indeed, as is submitted on their behalf, their actions in bringing the proceedings, although ultimately held to be misconceived, can be seen to be a manifestation of their statutory duties and obligations to the husband.  Their obligations to him, by reason of orders made by the New South Wales Guardianship Tribunal, are broader than those owed to him as case guardians in these proceedings.

Personal Orders

1. The considerations just mentioned are also in my view directly relevant to the application that the case guardians ought pay the costs personally.

2. It is submitted on behalf of the respondents that:

   Under chapter 6.14 of the Family Law Rules a party may be ordered to pay the costs of the case guardian.  It must follow that the appointment of a case guardian does not preclude an order for costs against the guardians.  The power of the Court under rule 6.14 (b) order that the costs of the case guardians be meet from the income or property of the person for whom they are appointed is discretionary and the court retains the discretion to order that the husband’s estate/stake[??]in effect, not indemnify the case guardian.

3. I reiterate that I do not consider that the actions of the case guardians were motivated by any form of mala fides or any improper considerations. I consider the actions taken by them were taken sincerely in what they considered to be the best interests of the husband.

4. The case guardians, in written submissions on their behalf, concede that the Court can make a costs order against the case guardians personally (citing Rule 6.13 of the Family Court Rules 2004).

5. Ultimately, I am not persuaded that there are any factors present by which I should exercise my discretion awarding costs against the case guardians personally.

Costs of the wife and D Starkey

1. An additional submission was made on behalf of the case guardians that no cost should be ordered in favour of the wife:-

   Both respondents applied for costs.  However, the case guardians sought no orders against the wife, though she being a respondent in the substantive proceeding, was properly served and given notice of the intended interlocutory application.  The wife’s participation and her attendance at the interlocutory hearing was unnecessary.  Accordingly, the wife should not have her costs.”

2. In response to that submission it is submitted that:-

   In paragraph 15, it is asserted that the wife’s participation as a first respondent in the proceedings was ‘unnecessary’.  This is contradicted by the next paragraph of the submissions where it is seemingly acknowledged that the import of the orders proposed by the husband and his case guardians went to her access to, and contact with, the husband.  Natural justice gives the wife the right to participate in the proceedings.  Material was filed by the second respondent; a response to the application was filed.

3. The paragraph of the written submissions on behalf of the case guardians there referred to is as follows:-

   It is not right to say that both respondents filed material.  Whilst the wife did (that being a matter for her), [D Starkey] did not (or at least none that was served on the case guardians).  Even then the wife’s evidence really went to issues pertaining to her own access to and contact with the husband.  So much is apparent from the affidavits… similar remarks apply in respect of each of the other affidavits filed.  It is submitted that this is relevant in deciding whether a costs order should be made: ss 117 (2A) (g).  Such fact militates against the case guardian being ordered to pay either respondents costs.”

4. It seems to me that the wife, being a party to the substantive proceedings and integrally concerned with them, (by reason of the long dispute to which reference was made in passing at the commencement of those reasons and which has been alluded to in earlier reasons given by me) had a direct interest in the proceedings, including a direct interest in the application being dismissed.

1. She was a party; she was entitled to be heard; she was entitled to be represented.  I have been made aware of no material filed prior to the hearing of the application which suggested to the solicitors for the respondents that it was not necessary for the wife to either file material or participate in the proceedings.

2. I see no reason to distinguish between Mr D Starkey and the wife in ordering that the Case Guardians pay the respondents’ costs of the unsuccessful proceedings.

3. For the reasons previously given I order that:-

   1)The applicant husband, through his case guardians, pay the respondent’s costs of and incidental to the application in a case filed by the husband on 12 November 2008 and dismissed by order of the Court on 16 December 2008 to be agreed or assessed on a party and party basis.

   2)The applicant husband pay the respondent’s costs of and incidental to the application for costs, to be agreed or assessed on a party and party basis.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy.

Associate: 

Date:  5 February 2009