Suffolk and Suffolk
[2010] FamCA 170
•5 February 2010
FAMILY COURT OF AUSTRALIA
| SUFFOLK & SUFFOLK | [2010] FamCA 170 |
| FAMILY LAW – COSTS – Financial agreement declared not binding – Husband found to have given deliberately false evidence – Wife awarded indemnity costs according to a costs agreement but reduced 5% for an unsuccessful issue – Wife also awarded uplift fee for no win no fee retainer on indemnity or alternatively partial indemnity basis having regard to Rule 19.18(3) Family Law Rules 2004 |
| Family Law Act 1975 (Cth) ss 90G(1)(e) 117, 117AB |
| Family Law Rules 2004 Rule 19.18(3) Cassidy v Murray (1995) FLC 92-633 Latoudis v Casey (1990) CLR 534 at 567 Penfold and Penfold (1981) 44 CLR 311 |
| APPLICANT: | Ms Suffolk |
| RESPONDENT: | Mr Suffolk |
| FILE NUMBER: | BRC | 4740 | of | 2008 |
| DATE DELIVERED: | 5 February 2010 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | O’Reilly J |
| HEARING DATE: | 4 February 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hall |
| SOLICITOR FOR THE APPLICANT: | Chan Lawyers |
| COUNSEL FOR THE RESPONDENT: | N/A |
| SOLICITOR FOR THE RESPONDENT: | Hirst & Co |
Orders
IT IS ORDERED
The husband pay to the wife her costs of and incidental to the issue of the validity under s90G(1)(e) of the Family Law Act 1975 (Cth) of the financial agreement made between the parties on 10 August 2004 including her costs of and incidental to the mediation held on 9 April 2009 in so far as related to that issue to be calculated as:
(a)95% of her costs pursuant to the Solicitor/Client Costs Agreement between the wife and her solicitors dated 31 July 2007, being all of her costs save only those costs unreasonable in amount and those costs unreasonably incurred, to be assessed if not agreed; and
(b)on that amount, such uplift fee as may be assessed as ordinarily chargeable by lawyers engaged on the basis of a no win no fee retainer for comparable litigious cases having regard to the importance, complexity or difficulty of the issue, provided that if there be no recognised standard uplift fee or range of uplift fees in order to be assessable on that basis, 25% uplift fee as set out in the letter of agreement between the wife’s solicitors and the wife dated 19 May 2008.
The husband pay the wife’s costs of and incidental to her costs application, excluding her costs of 20 October 2009, on the party and party basis, to be assessed if not agreed.
The wife pay the husband’s costs of 20 October 2009 limited to that day on the party and party basis to be assessed if not agreed with such costs to be set off against the costs the husband is to pay to the wife pursuant to orders 1 and 2.
AND IT IS CERTIFIED PURSUANT TO RULE 19.50 OF THE FAMILY LAW RULES 2004
It was reasonable for the parties to engage both Senior Counsel and Junior Counsel in relation to the issue of the validity under s90G(1)(e) of the financial agreement made between the parties on 10 August 2004, including in relation to the mediation held on 9 April 2009.
AND IT IS FURTHER ORDERED
The parties have liberty to apply if any clarification in relation to these costs orders should be required.
AND IT IS ORDERED BY CONSENT
The s79 property proceedings between the husband and the wife be stayed pending the determination or any deemed abandonment or other earlier termination of the husband’s appeal number NA73/2009 or further order.
IT IS NOTED that publication of this judgment under the pseudonym Suffolk & Suffolk is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 4740 of 2008
| MS SUFFOLK |
Applicant
And
| MR SUFFOLK |
Respondent
REASONS FOR JUDGMENT
Background matters, the wife’s costs application and costs issues
On 4 September 2009, on application by the wife, I declared that a financial agreement between the parties and dated 10 August 2004 is not a financial agreement binding on the parties under section 90G(1)(e) of the Family Law Act 1975 (Cth) (the Act) and ordered accordingly that the financial agreement be set aside.
The wife’s application to set aside the financial agreement was part of her amended application for final orders filed 10 June 2008, which seeks also a just and equitable division of the parties’ property and assets and other orders including costs.
On 1 September 2008, I ordered, by annexure A to the orders, that the wife file and serve a statement of facts and contentions identifying the facts matters and circumstances relied upon to set aside the financial agreement and that the husband file and serve a response to the wife’s statement of facts and contentions.
The wife’s statement included matters relating to s90G(1)(e) of the Act (the validity issue) and matters which broadly may be categorised as unconscionable conduct by the husband (the unconscionable conduct issues).
For convenience, and in particular because the wife’s allegations based upon the unconscionable conduct issues may have been likely to have required a lengthy hearing time, on 26 September 2008 I ordered that the validity issue be listed for hearing on 8 and 9 April 2009 by way of hearing and determination as a discrete preliminary point.
On 24 March 2009, at the request of the parties and by a consent order, I vacated those dates as the parties had agreed to participate in a mediation in respect of all issues on 9 April 2009, as appears by the notation to the orders made on 24 March 2009.
A mediation took place on 9 April 2009, conducted by the Hon Travis Lindenmayer, without any successful result.
Subsequently, the matter proceeded on 15 and 22 July 2009 for hearing and determination of the validity issue as a discrete preliminary point.
As I have said, on 4 September 2009, I set aside the financial agreement.
Against that background, the wife now applies for an order that the husband pay her costs of and incidental to the application to set aside the financial agreement, on the indemnity, solicitor/client or party and party basis, and the costs of and incidental to her costs application on the party and party basis.
During argument Mr Hall of Counsel, for the wife, refined the application as one for costs of and incidental to the validity issue under s90G(1)(e) of the Act. He sought that the costs order expressly include the wife’s costs of and incidental to the mediation held on 9 April 2009 in so far as related to that issue. He sought also certification under Rule 19.50 of the Family Law Rules 2004 that it was reasonable for the wife to engage both Senior Counsel and Junior Counsel in relation to the validity issue including in relation to the mediation.
Mr Hirst, Solicitor, for the husband, initially proposed that if there be any costs order in the wife’s favour it be restricted to the two hearing days 15 and 22 July 2009. Later, during argument, Mr Hirst agreed that if there be a costs order it be as refined by Mr Hall, that is, costs of and incidental to the validity issue. Mr Hirst resisted, however, that any costs order expressly include the wife’s costs of and incidental to the mediation in so far as related to that issue, on the basis that it was a “private mediation” and not one ordered by the Court, nor a “Court event”, such that it could not thus comprise part of “the proceedings”, and resisted that there be certification for Senior Counsel, on the basis that there is no evidence that the wife engaged Senior Counsel for the mediation. Mr Hirst made clear, however, that he did not oppose certification for Junior Counsel “in the proceedings”.
On 4 September 2009, I made directions for the filing and service of written submissions in relation to the wife’s costs application, the wife by 11 September 2009 and the husband by 18 September 2009. (The order inadvertently referred to 11 September 2009 in relation to the husband but was intended to be read and thus was read by the parties as 18 September 2009). The order provided that the parties include in their written submissions whether they required a listing of the wife’s costs application for oral argument or that it proceed on the basis of the written submissions.
The wife sought a listing, which subsequently was set for 20 October 2009.
The wife had filed material and submissions on 11 September 2009 and the husband submissions on 18 September 2009.
On 20 October 2009, the wife sought to rely on an affidavit by Charles Chan, her solicitor, filed 19 October 2009 annexing an itemised costs account, a Solicitor/Client Costs Agreement made 31 July 2007 and a letter 19 May 2008 from Mr Chan’s firm advising the wife that as the retainer was on a “no win no fee” basis an “uplift fee” of 25% of the firm’s costs and Counsel’s fees would be charged, the letter containing the wife’s signature in agreement.
On 20 October 2009, in consequence, Mr Hirst sought and obtained an adjournment based upon the wife’s late delivery of material. Fresh directions were made including a fresh listing on 4 February 2010 and an order was made that the husband’s costs of 20 October 2009 thrown away be reserved.
On 4 February 2010, Mr Hirst sought an order that the husband’s costs “of that day”, that is, 20 October 2009, be paid by the wife on the party and party basis. Mr Hall did not resist that order. Mr Hall and Mr Hirst agreed that such be set off against any costs order obtained by the wife. I will, therefore, make that order.
In the reasons for judgment which I gave on 4 September 2009, I made a finding, at par 67, that the husband deliberately gave false evidence in respect of the three critical factual issues identified earlier in the reasons for judgment, at par 47. See pars 47 and 67.
Mr Hirst, properly, acknowledged in his written submissions filed 18 September 2009 and orally that s117AB of the Act thus mandates a costs order. Section 117AB provides:
117AB Costs where false allegation or statement made
(1) This section applies if:
(a) proceedings under this Act are brought before a court; and
(b) the court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.
(2)The court must order that party to pay some or all of the costs of another party, or other parties, to the proceedings.
Mr Hirst then, properly, characterised the issues as:
·whether party and party or some other costs order be made
·whether the costs order include or not include reference to the wife’s costs of and incidental to the mediation
·whether there be certification for Senior Counsel or only Junior Counsel.
Mr Hirst, however, prefaced such with the context that in family law proceedings by s117(1) each of the parties is to pay his and her own costs unless a justifying circumstance be shown to enliven the discretion to make an order for costs and that if such be shown any order be limited to one which the Court considers just.
Relevant principles
In Penfold and Penfold (1981) 44 CLR 311 the High Court said at 315:
It is an accurate description of s117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s117(2). As sub-s(1) is expressed to be subject to sub-s(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.
Sub-section (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 interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs…..(emphasis added)
As is plain, Penfold’s case deals only with s117, not s117AB.
Nonetheless, it is equally plain that s117AB, whilst mandating an order for costs in the circumstances in which s117AB applies, confers a discretion that the order mandated be for “some or all” of the costs of another party.
Further, as the wife expressly seeks indemnity costs, it is necessary to refer to the principles relating to the consideration of such.
Principally, the authorities mandate that indemnity costs, when awarded, are to be compensatory and not punitive. Further, whilst they dictate that the categories of cases or circumstances in which indemnity costs are awarded are not closed, some of the circumstances in which indemnity costs have been awarded are instructive, as, for example, collected in Fennessy & Gregorian [2009] Fam CAFC 44; (2009) FLC 93-399 at [59]-[60], which paragraphs make clear also that the award of indemnity costs is “still an exception” to an order for costs on the party and party basis.
The wife’s grounds for seeking costs on the indemnity basis
In relation to s117(2A) of the Act, Mr Hall relied principally on:
·s117(2A)(c), namely the husband’s conduct in relation to the proceedings, in particular having regard to my finding that deliberately the husband gave false evidence as to the principal factual matters in issue
·s117(2A)(e), namely that the husband has been wholly unsuccessful in the validity proceedings
·s117(2A)(a), namely the financial circumstances of each of the parties and
·s117(2A)(g), referring again to my finding that the husband deliberately gave false evidence as to the principal factual matters in issue, such that in all of the circumstances thus his resistance of the wife’s s90G(1)(e) relief was “doomed to fail”.
The husband’s grounds for resistance of an order on the indemnity basis
In relation to s117(2A) of the Act, Mr Hirst relied principally on:
·s117(2A)(a), contending that the evidence shows that the husband has no capacity to pay a costs order and that his financial circumstances are such that there is no disparity between his and the wife’s financial circumstances
·s117(2A)(e), contending that the husband was not “wholly unsuccessful” in relation to the validity issue because one of his legal arguments was determined against the wife
·s117(2A)(f), contending that there is no evidence that the wife complied with pre-action procedures in relation to the validity issue, nor provided a letter before action and did not at any stage make an offer to settle concerning the validity issue for the husband to consider.
Analysis and findings
Section 117(2A)(e)
It is convenient first to deal with Mr Hirst’s point under s117(2A)(e).
As a subsidiary point to the wife’s main contention under s90G(1)(e), namely that the financial agreement was not binding because after it was signed neither the original nor a copy was given to her, the wife raised an alternative argument that contrary to s90G(1)(b) the financial agreement did not contain in relation to each party a statement complying with its requirements in that the statement in the financial agreement contained the words “entering into the Agreement” in relation to each party instead of the words used in s90G(1)(b)(ii) “making the agreement” (clauses 16(b) and 17(b)) and the wording in the certificates annexed to the financial agreement suffered the same deficiency.
At the hearing, I determined this matter against the wife. See the reasons for judgment, pars 110 - 114. As is evident, in a judgment of 33 pages and 122 paragraphs this was a very minor aspect of the matter and one which expressly I said was not necessary to deal with to dispose of the matter. See the reasons for judgment, par 110. Nonetheless, as the wife raised it, and argument was addressed to it, it is the case that whilst the husband was wholly unsuccessful in the result there was one legal issue raised by the wife in respect of which the husband succeeded.
As the trial judge, I have no hesitation in stating that this aspect of the matter occupied as little space in Counsels’ submissions as in my reasons for judgment; did not require any additional evidence being a matter argued on the face of the financial agreement, ex 1 in the proceedings; and occupied little Court time.
I am tempted to disregard the issue as so inconsequential as not to affect the costs order which, pursuant to s117AB, the wife must have. However, as s117AB expressly enlivens a discretion as to “some or all” of the wife’s costs, and as this issue did not touch at all upon the husband’s dishonesty, as I determined in par 67 of the reasons for judgment, it is just that I not allow the wife all of her costs, whether on the indemnity or some other basis, but that I make an order reflecting that at least some of her costs were directed to this issue on which she was not successful.
Having regard to the matters which I have mentioned, in the mandatory costs order which I will make, and whether on the indemnity or some other basis, the wife should not have her costs of this issue which, being generous to the husband, I would assess at 5% of the wife’s costs. Thus, in the order which I will make, whether on the indemnity or some other basis, I will order that the wife have 95% of her costs of and incidental to the validity issue.
As will be seen, this 5% reduction will apply to the wife’s costs as agreed or assessed, but not to any uplift fee, such being a sufficient reduction having regard to the matters which I have mentioned.
Section 117(2A)(f)
During argument it was stated as common ground that there is no evidence as to whether the wife engaged in pre-action procedures or provided a letter before action and common ground that she did not make an offer to settle in relation to the validity issue.
Mr Hirst relied on Greedy & Greedy (1982) FLC 91-250, referred to in Jensen & Jensen (1982) FLC 91-263, in relation to the principle that in some circumstances a failure to negotiate is a relevant consideration in determining whether a costs order be made.
However, in this case there was a mediation.
Further, to make good his argument, Mr Hirst would need to rely upon an inference that if the wife had engaged in pre-action procedures or provided a letter before action or made an offer to settle the husband would not have presented a deliberately false case and the matter thus may have been likely to settle. I do not think so. The husband was firmly wedded to his deliberate lies, as determined in par 67 of the reasons for judgment. I would refer to Schedule 1 to the Family Law Rules 2004, clause 1(4)(d). Having regard to the falsity of the husband’s case, probably it would have been futile for the wife to engage in pre-action procedures in relation to the validity issue. Moreover, as was pointed out during argument the validity issue was not one capable of any compromise between the husband and the wife. The financial agreement cannot have been found to have been “half valid”, as observed by Mr Hall. It was either valid, or not valid, having regard to s90G(1)(e), and that matter on any view required determination according to the parties competing factual contentions.
Negotiation thus could only have resulted in the wife surrendering her invalidity claim wholly, which would have been unreasonable to expect of her because she ultimately succeeded in it, or the husband acknowledging it and dropping his deliberately false case, which plainly would not have occurred because he persisted in it to the end. I reject, therefore, Mr Hirst’s argument, which seems to be that the wife’s position in relation to costs is somehow weakened in the circumstances outlined.
Section 117(2A)(c) and (g)
Mr Hirst submitted that I “preferred” the evidence of Mr X and the wife to that of the husband, but that whilst I rejected the husband’s evidence, the case was not one in which I found that the husband “set out from the beginning deliberately to concoct an inherently false story.” Further, he put that the husband “has not been shown by corroborative documents to have lied.” The first two contentions misread my reasons for judgment, in which I made clear that there was no mere preference in the face of doubt for Mr X’s and the wife’s evidence rather than the husband’s evidence, but a strong finding after very detailed examination of the evidence that the husband’s evidence deliberately was false, that the matter was not one of recall but of dishonesty and that the inconsistencies between the husband’s evidence and Mr X’s evidence were “too stark to resemble innocent error or mere mistaken recall” leading thus to my conclusion of “deliberately false evidence on the part of the husband in respect of these matters” (reasons for judgment, par 67) being the three critical matters earlier set out (reasons for judgment, par 47). Further, these were not merely peripheral issues, but the central issues.
If a matter is blatantly and starkly false, and found to be so, it is not to the point whether it was or was not “inherently” false. It matters not that the falsity was not corroborated by documents. It matters not whether the husband “set out from the beginning” to deceive, or concocted or made up his story along the way. (In this regard, as to part of his story, see the reasons for judgment, par 68). Moreover, as Mr Hall pointed out in his submissions, the husband’s false case was perpetrated not just in his affidavit material but prior to that in the pleadings (that is, the husband’s response to the wife’s statement of contentions) which on 1 September 2008 I had ordered be delivered. One applies of course the presumption (rebuttable) that in putting facts into a pleading a solicitor is acting on express instructions as to those facts.
The husband’s false conduct in the proceedings thus not only was conceived earlier than the hearing and at least at the pleading and affidavit stage but continued throughout with direct causative effect in relation to the incurrence of the wife’s costs in relation to the s90G(1)(e) validity issue.
Section 117(2A)(e)
The husband was wholly unsuccessful in the result on the validity issue, but on a minor issue was successful. I have dealt with this.
Section 117(2A)(a)
The wife has modest assets, referred to in her affidavit material, and lives week to week by modest earned income.
The husband, at the time of signing the financial agreement, by annexure C to it, was described as having net assets and financial resources of about $17.8 million, represented by assets $20.8 million and liabilities $2.93 million. See exhibit 1.
The husband, however, in a financial statement and affidavit each filed 18 December 2009 seeks to portray that as the result of the global financial crisis and other matters he and his group of companies, the B Group, are insolvent. The husband deposes thus that although he has been a property developer for some 35 years, he now has no capacity to meet a costs order. He deposes further, in support of this contention, that presently he has no income “at all”, and that whilst in the past he has repaid loans owing to him from companies and trusts in the B Group, in which he has an interest, funds are now not available for this to occur, such that he has been “living on borrowed funds and credit cards” and recently has had to take out “a further American Express credit card to meet the payment of legal costs associated with these proceedings.”
The husband, by way of Schedules A and B annexed to his financial statement, set out the several companies of which he is a director and shareholder and the several trusts in which he has an interest as a primary beneficiary (Schedule A) and a synopsis of the present financial state of his development and investment corporate and other trust vehicles (Schedule B). In schedule C, he provided balance sheets as at 30 June 2008 in relation to what appear to be the three major corporations in his group. Schedule C includes a letter from the husband’s accountant dated 7 April 2009. There is however no more recent financial information from his accountant, nor balance sheets for 30 June 2009 (even in draft) nor to date.
Mr Hall, by extraction of figures in those Schedules, submitted that they calculate as $19.35 million assets in the group, and $22.49 million liabilities, such that if the figures be accurate there is a liquidity problem and insolvency. Mr Hall put, however, that since the date of signing the financial agreement, and the husband’s then estimated net assets of $17.8 million, there has been a substantial increase in liabilities largely unexplained, and that whilst the figures indicate that there is insolvency they are untested and not accompanied by valuations such that there is no expert or independent evidence of the liabilities and values for which the husband now contends.
In Schedule B, the husband refers to P Pty Ltd as a company which owns one floor of a building on the Gold Coast, which the husband says has a value of “between $10 and $12 million dollars”, and a liability over the entire property of “$11 million” in favour of Westpac. In his affidavit, the husband said that these values are his estimate for non forced sale, but that if sold “by a bank or financial institution in possession” he would estimate that the values would reduce “by approximately 10 to 20 per cent”. The floor owned by P Investments Pty Ltd, he says, has a value of approximately $2 million. The balance of the floors, as I read Schedule B, are owned by S Corporation Pty Ltd. The husband contends that if he were “required to sell” the Gold Coast building, in a forced situation, “or if the bank took possession”, the sale price in his view “could be as little as $8 million”.
However, as submitted by Mr Hall, none of these “estimates” by the husband is the subject of independent expert valuation evidence and further there is no independent proof of the extent of the alleged current liabilities of the group nor how they may have increased from $2.93 million in 2004 (see annexure C to the financial agreement) to, allegedly, $22.49 million now.
It is not necessary to go into further detail in relation to the group’s financial circumstances, to the extent to which they are set out in the documents to which I have referred, save to observe that the husband deposes that currently he is not undertaking any developments and that the Gold Coast building has experienced reduction in its tenancies so that all of its income services the $11 million debt to Westpac. Curiously, as to the husband’s individual worth, his financial statement at Part B records against “total value of property owned by you” the words “not known”, and against “total of your liabilities” the words “not known” and against the words “total of your financial resources”, reference to the Schedules.
The Court will not make a futile order. However, I am not at all persuaded that the husband does not have the capacity to so arrange his affairs to enable him to pay a costs order including on the indemnity basis if I should order that. In this regard, I take into account that the wife’s material includes an itemised bill of costs, annexure A to the affidavit of Mr Chan filed 19 October 2009, claiming costs to date of $192,000 including a 25% uplift fee. However, even a cursory glance at the itemised bill of costs shows work done other than in relation to the validity issue so that even on the indemnity basis including a 25% uplift fee a costs order would be less than that amount. It is not yet known what amount may be assessed even on the indemnity basis including a 25% uplift fee, save that the itemised bill of costs may be taken to indicate the upper limit of claim before assessment and before apportionment in relation to the wife’s costs in relation to the validity issue as opposed to the other issues in the case which I have mentioned, that is, the unconscionable conduct issues.
Mr Hirst points to the circumstance that the husband was not, despite opportunity, cross-examined on his evidence as to his financial circumstances and submitted that an examination of the husband’s and the wife’s financial circumstances now shows that there is no longer any disparity.
On the husband’s own evidence however it appears that he has the capacity to borrow or at least recently has had the capacity to borrow for his own legal fees by way of an American Express credit card. Significantly, although the husband deposed that he has not been able to obtain funding for a project at D which has development approval he did not depose that any financier has refused him credit for any other purposes. Furthermore, having had opportunity to observe the husband at the trial, it seems to me to be more likely than not that in relation to a costs order he will find the capacity in some way to pay it rather than to suffer personal bankruptcy.
I have taken into account the husband’s material. As said, he was not cross‑examined. However, even on the face of his own material I am not persuaded that there is anything in it that indicates that he would not be able to so arrange his affairs to pay a costs order rather than suffer personal bankruptcy.
The result
In Penfold’s case, it was held that the giving of deliberately false or misleading evidence is conduct capable of leading to a costs order. Further, s117AB of the Act has the effect of a mandatory costs order having regard to that circumstance.
Indemnity or some other basis
As to whether the appropriate order is for indemnity costs or costs on another basis, it seems to me that, but for the husband’s lies, the wife would not have incurred the costs which she did incur in relation to the validity issue.
In Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536 it was held that justifying circumstances for indemnity costs included wilful disregard of known facts, the making of allegations which ought never have been made or the undue prolongation of a case by groundless contentions. Further, in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-1 it was held that it is appropriate to consider awarding what was there described as solicitor and client or indemnity costs:
…whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.
In J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) No 2 (1993) 46 IR 301at 303 French J said in relation to indemnity costs:
It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.
In Fennessy & Gregorian, to which I have already referred, the Full Court of this Court at [60] referred to the following passage in Colgate-Palmolive at 257:
…it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors & Weekes); evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (Messiter v Hutchinson; Maitland Hospital v Fisher (No 2); Crisp & Kent) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). (citations omitted)
It seems to me that not only did the husband have a hopeless case on the validity issue on the true facts, that is, if he had not lied, but that the matter of his hopeless case was compounded by his blatant dishonesty and blatant fabrication of a deliberately false case, as I have found. Absent the husband’s dishonesty, he had no arguable case to run on the s90G(1)(e) validity issue. His deliberately false evidence caused loss of time to the Court and caused the wife unnecessarily to incur costs relating to the validity issue.
Thus, it appears to me that the husband’s conduct falls into several the categories collected in Colgate-Palmolive, namely that his particular misconduct, by his dishonesty, caused loss of time to the Court and to the wife; that his conduct in the proceedings was in wilful disregard of the known facts, that is, the true facts; nd, that his conduct caused undue prolongation of a case by groundless contentions.
In these circumstances, it is the proper exercise of my discretion to award indemnity costs and in the exercise of my discretion, I will do so, based upon the Solicitor/Client Costs Agreement between the wife and her solicitors, but subject to the 5% reduction to which already I have referred. The order will be in the usual terms, that is, that the wife have all costs incurred save only those costs unreasonable in amount and those costs unreasonably incurred: Fountain Meats at 400-1.
The uplift fee
Separate argument ensued as to whether the costs order in the wife’s favour should include the 25% uplift fee which the wife agreed to pay according to the terms of the retainer with her solicitors which was on the “no win no fee” basis. The Solicitor/Client Costs Agreement, by Item 4 of the Schedule, provided:
ITEM 4: FEES – HOW CALCULATED
…..
(ii) No Win No Fee
We agree to the terms and conditions set out in this agreement:
(a)To act on your behalf on the basis that this firm’s legal fees will be paid at the successful conclusion of your matter. If your case is successful our fees will be paid out of any settlement, or costs recovered on your behalf.
(b)To waive or not enforce any requirement of you to pay our legal fees in the event that your claim does not resolve in the recovery of settlement monies.
…..
By letter 19 May 2008, signed by the wife in agreement, her solicitors set out the following further terms in relation to the costs agreement:
We refer to the above and to our Cost Agreement dated 31 July 2007.
As you have instructed us to initiate Court proceedings with regard to the validity of the Financial Agreement dated 10 August 2004, we wish to advise our amended estimated costs as follows:
1.As our retainer is on a ‘no win no fee’ basis we will charge an uplift fee of 25% of our costs;
2.Fees: Between $55,000 to $65,000 plus GST and uplift fees;
3.Barristers fees: Between $75,000 and $85,000 plus GST plus uplift fees;
4.Outlays including Postage, Photocopying, Telephone and Facsimile charges and agency fees for court filing: $2,000 + GST.
Should you agree to the above, please sign the duplicate of this letter where indicated.
Section 324 of the Legal Profession Act 2007 (Qld) provides:
324 Conditional costs agreements involving uplift fees
(1)A conditional costs agreement may provide for the payment of an uplift fee.
(2)The basis of calculation of the uplift fee must be separately identified in the agreement.
(3)The agreement must contain an estimate of the uplift fee or, if that is not reasonably practicable, both of the following—
(a) a range of estimates of the uplift fee;
(b)an explanation of the major variables that will affect the calculation of the uplift fee.
(4)If a conditional costs agreement relates to a litigious matter, the uplift fee must not exceed 25% of the legal costs, excluding disbursements, otherwise payable.
It seems to me that the terms of the letter comply with s324(4) in that the uplift fee does not exceed 25%.
During argument, as I recall, it was suggested by Mr Hirst that the question whether the uplift fee should comprise part of the wife’s costs be left as part of the assessment process. However, potentially that would lead to the requirement for Court adjudication on another day. The matter has been fully argued and there is no reason not to determine it.
Section 117AB provides a discretion to pay “some or all” of the costs of another party, in cases in which s117AB applies.
Thus, it is open to me to award the wife full indemnity costs in relation to the applicable fees set out in the Solicitor/Client Costs Agreement, but either full or partial indemnity costs in relation to the uplift fee.
I am inclined to allow the uplift fee of 25% on the full indemnity basis, for the reason that indemnity costs, which I have determined the wife should have, are compensatory: Cassidy v Murray (1995) FLC 92-633 at 82,365-6 citing Latoudis v Casey (1990) CLR 534 at 567 per McHugh J. Mr Hall argued, based upon that principle, that the wife be “reimbursed for the full liability incurred”, thus including the 25% uplift fee. He referred to the circumstance that it was necessary for the wife to agree to the 25% uplift fee because she could not afford to put her lawyer in funds, with effect that she and her lawyers agreed a retainer on the no win no fee basis, which her lawyers were not obliged to do, such that the uplift fee agreed was part and parcel of the retainer on that basis and inseparable from it. Mr Hall argued thus that the wife would not have been able to engage lawyers to prepare and argue her case if she had not agreed to the uplift fee, such that the only way she could bring her case was by agreeing to that term.
Mr Hirst argued however that there was no evidence that the wife could not have engaged lawyers on the no win no fee basis who would not charge an uplift fee, nor whether there are firms in that category that the wife could have approached. Mr Hirst raised also that one of the matters that I am required to consider under Rule 19.18(3)(c), in assessing whether costs should be awarded on the indemnity or some other basis (see Rule 19.18(1)(b)), is whether the rate charged, that is, the uplift rate charged, is one “ordinarily payable to lawyers in comparable cases”, referring also to Rule 19.18(3)(a) as to “the importance, complexity or difficulty of the issues”.
In this regard, I am able to assess, from my own experience, that the Schedule of Fees in the Solicitor/Client Costs Agreement, Item 4(i) of the Schedule, is comparable for litigious matters of similar importance, complexity or difficulty. At this part of the Schedule, the hourly rates were set out for “Principal”, “Consultant”, “Solicitor” and “Articled Clerk/Law Clerk”. However, I am not able to assess, from my own experience, whether a 25% uplift fee is a rate “ordinarily payable to lawyers in comparable cases”, that is, litigious cases of similar importance, complexity or difficulty, and I am not assisted by any evidence in relation to this aspect of the matter. Thus, although s324(4) of the Legal Profession Act 2007 (Qld) allows the charge of an uplift fee in litigious matters to be 25% of the legal costs, excluding disbursements, otherwise payable I am not able to assess whether in this particular case such is standard, within range or excessive. In this context, if such be standard, or within range, then the husband should pay it on the full indemnity basis. However, if 25% exceeds what is standard, or within range, then it would be unfair to the husband for the wife to have full indemnity for the uplift fee and she should have partial indemnity for such percentage uplift fee as may be assessed as standard or within range in the particular circumstances of the case.
Thus, mindful as I am that under s117AB there is scope to order “some or all” of the wife’s costs, and of the wide discretion under Rule 19.18(1)(b) to assess costs “on a particular basis”, it seems to me that I am able to order, as already determined, that the wife have indemnity costs according to the hourly rates and other matters set out in the Solicitor/Client Costs Agreement, but that in relation to the uplift fee I frame an order so that the wife have such uplift fee as may be assessed as ordinarily chargeable by lawyers engaged on the basis of a no win no fee retainer for comparable litigious cases having regard to the importance, complexity or difficulty of the issue, but that if there should be no recognised standard uplift fee or range of uplift fees in order to be assessable on that basis for partial indemnity of the uplift fee, then the wife be entitled to the full 25% uplift fee agreed between her and her solicitors.
I have determined already that the assessment of the wife’s costs under the Solicitor/Client Costs Agreement be reduced by 5%.
There is however no reason to reduce the uplift fee, be it 25% or assessed at a lower percentage, as the 5% reduction already will have been taken into account.
Specifically, I have considered whether the 5% reduction should apply also to the uplift fee, and have determined that it should not, for the reasons earlier stated.
Costs order to include or exclude the mediation
The next question which arises is whether the order expressly ought make reference to the mediation. I have foreshadowed that Mr Hirst’s argument was that this ought not be included in my order because it was a private mediation and thus not a Court event. In this regard, as I understood his argument, he distinguished, by way of proposition, between private mediation and Court ordered mediation. I regard this distinction as artificial in the particular case because, as I have mentioned, the parties by consent sought that the hearing dates 8 and 9 April 2009 be vacated expressly for the stated purpose of parties attending the mediation which they had agreed should take place on 9 April 2009 instead.
Further, in relation to Mr Hirst’s submission that the mediation was not a Court event and thus could not comprise part of “the proceedings”, such submission is contrary to the definition of proceedings in section 4(1) of the Act:
“proceedings” means a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
It is settled law at the highest level of authority that words such as “in connexion with” are words of the widest import. I do not, therefore, accept the submission that a mediation in the course of these proceedings agreed upon by the parties hopefully to bring the proceedings to an end is not “in connexion with” the proceedings.
Further, the Rules encourage conduct by parties to promote their main purpose, which is the expedient dispatch of the Court’s business without undue expense or delay. The mediation, as I have said, was in relation to all issues, not just the validity issue.
Mr Hirst further contended that I not include reference to the mediation in the order but that such argument be left for another day when the wife’s costs are to be assessed. However, full argument has been had on the matter and adjudication of it plainly is required.
In my view, the mediation conducted with the Hon Travis Lindenmayer, although not ordered by the Court, and as such not a Court event, nonetheless was a step in connexion with the proceedings and properly thus the subject of inclusion in the order for assessment of the wife’s costs.
I will add, as submitted by Mr Hall, that Rule 19.18(3)(e) requires that I may consider in making a costs order “the time properly spent on a case”. It is not contestable that the mediation was other than “time properly spent” on the case.
Certification for Senior Counsel
As to certification for Senior Counsel, as I understood Mr Hirst’s argument, he opposed certification for Senior Counsel because there is no evidence that the wife at any stage had engaged one. The wife did not appear by Senior Counsel in the Court, the appearances for her being by Mr Hall of Junior Counsel.
I do not know whether the wife may have had Senior Counsel behind the scenes, as it were, as indeed did the husband, by Mr Richardson SC, nor whether the wife may have had Senior Counsel appear for her at the mediation. If the wife did not have Senior Counsel, then nothing turns on it. However, in my view it is somewhat awkward for Mr Hirst to contend that there ought not be certification for Senior Counsel when he indeed conceded that the husband has had Senior Counsel, Mr Richardson SC, behind the scenes, and indeed, as I observed in the reasons for judgment, Mr Richardson SC is named on the husband’s submissions in relation to the validity issue. I therefore propose to exercise my discretion to certify for Counsel, including Senior Counsel, in relation to the validity issue and that expressly such include the mediation.
Editing
In editing these reasons, I have taken the opportunity to expand upon the reasons concerning the uplift fee, which right I expressly I reserved upon the delivery of these reason ex tempore.
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I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly
Associate:
Date: 8 March 2010
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