Stasiuk & Guild
[2021] FamCAFC 62
•6 May 2021
FAMILY COURT OF AUSTRALIA
Stasiuk & Guild [2021] FamCAFC 62
Appeal from: Guild & Stasiuk (No. 2) [2020] FamCA 564 Appeal number(s): SOA 69 of 2020 File number(s): MLC 13949 of 2018 Judgment of: STRICKLAND, RYAN & KENT JJ Date of judgment: 6 May 2021 Catchwords: FAMILY LAW – APPEAL – COSTS – Appeal against costs awarded on indemnity basis – Consideration of whether case was “exceptional” to warrant costs on indemnity basis – Application of principle in Kohan and Kohan (1993) FLC 92-340 – Doctrine of precedent – Appeal allowed and orders set aside – Re-exercise of discretion. Legislation: Family Law Act 1975 (Cth) s 117
Statute of Gloucester 1278, 6 Edw 1Cases cited: Browne v Green (2002) FLC 93-115; [2002] FamCA 791
Elmi & Munro (2019) FLC 93-912; [2019] FamCAFC 138
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Harris and Harris (1991) FLC 92-254; [1991] FamCA 124
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kapiris Bros (Vic) Pty Ltd v Zausa [2006] VSCA 15
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Mansfield and Ors & Mansfield and Anor (2019) FLC
93-920; [2019] FamCAFC 186Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC
93-664; [2015] FamCAFC 157Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105
Robinson and Higginbotham (1991) FLC 92-209; [1991] FamCA 5
Steele & Stanley [2009] FamCAFC 39
Division: Appeal Division Number of paragraphs: 25 Date of hearing: 16 February 2021 Place: Melbourne (by videolink) Solicitor for the Appellant: Berger Kordos Counsel for the Appellant: Mr Bartfeld QC Solicitor for the Respondent: Lander & Rogers Counsel for the Respondent: Dr Smith ORDERS
SOA 69 of 2020
MLC 13949 of 2018APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: Mr STASIUK
Appellant
AND: Ms GUILD
Respondent
ORDER MADE BY:
STRICKLAND, RYAN & KENT JJ
DATE OF ORDER:
6 MAY 2021
THE COURT ORDERS THAT:
1)The appeal be allowed.
2)Orders (1) and (2) dated 17 July 2020 be set aside.
3)In the event that the parties propose that the appeal is finalised by consent, direct that the proposed orders be filed by 24 May 2021.
4)In the event that the appeal is not finalised by consent, judgment will be given at 10.00 am on 25 May 2021.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stasiuk & Guild has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRICKLAND, RYAN & KENT JJ:
The appellant, Mr Stasiuk (“the husband”) and the respondent, Ms Guild (“the wife”) are in dispute in relation to financial matters consequent upon the breakdown of their marriage. Before the parties married, they entered into what they termed a “pre-nuptial agreement” (“the agreement”). Upon the parties’ separation, a dispute arose as to whether or not they were bound by the agreement. As the resolution of this issue was central to the Court’s power to grant the relief sought by the wife for property settlement, this and allied issues were listed for determination as a separate, preliminary question. On 14 May 2020, the primary judge ordered that the agreement be set aside and dismissed the husband’s application for it to be enforced.
As foreshadowed in the wife’s Initiating Application filed on 3 December 2018 (as amended on 14 February 2019), the wife claimed indemnity costs against the husband in relation to the separate hearing. In the alternative, the wife sought costs on a party/party basis. The husband resisted the application for costs. In accordance with orders dated 11 June 2020, the application was dealt with by written submissions. By orders dated 17 July 2020, the husband was ordered to pay the wife’s indemnity costs in an amount agreed by the parties and, failing agreement, as assessed.
The husband appeals from the order for indemnity costs. He concedes that an order for party/party costs could properly have been made against him. In the event that the appeal is allowed, the husband proposes that an order for party/party costs is made against him in relation to the proceedings in the Court below and those costs be fixed at $50,000. Although the wife seeks to uphold the orders, in the event that this Court determines an order for party/party costs should be made in lieu of the orders under appeal, she says the amount should be fixed at $67,000 (Letter of Lander & Rogers dated 18 February 2021 (Exhibit 1)).
THE GROUNDS OF APPEAL
Before considering the grounds of appeal in detail, it needs to be understood that this is an appeal against the exercise of discretion to be determined in accordance with the principles set out in House v The King (1936) 55 CLR 499 (“House”). A different view by an appellate court only on matters of weight by no means justifies a reversal of a decision of the primary judge (Gronow v Gronow (1979) 144 CLR 513 at 519).
In Harris and Harris (1991) FLC 92-254 this Court said at 78,711:
…Orders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full Court should interfere with a costs order.
Although this may state the proposition “at its highest” (Browne v Green (2002) FLC 93-115 at 89,162), this Court is generally reluctant to interfere in a decision as to costs (Robinson and Higginbotham (1991) FLC 92-209 (“Robinson”)). But this reluctance does not mean that this Court should never interfere with the exercise of a costs discretion: “if the result is plainly unjust or if the discretion was exercised on wrong principles then this Court must interfere” (Robinson at 78,417). Decisions such as Prantage & Prantage (2013) FLC 93-544 (“Prantage”) and Steele & Stanley [2009] FamCAFC 39 are examples of cases where this Court has intervened.
The husband presents two grounds of appeal (Grounds 2, 3, 5, 6 and 7 were abandoned) which, stated broadly, assert that the primary judge erred:
·by not identifying the legal basis upon which he made the order for indemnity costs (Ground 1); and
·by failing to apply Full Court authority in preference to his own decisions (Ground 4).
Central to both grounds of appeal is the unremarkable proposition that the approach to an application for indemnity costs made under the Family Law Act 1975 (Cth) (“the Act”) is well settled by the Full Court decision of Kohan and Kohan (1993) FLC 92-340 (“Kohan”). The Full Court concluded that the costs power under s 117 of the Act includes the power to make orders for costs on an indemnity basis. The Full Court said at 76,614:
[T]he purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges… [T]he Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.
Indemnity costs orders are still an exception in this and other jurisdictions[.]
(Citations omitted)
Notwithstanding that the wife’s application for costs relied on Kohan and, there being no submission for the husband that Kohan was wrongly decided or should no longer be applied, the primary judge said that “a school of thought exists” in cases such as Kohan “that an order for indemnity costs is exceptional” [37], that that statement is “of highly dubious utility” and cannot be maintained [42], and that the decision “is unsupportable” [43].
In seeking to resist the appeal, counsel for the wife contended that “notwithstanding the learned trial judge’s discourse with respect to ‘exceptional circumstances’… his Honour nevertheless followed Full Court authority” (wife’s Summary of Argument filed 8 February 2021, p.7). In other words, although the primary judge said Kohan was unsupportable, and perhaps without intending to do so, Kohan was nonetheless applied. The submission should be rejected.
KOHAN IS PRECEDENTIAL AUTHORITY
Given the grounds of appeal, it is necessary to say something about the doctrine of precedent and the discipline of judging. The doctrine of precedent requires that a lower court is bound by the decisions of a higher court in the hierarchy to which it belongs (Prantage at [92]). Adherence to the doctrine of precedent achieves predictability in the law and means that similar cases should be judged alike. It promotes public confidence in the rule of law and protects the public from idiosyncratic notions of justice. Absent judicial adherence to the doctrine of precedent (including its limitations which for present purposes are irrelevant), as Deane J commented in Mallet v Mallet (1984) 156 CLR 605 at 641:
…the law would, in truth, be but the "lawless science" of a "codeless myriad of precedent" and a "wilderness of single instances" of which Lord Tennyson wrote in his poem "Aylmer's Field".
Although Deane J spoke of the general counsel of experience of what is just in a property settlement application, the comments are no less apt to the mischief which unfolds when precedent is disregarded.
In circumstances which resonate with the judgment under appeal here, in Elmi & Munro (2019) FLC 93-912 (“Elmi”), this Court said:
21.The decision of the trial judge to attempt a critique of, rather than an application of, Rice and Asplund and the principles discussed in that seminal authority, as elaborated upon by subsequent decisions of the Full Court over the decades since it was decided, was an impermissible exercise of judicial authority. It appears that the notion that he had discovered historic error distracted the trial judge from analysing the proper application of long established principles to the relevant facts concerning the central question falling for determination.
22.The obligation on a judge of the Federal Circuit Court of Australia or the Family Court of Australia is to follow and apply decisions of the Full Court of the Family Court of Australia. It is not for trial judges to question or cavil with them. Stephen J explained this in Viro v The Queen (1978) 141 CLR 88 at 129 as follows:
The first duty of a court is to administer justice according to law. However in the case of an inferior court operating within a system where the doctrine of precedent applies, the existence of authority binding upon it determines for it what it must understand to be the law. It must accept the law to be as that precedent authority has declared it to be, whatever may be its own inclinations in the matter. The sanction implicit in the doctrine of precedent is simple and effective: if an inferior court fails to observe the doctrine the superior court will correct its decision on appeal[.]
As this case demonstrates, the refusal to follow precedent almost inevitably leads to an appeal and perhaps a rehearing with the attendant systemic costs and even more stress and legal costs for litigants.
PRECEDENT AUTHORITY WAS NOT APPLIED
Turning then to the primary judge’s reasons, these demonstrate that his Honour understood that the wife’s application for costs was governed by s 117 of the Act and fell to be determined in “accordance with established principles and in relation to the facts of a case” [45]. As there was no question that the provision enabled an order for costs, including indemnity costs, that the primary judge chose to discuss the Statute of Gloucester 1278, 6 Edw 1 and trace the history of equity’s treatment of costs from 1742, is odd. None of this was raised for consideration and the exegesis on the history of the law as to costs is a judicial flourish which was entirely uninformed by argument. Indeed, of the 54 cases cited in the costs judgment, at most six (which discuss the approach to costs decided under the Act) were relevant to the case under consideration. Notably, none of the 54 cited cases disputed Kohan and, where Kohan was considered it was applied. The extravagant recitation of irrelevant decisions, statutes and text is the antithesis of judicial economy and operates as an inappropriate barrier to accessible justice. Almost certainly it increases the cost to parties of obtaining legal advice and all but makes it impossible for a litigant in person to understand the basis for the decision.
As was stated by the Victorian Court of Appeal (Warren CJ, Ormiston JA and Harper AJA) in Kapiris Bros (Vic) Pty Ltd v Zausa [2006] VSCA 15 at [25]:
…While justice must be seen to be done, that necessary goal must be achieved without the unnecessary expenditure of the limited time judges have available, and with an appreciation of the interests of those who have occasion to read reasons for judicial decisions. Those interests, which in summation include the community interest in the due and efficient administration of justice, will never be served by judgments of unnecessary length. The judge has the often difficult task of finding the correct balance, which of course will vary according to the circumstances, including the place which the court occupies in the judicial hierarchy.
(Footnotes omitted)
Reference has already been made to Kohan and the principle that an order for indemnity costs in proceedings to which s 117 applies is exceptional. Kohan was cited in Prantage as, in effect, the cornerstone of well-established law in this jurisdiction [77], [147]. As Murphy J said in Prantage:
152.Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (ie “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party … shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context[.]
The primary judge referenced Prantage, at [37]. It follows, that his Honour was aware that in Prantage, the Full Court considered whether it should depart from Kohan. In deciding that Kohan should not be departed from, Thackray and Ryan JJ said:
93.Consistent with these principles, there have been occasions when this Court has departed from an earlier decision. However, as Fogarty J pointed out in Farnell & Farnell (1996) FLC 92-681 at 83,071, “where the previous decision relates to a matter of practice which has been uniformly acted upon in the intervening period so as to develop expectations that will continue to be the case, it may be unsettling to [overturn the decision]”.
Against this background, the primary judge should have understood that he could not permissibly depart from Kohan. Furthermore, given that in Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664, Kohan was expressly applied, it offered no support for the approach taken by the primary judge.
Whilst not intending to labour the point, but to show that Kohan remains good law, reference should be made to Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920 where this Court said:
7.The Full Court noted in [Prantage] at [42], that even in jurisdictions where the usual rule is that costs follow the event, it is well settled that indemnity costs “should only occur in an extremely rare situation” (see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] 179 ALR 406). We agree with Murphy J in Prantage at [152] that in proceedings under the Act, where the usual rule is that each party shall bear his or her own costs, an order for indemnity costs is even more exceptional.
By rejecting Kohan and the large number of decisions by this Court which have embraced the principles there stated, the primary judge acted on a wrong principle and thus erred in a House sense. The effect of this is that the orders should be set aside. In that event, both parties asked us to re-exercise the discretion of the primary judge on the material available to us. In the interests of saving further legal costs, we propose to do so.
CONCLUSION
In light of the concession made as to party/party costs, the only question which requires consideration is whether or not this case is sufficiently exceptional to justify an order for indemnity costs.
On 30 April 2021, the parties were notified that judgment in this appeal would be delivered on 6 May 2021. At 9.24 am on 6 May 2021, the Court received an email from the parties’ solicitors requesting that we defer judgment for 14 days so that the parties could continue to explore a possible resolution to their dispute.
An agreed outcome is obviously desirable and in our view the appropriate course is that we delay judgment on the re-exercise. This enables the negotiations underway to take place on a certain footing; namely with the orders under appeal having been set aside and to decide for themselves, the consequences which flow.
The parties will be given the opportunity to present consent orders which finalise the outstanding issues, failing which judgment will be given on 25 May 2021.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Strickland, Ryan & Kent. Associate:
Dated: 6 May 2021
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