Strahan and Strahan
[2019] FamCA 376
•10 June 2019
FAMILY COURT OF AUSTRALIA
| STRAHAN & STRAHAN | [2019] FamCA 376 |
| FAMILY LAW – COSTS – Where the husband seeks an order that the wife pay the costs of both parties’ applications on an indemnity basis – Where alternatively the husband seeks orders that the wife pay the costs of both applications on a lawyer and client basis, or a party/party basis – Where the wife seeks an order that each party pay their own costs – S 117(2A) considerations – Where the husband made an offer to the wife which was not accepted – Where the husband contends the orders sought by the wife for adult child maintenance are an abuse of process – Where the court satisfied that there should be a departure from the ordinary rule for costs – Order that the wife pay the husband’s costs – Order for indemnity costs. |
| Family Law Act 1975 (Cth) ss 117, 118 Family Law Rules 2004 (Cth) r 19.08, 19.18 |
| Strahan & Strahan [2019] FamCAFC 31 Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225 Kohan & Kohan (1993) FLC 92-340 Muldoon & Carlyle (2012) FLC 93-513 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra). Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433 |
| APPLICANT: | Ms Strahan |
| RESPONDENT: | Mr Strahan |
| FIRST INTERVENOR: | PP LAWYERS |
| SECOND INTERVENOR: | NF Pty Ltd |
| THIRD INTERVENOR: | NS Company |
| FILE NUMBER: | ADF | 228 | of | 2005 |
| DATE DELIVERED: | 10 June 2019 |
| PLACE DELIVERED: | Cairns |
| PLACE HEARD: | By way of written submissions |
| JUDGMENT OF: | Tree J |
| HEARING DATE: | Last submission filed 31 October 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Raeburn |
| SOLICITORS FOR THE APPLICANT: | Mcinnes Wilson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Wilson |
| SOLICITORS FOR THE RESPONDENT: | Kennedy Partners |
Orders
The wife pay the husband’s costs of and incidental to her Initiating Application filed 6 March 2018, and the husband’s Application in a Case filed 12 April 2018, such costs to be as agreed or assessed, calculated on an indemnity basis.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Strahan & Strahan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CAIRNS |
FILE NUMBER: ADF228/2005
| MS STRAHAN |
Applicant
And
| MR STRAHAN |
Respondent
REASONS FOR JUDGMENT
introduction
In Strahan & Strahan [2019] FamCAFC 31 at [2]-[3] the Full Court said this in relation to the background to these proceedings:
2. The husband and wife separated after eleven years of marriage in January 2005 and divorced in February 2006. They have been litigating about their marriage longer than they were married.
3. Since the first Initiating Application was filed shortly after separation, over 700 documents have been filed resulting in a vast number of different hearings. Sixty-one sets of reasons have been published. Ten previous appeals have been heard and determined. By March 2017, the parties had between them spent some $35 million in legal fees. They have each spent more since. The wife has instructed approximately 16 different firms of solicitors. Inclusive of senior counsel who argued the instant appeals, the wife has instructed eight different senior counsel and fourteen different junior counsel.
Their Honours were then dealing with what transpired to be, an unsuccessful appeal from orders of Cronin J made 13 November 2017, refusing Ms Strahan’s (“the wife”) application to adjourn the trial of property proceedings due to start that day, and further, his Honour’s subsequent orders made 23 November 2017 under which, in addition to the $12 million in partial property settlements by then already received by the wife, and $1.5 million in spousal maintenance, she was to receive five unencumbered real properties to a total value of $7.8 million, a further $1.7 milllion in cash, and other assets approaching $1.5 million in value.
As I have said, the wife appealed those orders of Cronin J. However, while the appeal was still pending, she commenced fresh proceedings against Mr Strahan (“the husband”) by Initiating Application filed 6 March 2018. In those proceedings, by way of both final interim relief, she sought adult child maintenance in respect of the parties’ son, Mr S, in the sum $70,760.00 per week, to be paid annually in advance, and by way of further final relief, the transfer to her as trustee for Mr S, of three further properties which she had claimed in the original property proceedings, but was not successful in having transferred to her. On an interim basis, she sought restraints on the husband from dealing with those properties, or interfering with her and Mr S exclusive use of them, notwithstanding that exclusive use was then actually being enjoyed by her and Mr S. The wife also sought further interim orders requiring the husband to pay all outgoings for the three properties.
By Application in a Case filed 12 April 2018, the husband sought orders that the wife’s Initiating Application be struck out or summarily dismissed, together with costs on an indemnity basis. That application came on before me on that day, and I made directions for the filing and serving of affidavits and written submissions in relation to the husband’s application, which timetable concluded on 21 June 2018, after which the parties would have leave to seek to have the application listed for hearing.
On 5 July 2018 the solicitor for the husband made an offer to the solicitors for the wife on a “without prejudice save as to costs” basis. The offer which they made was to have both the Initiating Application of the wife, and their Application in a Case, dismissed with no order as to costs. Noting that the Application in a Case had by then been listed for 31 August 2018, the offer was expressed to be open for 28 days.
The wife did not accept the offer. The matter came on for hearing on 31 August before me, but was by consent adjourned for further hearing to 13 September 2018. On that day I made, by consent, an order dismissing the husband’s Application in a Case filed 12 April 2018, although the order was preceded by the following:
…
AND UPON the husband undertaking by counsel not to dispose of his interests in AT Street, Suburb G and NC Street, Suburb ND, or exclude the wife from either property, without giving 30 days prior written notice to her.
AND UPON counsel for the wife indicating that the wife’s solicitors will within 7 days file a notice discontinuing her Initiating Application filed 6 March 2018.
…
I also made orders for a timetable for the filing of material dealing with the husband’s oral application for costs which had been made that day.
In due course, as foreshadowed, the wife discontinued her Initiating Application.
The order for costs that was ultimately sought by the husband was articulated in his written submissions as follows:
The wife pay the husband’s costs of and incidental to her Initiating Application filed on 6 March 2018… and the husband’s Application in a Case filed on 12 April 2018… such costs are to be calculated on an indemnity basis and agreed between the parties or assessed by the Registrar in default of agreement as to quantum.
In that outline, alternative costs orders were sought, namely that the costs of both applications be paid by the wife on a lawyer and client basis, or by way of final alternative, on a party/party basis.
By her submissions in response, the wife seeks an order that each party pay their own costs of the two proceedings.
RELEVANT STATUTORY PROVISIONS AND LEGAL PRINCIPLES
Cost orders generally
The starting point for a consideration of these applications is s117 of the Family Law Act which relevantly provides as follows:
117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.
117(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), (4A) 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.
117(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.
…
It is also relevant to note s118 which provides as follows:
118 The court may, at any stage of proceedings under this Act, if it is satisfied that the proceedings are frivolous or vexatious:
(a)dismiss the proceedings; and
(b)make such order as to costs as the court considers just.
Rule 19.08(3) imposes a mandatory obligation in the following terms:
A party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a Costs Agreement in relation to those costs and, if so, the terms of the Costs Agreement.
Rule 19.18 deals with the method of calculation of costs in the following terms:
19.18(1) The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount assessed in accordance with Schedule 3.
Example
For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.
19.18(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
19.18(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d) whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)expenses properly paid or payable.
Principles relating to indemnity costs
In order to justify the making of an order for costs on other than a party/party basis, all that is required are particular facts and circumstances of the case in question warranting the making of such an order.[1] That said, such an order is a very great departure from the normal standard, and hence it is imperative that the court be aware of what the nature of the indemnity is, in the sense of what the costs agreement between the parties seeking the order and their solicitors is.[2] Further, such an order remains wholly compensatory and not punitive.[3]
[1]Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225.
[2]See Kohan & Kohan (1993) FLC 92-340 and FLR 19.08(3).
[3]See Muldoon & Carlyle (2012) FLC 93-513 at [115].
It is well established that proceedings brought in wilful disregard of known facts or clearly established law are one of the established categories which justify indemnity costs.[4] An instance of that in this court is the decision of Limousin[5] where the Full Court did not disturb a costs order against a solicitor who had failed to have any proper regard to the prospects of success of a claim.
[4]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra).
[5]Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433.
SHOULD THERE BE AN ORDER FOR COSTS AT ALL
In determining this matter, it is necessary to address the considerations under s 117(2A).
The wife did not file a financial statement in support of her Initiating Application, however she is by no means impecunious, in that, as the husband observes in his written submissions, she has received five real properties under the 23 November 2017 orders, and although there was also an order for the payment of a further cash sum, as I understand it, it has not presently been released to the wife, as there is a dispute between her and her solicitors as to who is entitled to it. However she continues to enjoy the rent free, use and occupation of properties in South Australia, and does not have to meet the costs of the parties’ child Mr S, as they are virtually all met by the husband.
Clearly enough however, nonetheless the husband is in a far superior financial position to the wife.
Neither party is in receipt of legal assistance.
The husband contends that the wife’s conduct, both in commencing and pressing these proceedings, is relevant. He says that the claim made by the wife in her Initiating Application should have been included in the proceedings before Cronin J. Had the wife pressed on with her Initiating Application filed in 2018, he was intending to argue that there was an Anshun estoppell which operated to preclude the wife from further litigating such matters. Further, the husband says that the very properties which she sought to have transferred to her under guise of capitalised adult child maintenance, were the same properties that she unsuccessfully sought to have transferred to her in the proceedings before Cronin J.
The husband also noted that in her Summary of Argument filed in the appeal from the orders of Cronin J, the wife sought an order as follows:
8(g). In any event, that if the husband materially reduces the financial support provided or caused to be provided by him for the parties’ child Mr S, then the wife have liberty to apply for orders in respect of adult child maintenance.
Then on 3 August 2018, she sought such an order in her Further Amended Notice of Appeal filed that day.
The husband says that when these proceedings were commenced on 6 March 2018, there had been no change in Mr S circumstances from those which had prevailed at the time of the hearing before Cronin J.
Finally the husband relies upon the wife’s failure to file a financial statement in support of her Initiating Application, failure to file any material in response to the husband’s summary dismissal application, and ultimately her not seeking to defend the husband’s claims in relation to her Initiating Application, but rather agreeing to discontinue that application.
I accept that all of the above conduct is relevant in this case.
There is no evidence that either party has failed to comply with earlier orders of the court.
The husband contends that he has been wholly successful, and the wife wholly unsuccessful, in the proceedings. However the wife disagrees, and says that she was able to extract the undertaking which was noted in my orders of 31 August 2018. Whilst it is true that undertaking was offered and made, and whilst it is true that there is some similarity between that undertaking and the injunction sought on an interim basis in the wife’s Initiating Application, the simple fact is that there was no order for transfer of any property, and no order for the payment of any adult child maintenance. Even if the wife was not wholly unsuccessful, she was substantially unsuccessful.
I have already related the fact of the 5 July 2018 Calderbank offer.
At paragraphs 24 and 25 of the husband’s written submissions, he extracted passages from two Full Court cases in relation to offers to settlement as follows:
24. In Browne & Green (2002) FLC 93-115: [2002] FamCA 791, the Full Court commented at paragraph 57:
We think that whilst s.117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement …… The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time of the offer is made to give it a proper consideration, is something which very significant weight indeed ought normally be given…
25. In Lenova v Lenova (Costs) (2011) FLC 93-467; [2011] FamCAFC 141, the Full Court stated at paragraphs 10 and 11:
10. In this jurisdiction, costs do not ‘follow the event’ ….. As a result, a litigant or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation…
11.A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
Weighing all of those matters in the balance, to my mind strongly establishes circumstances that justify a departure from the ordinary rule for costs. I am therefore satisfied that there should be an order that the wife pay the husband’s costs.
SHOULD THERE BE AN ORDER FOR INDEMNITY COSTS
As I have noted, the primary position of the husband is to seek an order for indemnity costs. At paragraphs 31 and 32 of his submissions he said as follows:
31. The husband submits an order for indemnity costs is justified given:
31.1The wife conceded, in her Summary of Argument filed in support of her Appeals on 18 June 2018, that an application for adult child maintenance is without merit unless the husband “materially reduces” his financial support of Mr S;
31.2The husband’s offer to settle dated 5 July 2018; and
31.3The wife knew, or ought to have known, that her Initiating Application seeking orders for adult child maintenance was an abuse of process, in circumstances where:
31.3.1The substantive proceedings had been listed for final hearing less than six months earlier;
31.3.2Her extant application for final orders sought similar relief to her Initiating Application; and
31.3.3She did not claim or allege any change in circumstances.
32. The wife has been on notice since 12 April 2018 of the husband’s intention to seek an order for costs calculated on an indemnity basis.
For her part, the wife says there is nothing in the facts of this case to warrant such an order.
I am persuaded that there should be an order for indemnity costs. The wife’s conduct in commencing the proceedings, alone justifies such an order; her failure to accept the husband’s offer reinforces the unreasonableness of her conduct, given her ultimate capitulation.
CONCLUSION
For these reasons there will be orders as set out at the commencement of this judgment.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 10 June 2019.
Associate:
Date: 10 June 2019
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