Steadman and Randall (Costs)
[2011] FamCAFC 164
•16 August 2011
FAMILY COURT OF AUSTRALIA
| STEADMAN & RANDALL (COSTS) | [2011] FamCAFC 164 |
| FAMILY LAW – APPEAL – COSTS – WIFE’S APPLICATION – where leave to appeal was refused – where the wife sought costs fixed in the sum of $18,619.15 or in the alternative as taxed in default of agreement on an indemnity basis or in the further alternative as taxed in default of agreement on a party/party basis – whether the matter should be certified fit for attendance of Senior Counsel – whether the attendance of two counsel was necessary – where the husband opposed the wife’s application – where the husband’s financial circumstances are superior to those of the wife – where the husband has been wholly unsuccessful in his application for leave to appeal – where the husband alleges that his solicitor acted without instructions, was negligent and his solicitor and counsel allegedly gave him incorrect or negligent advice in relation to the application for leave to appeal and the appeal – where the case is found not to be an “exceptional” one and indemnity costs are not justified – where costs should be assessed on a party/party basis – where the case should be certified as fit for the attendance of Senior Counsel – where the attendance of two counsel cannot be justified – where the husband is to pay the wife’s costs fixed in the sum of $12,500 within two months. FAMILY LAW – APPEAL – COSTS – HUSBAND’S APPLICATION – where the husband seeks his costs of attendance at the hearing on 24 February 2011 – where those costs should be at the higher end of the range suggested by the wife namely $394.75 to $676.70 – where the wife concedes that an order for costs should be made – where the wife is to pay the husband’s costs fixed in the sum of $550 offset against the amount that the husband is to pay the wife. |
| Family Law Act 1975 (Cth) s 117 (1), (2), (2A) Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 |
| APPLICANT: | Mr Steadman |
| RESPONDENT: | Ms Randall |
| FILE NUMBER: | ADC | 4138 | of | 2009 |
| APPEAL NUMBER: | SA | 73 | of | 2010 |
| DATE DELIVERED: | 16 August 2011 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 1 August 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 30 August 2010 |
| LOWER COURT MNC: | N/A |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hanus |
| SOLICITOR FOR THE APPLICANT: | Angela Ferdinandy |
| COUNSEL FOR THE RESPONDENT: | Mr McGinn |
| SOLICITOR FOR THE RESPONDENT: | Diane Myers Pty Ltd |
Orders
The husband pay to the wife the sum of $11,950 by way of costs within two [2] months of the date hereof.
Certified fit for Senior Counsel.
IT IS NOTED that publication of this judgment under the pseudonym Steadman & Randall (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SA 73 of 2010
File Number: ADC 4138 of 2009
| Mr Steadman |
Applicant
And
| Ms Randall |
Respondent
REASONS FOR JUDGMENT
Introduction
Before me are two applications. First, there is the wife’s application for costs consequent upon my dismissal on 16 March 2011 of the husband’s amended application for leave to appeal filed on 14 December 2010. Second, there is the question of the husband’s costs thrown away that I reserved on
24 February 2011.
In her written outline filed on 2 May 2011 the wife set out the orders that she sought as follows:
1.That the appellant husband do pay the wife’s costs of and incidental to these proceedings fixed in the sum of $18,619.15 within twenty eight days.
2.That in the alternative to paragraph 1, the appellant husband do pay the wife’s costs of and incidental to these proceedings (including any application for costs on an indemnity basis) in such amount as agreed between the parties within fourteen days or in default of agreement as taxed, such payment to be made within fourteen days of agreement or taxation.
3.Further in the alternative to paragraph 1, the appellant husband do pay the wife’s costs of and incidental to these proceedings (including any application for costs on an party/party basis) in such amount as agreed between the parties within fourteen days or in default of agreement as taxed, such payment to be made within fourteen days of agreement or taxation.
4.That in respect of the order reserving costs made 24 February 2011 that:-
4.1 There be no order as to costs.
4.2In the alternative to 4.1 that the wife do pay the husband’s costs of his attendance of 24 February 2011 thrown away fixed in the sum of somewhere between $394.75 and $676.70.
4.3That any orders payable by the respondent wife to the appellant husband pursuant to this order be paid at the same time as the husband pays the wife’s costs pursuant to these orders.
5.That interest accrue upon the amount of costs awarded in favour of the wife from the date of these orders at the rate prescribed under the Family Law Rules 2004 applicable from time to time calculated from the date of these orders until the date of payment of the same.
6. That the matter be certified fit for the attendance of Senior Counsel.
7. That the wife’s costs do allow for the attendance of two counsel.
The husband opposed the wife’s application, however, in relation to the reserved costs the husband sought an amount at the higher end of the range in paragraph 4.2 of the orders sought by the wife.
Background
Both parties sought in different ways to rely on the history of this matter including from the time of the commencement of the proceedings for property settlement in the Federal Magistrates Court with the wife’s application filed on 20 October 2009. That history is conveniently set out between paragraphs 3 and 13 of my reasons for judgment delivered on 16 March 2011, and there is no need for me to repeat the same here.
In relation to the amended application for leave to appeal the relevant background is as follows:
a)The husband filed a Notice of Appeal on 22 September 2010, and he filed an amended Notice on 14 December 2010.
b)
The matter first came before me on 23 November 2010 when at the request of both counsel the Notice of Appeal was adjourned to
16 December 2010.
c)
On 16 December 2010 there was an appearance on behalf of the husband but there was no appearance on behalf of the wife. Nevertheless, I listed the amended Notice of Appeal for hearing on
24 February 2011 and made the usual orders preparing the matter for that hearing.
d)
The wife’s summary of argument was due to be filed and served on
16 February 2011. In fact it was filed on 17 February 2011 and not served until 23 February 2011. As a result, on 24 February 2011, on the application of the husband the matter was adjourned to 7 March 2011. I delivered reasons for judgment in relation to this issue and I need not repeat here what I said in those reasons. The other order that I made on that day was to reserve the question of the husband’s costs thrown away.
e)On 7 March 2011 I heard the husband’s amended application for leave to appeal and I reserved my judgment. Subsequently, on 16 March 2011 I delivered my reasons for judgment and made orders dismissing the amended Notice of Appeal and adjourning the question of costs for mention on 4 April 2011.
f)
On 4 April 2011 the issues of costs were listed for hearing on
10 May 2011. However, for reasons which I do not need to elaborate on, on 10 May 2011 the matter was adjourned to 10 June 2011, and on that day the matter was further adjourned to 1 August 2011 for hearing.
The documents relied upon
In addition to all of the documents that were before the Court for the purposes of the hearing of the amended Notice of Appeal, the wife relied on the following:
a)The affidavit of the wife filed on 2 May 2011.
b)The financial statement of the wife filed on 2 May 2011.
c)The outline of submissions in relation to costs filed on behalf of the wife on 2 May 2011.
For his part the husband relied on the following documents:
a)The affidavit of the husband’s solicitor filed on 22 July 2011 annexing the husband’s financial statement sworn on 15 July 2011.
b)The affidavit of the husband filed on 27 July 2011.
c)The outline of submissions in relation to costs filed on behalf of the husband on 27 July 2011.
The relevant statutory provision
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) deals with costs in proceedings under the Act and provides as follows:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 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) 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.
Discussion
The wife’s application for costs
As can be seen from s 117(2) above, the wife must persuade the Court that there are circumstances here that justify an order for costs.
The wife in her written outline suggests that sub-paragraphs (a), (c) (d), (e) and (f) of s 117(2A) are relevant here, and provide the necessary circumstances.
(a) The financial circumstances of the parties
I have financial statements for both parties and it is quite apparent that the financial circumstances of the husband are superior to those of the wife. Although his expenses are high, so is his income, and I accept the submission of Mr McGinn that the husband has $1,759 available income each week given his superannuation payment of $960 is a discretionary payment.
This demonstrates that the husband has the capacity to meet an order for costs.
(c) The conduct of the parties in relation to the proceedings
Mr McGinn submits that under this heading I can take into account the conduct of the husband “in the Court below”.
However, Mr Hanus submits otherwise and I agree with him. The only proceeding before me was the husband’s amended application for leave to appeal, and if leave was granted, his appeal, and it is those proceedings which are the relevant proceedings for the purposes of an application for costs in relation to the same. There is no “conduct” in relation to the application for leave or the appeal that the wife suggests is relevant, and thus this does not provide any circumstance that justifies an order for costs.
I also observe that the submission that the “appeal is the product of the husband failing to comply with Orders for discovery and persisting with such failure” does not advance the wife’s position. The application for leave to appeal and the appeal was brought because the husband challenged the orders of the Federal Magistrate; nothing more, nothing less.
(d)Where the proceedings were necessitated by the failure of the husband to comply with previous orders of the Court
Much like the last point, the submission here is that the “appeal” comprises the proceedings that were necessitated here. However, this is a nonsense. Again, the application for leave to appeal and the appeal was brought because the husband challenged the orders of the Federal Magistrate. Thus, this does not provide any circumstance that justifies an order for costs.
(e) Where a party has been wholly unsuccessful
There is no doubt the husband has been wholly unsuccessful given that his application for leave to appeal has been dismissed, and this is clearly a circumstance that can, and usually does, in the context of applications for leave to appeal and appeals, justify an order for costs.
(f) Offers in writing
The wife relies on a letter to the husband’s solicitors dated 21 March 2011 seeking the payment of costs on an indemnity basis in the sum of $18,626.98, namely the entire amount of costs sought by the wife at that point.
As will become apparent in these reasons for judgment the husband was justified in rejecting that claim. However, in any event, this letter cannot be described as an “offer of settlement”. There is no compromise beyond the fact that by the husband paying the entirety of the costs of the wife the application for costs would not proceed to a hearing.
In summary then, the only circumstance that justifies an order for costs here is the fact that the husband was wholly unsuccessful, but as I explained to the wife’s counsel during the hearing, that circumstance is sufficient.
However, the husband argues that in exercising the very wide discretion that the Court has under s 117 of the Act no order for costs should be made at all. He says in his written outline that “on a full examination of the matters surrounding his lack of opposition to the order made by the learned Federal Magistrate and the subsequent institution of the Application for Leave to Appeal to this court, the circumstances do not justify a departure from the general rule in s 117(1) that each party should bear his or her own costs.”
In short, the husband says that his solicitor acted without instructions and was negligent in not opposing the order for discovery made by the Federal Magistrate, and the subsequent advice that he received from his solicitor and his counsel as to the nature of the application for leave to appeal and the appeal, and the prospects of success of the same, was incorrect.
However, these are not matters that are relevant to the application for costs, except perhaps on the discrete question of whether any costs order should be assessed on an indemnity basis.
Although this may explain why this matter has reached this stage, the wife has had to incur a substantial amount of costs in responding to the application for leave to appeal and the appeal, and she should not be prejudiced by any alleged failings of the husband’s legal advisers. That is a matter between him and those advisers.
As was said by the Full Court (Kay, Coleman and Boland JJ) in Limousin v Limousin (Costs) (2007) 38 FamLR 478 (at para 55):
55… If, for reasons which we cannot know, [the solicitor] gave negligent advice, encouraged the appeal in pursuit of some ulterior motive, or otherwise acted in a manner which led the [husband] to commence and pursue an appeal which [he] would not have, had [he] received competent and ethical advice, that is a matter between the [husband] and [solicitor]. Ultimately, it may be that the [husband] is entitled to be indemnified by [the solicitor] with respect to this order, but that is not a matter about which we can or need speculate.
Thus, the alleged deficiencies in the conduct of the husband’s solicitor and the alleged negligent or incorrect advice in relation to the application for leave to appeal and the appeal cannot prevent an order for costs being made where there are circumstances that justify such an order.
It is now necessary to consider whether the costs to be awarded against the husband should be on a party/party or indemnity basis. The wife seeks that the latter be the case, but the husband suggests that the former should be the result.
In Limousin the Court reviewed the authorities in relation to indemnity costs. Reference was made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. There the Court said this (at 79,614, citations omitted):
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the Rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges …
Consequently, the 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.
The Court in Limousin also referred to the judgment of Shephard J in Colgate – Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248. There his Honour said this (at 256):
2.The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis …
3.This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it …
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course …
It must be said though that the categories of circumstances which enliven the discretion to amend indemnity costs are not closed (Yunghanns v Yunghanns (2000) FLC 93-029, at 87,471, para 31).
Here the wife submits that “the circumstances of this application for leave to appeal falls within the first of the categories of circumstances identified by Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660 constituting warranting the exercise of a discretion to award costs on an indemnity basis”, namely:
Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known they have no chance of success. In such cases the action must be presumed to have been commenced or continued with some ulterior motive or because of some wilful disregard of the known facts.
In other words, this is one of the classic categories identified by Shephard J.
For the husband’s part, he again relies on the alleged negligent conduct of his solicitor and the alleged negligent or incorrect legal advice given to him in relation to the application for leave to appeal and the appeal. He says that his evidence as to his state of mind contained in his affidavit is unchallenged and should be accepted by this Court. On that basis any presumption that the application for leave to appeal was “commenced or continued with some ulterior motive or because of some wilful disregard of the known facts” is rebutted. Thus, there is no basis for costs to be assessed on an indemnity basis.
The wife’s counsel attempted to argue that this Court could not have regard to the husband’s evidence contained in his affidavit, but I am not persuaded by this submission. I fail to see why this Court cannot have regard to unchallenged evidence properly before it to determine the question of whether the costs should be awarded on an indemnity basis. Thus, on the basis of that evidence I am satisfied that there was no ulterior motive by the husband or some wilful disregard of the known facts.
I am not persuaded by anything to which I have been referred that this is the kind of “exceptional” case in which indemnity costs should be ordered. Costs should be assessed on a party/party basis.
As to the quantum of the costs I am tempted to make an order that the husband pay the wife’s costs of and incidental to the application for leave to appeal and the appeal, such costs to be as agreed or in default of agreement as taxed. Indeed, that is what the husband sought if I determined that it was appropriate to make an order for costs.
However, the wife has gone to some trouble to set out the costs that she seeks, and I much prefer to fix costs if I can. That saves the parties the time, trouble and expense of a taxation if they cannot agree, which in this case seems likely.
Thus, despite the deficiencies that I will refer to in a moment in how the wife presented the detail of the costs sought, I propose to fix those costs.
The wife has annexed to her affidavit a memorandum of costs as at
29 April 2011 calculated both on the scale and in accordance with the costs agreements that she has with her solicitors. However, given that the costs will not be assessed on an indemnity basis the party/party scale applies, and in the memorandum that comprises $3,649.10 for solicitor’s fees, and $11,702.35 being the invoiced counsel fees.
In addition, Mr McGinn informed me at the commencement of the hearing that since 29 April 2011 a further $6,000 in solicitor’s fees have been incurred and $440 for counsel fees. I am not told whether these further solicitor’s fees are calculated on the basis of the costs agreements, but I assume that that is the case. Thus, not all of those costs should be allowed.
Three further issues arise for consideration in determining the quantum of costs. Firstly, whether there was a basis for senior counsel to be briefed, and, secondly, if so, whether it was necessary for both senior and junior counsel to be briefed. Thirdly, as was ultimately conceded by Mr McGinn, given the reasons for the adjournment of the matter on 24 February 2011 it is not open to the wife to claim costs in relation to that hearing. Unfortunately though, that was not considered when the memorandum was prepared and it includes these costs.
With the first issue, in her outline the wife submitted that the briefing of senior counsel was justified “on account of the complexity of the matter and the possible importance in the context of the appeal having been allowed as to the everyday functioning of the Federal Magistrates Court in relation to the conduct of procedural matters relating to the giving of discovery.” Mr McGinn elaborated on that in his oral submissions, but I remain unpersuaded that there was such complexity in the application for leave to appeal, and such importance arising from the order made by the Federal Magistrate, that it was appropriate to brief senior counsel. The issue on appeal was simply the circumstances of and the basis for the Federal Magistrate making an order for discovery where that order was unopposed.
However, the fact of the matter is that the husband’s solicitor briefed senior counsel, presumably on the basis that it was warranted. In these circumstances it was not unreasonable for the wife to instruct her solicitor to also brief senior counsel. Thus, I will provide for that in determining the amount of costs to be awarded.
As to the need for two counsel to be instructed on behalf of the wife, I consider that that cannot be justified. I repeat my comment about the lack of complexity in the application for leave to appeal and the appeal, and I note that although this is not the test for the wife’s representation, the husband did not have junior counsel as well as senior counsel. Accordingly, I will make appropriate adjustments for this in determining the quantum of costs to be awarded.
With the third issue, given the appropriate concession by Mr McGinn, I need not say anything more about this, save and except to observe that I will again make the necessary adjustment in fixing the amount of costs to be paid by the husband.
Turning then to that issue, in all the circumstances I propose to order that the husband pay the wife the sum of $12,500.
In his affidavit the husband indicated that given he had recently been required to make a large payment to the Australian Taxation Office he would need time to pay any order for costs. Counsel was not able to assist me in identifying how much time the husband needed, but given his financial circumstances I consider that a period of two months is not unreasonable.
The husband’s application for costs
This relates to the reservation of the husband’s costs thrown away as a result of the adjournment granted on 24 February 2011.
It was conceded by the husband’s counsel that the costs thrown away would comprise an attendance fee, and in that regard he sought that it be at the higher end of the range referred to by the wife in her outline, that range being $394.75 to $676.70.
In the circumstances I fix the amount of costs to be paid by the wife to the husband at $550.
Conclusion
I have determined that the husband should pay to the wife the sum of $12,500 and that the wife should pay to the husband the sum of $550. It is logical to offset these amounts and thus I propose to order the husband to pay to the wife of $11,950 within two months.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on .
Associate:
Date: 16 August 2011
0
3
0