Stokerton & Stokerton (No 3)
[2023] FedCFamC1F 821
•27 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Stokerton & Stokerton (No 3) [2023] FedCFamC1F 821
File number(s): MLC 1922 of 2020 Judgment of: GILL J Date of judgment: 27 September 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Application for costs – Where the mother failed to participate in attempts to settle the matter or in the parenting proceedings – Where the financial circumstances of the parties are limited – Costs awarded on an indemnity basis Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Idoport Pty Ltd v National Australia Bank Ltd & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23
Munday v Bowman (1997) 22 FamLR 321
Quickley & Pelissier [2016] FamCAFC 124
Division: Division 1 First Instance Number of paragraphs: 38 Date of hearing: 8 September 2023 Place: Canberra Solicitor for the Applicant: Hope Earle Lawyers Solicitor for the First Respondent: Litigant In-Person (did not participate) Solicitor for the Second Respondent: AFL Kordos Lawyers ORDERS
MLC 1922 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR STOKERTON
Applicant
AND: MS C STOKERTON
First Respondent
MS D STOKERTON
Second Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
27 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Ms C Stokerton pay to Ms D Stokerton costs on an indemnity basis fixed in the sum of $35,237.60 in relation to the parenting proceedings of 17 July 2023.
2.Ms C Stokerton pay to Mr Stokerton costs on an indemnity basis fixed in the sum of $30,673.00 incurred in relation to the parenting proceedings from 5 June 2023 to 17 July 2023.
3.Ms C Stokerton is liable to pay costs under Orders (1) and (2) within 30 days of the sale of the family home as provided for in the property orders dated 21 August 2023.
4.Mr Stokerton’s application seeking costs in relation to Ms C Stokerton’s application for an adjournment on 17 July 2023 is dismissed.
5.Mr Stokerton’s application seeking costs in relation to the Interim Defended Hearing on 23 March 2021 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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J
The father filed an application in a proceedings on 22 August 2023 with an accompanying affidavit. Ms D Stokerton filed in application in a proceedings on 24 August 2023 with an accompanying affidavit. Both parties are seeking costs in relation to the proceedings relating to the children, where the final hearing was heard on 17 July 2023 in the absence of the mother, who failed to attend and failed to file any trial material in accordance with the trial directions, or at all.
Orders sought
The father seeks:
1.Within thirty (30) days of the date of these Orders, the Respondent Mother pay the Applicant’s Father’s costs on an indemnity basis in relation to the following:
(a) The Interim Defended Hearing on 23 March 2021 in the amount of $12,681.95;
(b) Parenting matters from the period 5 June 2023 to 17 July 2023 in the amount of $30,673; and
(c) The Respondent Mother’s application for an adjournment on 17 July 2023 in the amount of $8,320.
2.In the alternative to paragraph 1, within thirty (30) days of the date of these Orders, the Respondent Mother pay the Applicant Father’s costs to scale in relation to the following:
(a) The Interim Defended Hearing on 23 March 2021 in the amount of $8,315.97;
(b) Parenting matters from the period 5 June 2023 to 17 July 2023 in the amount of $23,116.71; and
(c) The Respondent Mother’s application for an adjournment on 17 July 2023 in the amount of $3,833.30.
3.That the Respondent Mother pay the Applicant Father’s costs of and incidental to this application.
4.In the alternative to paragraph 1 and 2 above, the costs be paid as at the time the Respondent Mother receives her property settlement.
5.Such further and other Orders as this Honourable Court deems appropriate.
Ms D Stokerton seeks:
1.Within 21 days, the [Ms C Stokerton] pay costs on an indemnity basis to [Ms D Stokerton] in the sum of $35,237.60.
2.In the alternative, if the Court does not make the Order set out in Order 1, then within 21 days, [Ms C Stokerton] pay costs to [Ms D Stokerton] fixed in the sum of $23,492.
3.Such further and other Orders as this Honourable Court deems appropriate.
Principles
Three issues are live in the determination of the costs applications brought against the mother. They are firstly whether a costs order ought to be made, secondly whether the order should be made on an indemnity basis or the usual party-party basis, and thirdly whether they should be awarded in a fixed sum.
Section 117 of the Family Law Act 1975 sets a starting point that each party should bear his or her own costs. However, should it be determined that there are circumstances that justify the making of a costs order, then the court has a discretion to award costs as it considers just.
In determining this issue, the court is to consider the circumstances identified at s117(2A) which are as follows:
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.
Given the non-participation of the mother in this aspect of the proceedings, the material upon which these considerations are based is necessarily limited. However, the matters that have been emphasised are the financial circumstances of the parties, the manner of conduct of the proceedings, and whether the mother has been wholly unsuccessful. These will be examined below.
Whilst the usual form of orders for costs is for costs paid on a party-party basis, here indemnity costs are sought, which brings further principles into play. The principles in relation to indemnity costs are set out in Quickley & Pelissier [2016] FamCAFC 124:
119.We then turn to consider whether costs should be awarded on a party/party or indemnity basis.
120.In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the “settled practice” that where a court orders one party to pay another party’s costs, the order is for costs to be paid on a party/party basis. His Honour also said “there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice” at 257.
121.In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
122.In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:
Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.
The principles in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 are also usefully discussed in Munday v Bowman (1997) 22 FamLR 321. In that judgment, Holden CJ extracted a series of circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis, being:
(a)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: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
(c)Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
(e)An imprudent refusal of an offer to compromise.
An order for indemnity costs is an extreme outcome and so, when considering the issues identified by Holden CJ, attention must be given as to whether they constitute extreme examples. For example, in relation to the “no chance of success” example Holden CJ indicated that the conduct was to be such as to allow a finding of “ulterior motive” or “wilful disregard of known facts”. That is, it is not sufficient to reflect that the application had a low chance of success, but rather that the prospective lack of success was so stark as to require the inference that the application was occasioned by an ulterior motive.
Typically where an order is made for costs, it is to be as agreed or as assessed. The Rules however provide for an alternative approach of the setting of a specified sum.
In Idoport Pty Ltd v National Australia Bank Ltd & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23 Einstein J set out the principles underpinning both the reason for, and the approach to a fixed sum costs order:
9For present purposes it seems convenient to commence with a recitation of the principles which inform the exercise of the discretion:
i. the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119, Von Doussa J page 265: [following Purchase J in Leary v Leary [1987] 1 All ER 261 who described the purpose of the rule allowing the fixing of a gross sum as “the avoidance of expense, delay and aggravation involved in protracted litigation arising out of taxation” (All ER page 265)];
ii. the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16];
iii. the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrison v Schipp (2002) 54 NSWLR 738, per Giles JA at para [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith (2005) 215 ALR 788; [2005] FCA 228; BC200500963 at para [199];
iv. a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrison v Schipp at para [22];
v. the gross sum “can only be fixed broadly having regard to the information before the Court”: Beach Petroleum at 124;
[In Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] it was said that the evidence enabled fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates”.]
vi. nevertheless the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 at 120”;
vii. In terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL & Anor v Johnson & Ors (No 2) (1995) 57 FCR 119, put the matter as follows, at paras [16]:
“On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimates submitted to the Court: Leary v Leary at 265. …”
In this case there is good reason for specifying a specific sum provided that there is sufficient information to do so. The mother, who is the object of each of the costs applications has been disengaged from the litigation, failing to comply with directions, or to attend court events. As may be seen from her conduct in the proceedings as set out below, there is little prospect for her cooperation in any costs assessment process, or costs negotiations.
It is necessary to consider the matters that were emphasised on the father’s and Ms D Stokerton’s applications for costs.
Financial circumstances
Absent the mother’s participation in these costs proceedings, the mother’s financial circumstances are best understood from the recently resolved property proceedings. In those proceedings it was identified that the mother faces parlous future circumstances. She is liable, from her share of the division of property to pay to her former lawyers almost a quarter of a million dollars. It may be expected that she will net several hundred thousand dollars over and above this amount, but that her future financial prospects are poor.
The father’s position is stronger, both in terms of his entitlement to a larger share of the property pool, and his capacity for employment. That is not to suggest that his employment prospects are strong, merely that he retains work at a low level of remuneration. Although he suggests that he suffers from PTSD, the evidence is not sufficiently cogent to establish either this, or that it is of economic consequence. He has incurred significant legal fees in excess of $200,000.
Information as to Ms D Stokerton’s circumstance is limited. She was 21 at the time of the proceedings, supporting herself and her siblings that she cared for, who were the subject of the parenting proceedings. It is expected that she will receive some monies from the vesting of a trust that was the subject of the property proceedings. She has the care of a number of her siblings. The evidence is that she cannot afford to litigate the costs matter, and that her counsel for the trial agreed not to invoice her. These matters are suggestive that Ms D Stokerton’s financial circumstances are very limited.
Conduct
The mother failed to file any affidavit material for the trial.
The mother failed to participate in an attempt to settle the matter, in circumstances where the ICL, father and Ms D Stokerton were agreed, at least in large part, as to the outcome. The mother failed to reply to written correspondence as to such, and did not advise of her position. This was in the further context that the mother had advanced contradictory positions previously, as to the need to protect the children from the father, and as to asserting that the outcome should be a reconciling of the family.
The father and Ms D Stokerton were thereby compelled to file trial material and to prepare for trial.
The mother failed to attend the final hearing of the parenting dispute. The ICL, father and Ms D Stokerton, who did attend the trial agreed to deal with the parenting issue first, that being the only issue that involved Ms D Stokerton and the ICL. That matter was heard to completion, on an undefended basis in respect of the mother, with those parties agreeing as to outcome. After consideration of the proposed terms, final orders were made with reasons reserved. Ms D Stokerton and the ICL were excused. The property proceedings commenced and some time later the mother attended court.
The mother then unsuccessfully sought to adjourn the property trial.
Was the mother wholly unsuccessful?
The mother’s position on the litigation remained hazy. Her positions articulated previously were inconsistent, and neither reflected anything even remotely approaching the outcome of the parenting litigation. This inconsistent articulation is better understood as a part of her conduct of the proceedings rather than in an assessment of whether the mother was wholly unsuccessful.
Ms D Stokerton
Ms D Stokerton’s pursuit of costs is well justified. The manner of engagement of the mother, and her conduct of the proceedings caused unwarranted legal expense in causing Ms D Stokerton to prepare for and attend the trial of the matter that the mother did not participate in. This position is aggravated by the failure of the mother to engage in attempts to resolve the matter, or even to articulate a coherent position in the litigation. When seen in the light of the contradictory positions taken by her it is conduct that is redolent of an ulterior purpose in her engagement with the litigation.
These matters call not only for a costs award in Ms D Stokerton’s favour, but fall within the extreme examples that warrant an order for indemnity costs, particularly when the financial circumstances are considered.
The indemnity amount identified as the professional expenses and disbursements, totalling $35,237.60, is reasonable given the nature of the subject matter and circumstances of the litigation, and an award should be made in those terms.
Conclusion regarding Ms D Stokerton’s application
Ms D Stokerton will be awarded indemnity costs fixed in the sum of $35,237.60. The mother will be liable to pay the sum following the sale of the family home as provided for in the property orders.
The father
The father seeks costs in relation to four aspects. The first is as to an interim determination of 23 March 2021, the second as to the parenting proceedings from 5 June 2023 to the hearing date of 17 July 2023, the third in relation to an adjournment application in respect of the property trial of 17 July 2023 and the fourth relating to the costs of this application.
As to the first aspect, no significant information is provided in respect of the 23 March 2021 hearing, and no adequate justification is put forward to depart from the position at s117 of the Act that each party bear their own costs.
The second aspect of costs flows from the point after which the father set out his position in the parenting proceedings that largely conformed with Ms D Stokerton’s and the ICL’s positions, and was largely consistent with the ultimate disposal of the matter.
For the manner of conduct of the proceedings reasons as set out in respect of Ms D Stokerton, the mother should not only pay his costs for this period, but should do so on an indemnity basis.
That indemnity cost is reasonably set out in terms of the costs incurred at $30,673, in respect of his lawyer’s fees and counsel’s fees.
The third aspect relates to an attempt by the mother to adjourn proceedings on 17 July 2023. Given that the parenting proceedings had been disposed of, this can only relate to the property proceedings. The mother was unsuccessful in her application.
The father seeks, in relation to the adjournment application of 17 July 2023 the sum of $8,320, being professional fees of $2,820 and barrister’s fees if $5,500.
However, an order for indemnity costs has already been made that, as far as can be ascertained form the affidavit filed by the father, incorporates the first day of the trial where the parenting proceedings were dealt with. The bulk of the unsuccessful adjournment application was also heard on that day, along with a contested application by the father to receive expert evidence from an accountant. In the absence of an evidential basis, or argument to suggest why a further award should be made, this aspect of the application is refused.
This leaves the issue of the costs of the costs application. There is some ambiguity in the father’s position as to this aspect, he pursuing it in the orders sought in his application in proceedings, but not in the orders identified in his affidavit.
In this instance there should be no departure from the starting position that each party bear his or her own costs. Whilst it is true that the mother failed to participate in this aspect of the proceedings, the matters pursued by the father have included claims for costs where he has not been successful. On balance the default position should be maintained.
Conclusion regarding the father’s application
The father will be awarded costs, on an indemnity basis, of the parenting proceedings from 5 June 2023 to the hearing date of 17 July 2023 fixed in the sum of $30,673. The father’s other costs applications are dismissed. The mother will be liable to pay the sum following the sale of the family home as provided for in the property orders.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 27 September 2023
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