TALWAR & SHARMA (No.2)
[2018] FCCA 3413
•30 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TALWAR & SHARMA (No.2) | [2018] FCCA 3413 |
| Catchwords: COSTS – Application for costs on an indemnity basis – costs order made on an indemnity basis. |
| Legislation: Family Law Act 1975 (Cth), s.117 Federal Circuit Court Rules 2001, r. 21.01, 21.02 |
| Cases cited: Calderbank v Calderbank [1975] 3 All ER 333 |
| Applicant: | MR TALWAR |
| Respondent: | MS SHARMA |
| File Number: | PAC 4550 of 2017 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 20 August 2018 |
| Date of Last Submission: | 7 September 2018 |
| Delivered at: | Parramatta |
| Delivered on: | 30 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Mahony |
| Solicitors for the Applicant: | Foteades Freeman Cohen |
| Appearing for the Respondent: | Mr Benjamin |
ORDERS
That within 30 days the wife pay the husband’s costs in the amount of $22,850.
Remove all outstanding issues from the list of cases awaiting finalisation.
IT IS NOTED that publication of this judgment under the pseudonym Talwar & Sharma (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 4550 of 2017
| MR TALWAR |
Applicant
And
| MS SHARMA |
Respondent
REASONS FOR JUDGMENT
On 1 March 2018 the Court made Orders pursuant to Rule 21.01 Federal Circuit Court Rules2001 that the wife was to pay, within 42 days, an amount of $15,000 into the trust account of the husband’s solicitors by way of security of costs. The substantive proceedings were stayed pending the wife’s compliance with the security for costs order.
On the same day the Court published its Reasons for Judgment in respect of the security for costs order.[1]
[1] See Talwar & Sharma [2018] FCCA 483
On 12 April 2018 the wife filed a Notice of Discontinuance in respect of her “Application for Final Orders” filed 11 August 2017. She applied to discontinue all of the orders she sought.
The wife has never complied with the security for costs order.
On 7 May 2018 the husband filed a further Application in a Case seeking an order that the wife pay him the sum of $22,885 within 30 days, by way of costs calculated on an indemnity basis. In support of that application the husband filed an Affidavit on 7 May 2018, and written submissions on 14 August 2018.
The wife opposes the making of the indemnity costs order. She has filed a Response to an Application in a Case, a Financial Statement and two Affidavits in support of that Response.
On 20 August 2018 the Court made Orders, following the parties’ consent for the matter to be dealt with on the papers, for the wife to file submissions within 21 days and any submissions in reply to be filed within a further 7 days.
On 7 September 2018, a document titled “Wife’s Response to Written Submissions as to Costs” was filed in the wife’s case (“wife’s submissions”). No submissions in reply were filed by the husband.
At the commencement of the wife’s submissions the following appears:
Ms Sharma attended the free-legal service of Suburb A Legal Centre (TLC) initially on 16 June 2018. As a vulnerable person with little money, she was referred to Suburb A LC by a solicitor who could not help her free-of-cost.
Suburb A LC is an unfunded community based legal centre run by volunteer-solicitors and law students.
Since Suburb A LC functions only on a part-time basis, it took a few visits to the Centre to understand Ms Sharma’s circumstances and where the court process stood.
During these visits, we were able to understand the issues and offered our advice.
20th of August 2018 was my first pro bono appearance on her behalf before the Federal Circuit Court.
The following response is based on Ms Sharma’s instructions and supported by evidentiary material available (either previously provided or attached to this submission).
The Court understands that the wife’s submissions were prepared on a pro-bono basis.
The submissions filed on behalf of the wife in response to the application for indemnity costs are of very little assistance, notwithstanding their length. The submissions rely on matters which are not the subject of any sworn evidence and annex documents which are not sworn documents. To the extent that the submissions address matters which are not the subject of any evidence, those submissions are given no weight. The submissions to a large extent purport to re-agitate matters which were the subject of the security for costs application or alternatively and equally unhelpfully seek to re-agitate matters in respect of the property adjustment application which the wife discontinued.
The husband in his Affidavit sets out the relevant matters in support of his costs application, including the amount of costs he had incurred and annexing an offer of compromise (pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333 made on 27 February 2018 and rejected by the wife on 28 February 2018. It was an offer that the husband pay the wife the sum of $15,000 in full and final settlement of the property adjustment proceedings commenced by the wife on 11 September 2017. The wife in rejecting the offer made a counter offer that the husband pay her $20,000. As noted earlier, she discontinued the proceedings on 12 April 2018. The husband incurred substantial costs.
The principles in respect of costs orders in family law proceedings are well known. The starting position with respect to costs, as set out in s117 of the Act is that, subject to subsection 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[2]
[2] see for example Collins & Collins (1985) FLC 91-603.
The High Court held in Penfold & Penfold[3] that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
[3] (1980) 144 CLR 311
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the Applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a ‘clear case’. [4]
[4] See in general the comments made by the Full Court in Wrensted & Eades [2016] FamCAFC 46 and in particular where the Full Court approved the comments of the judge below at [103]
In Latoudis v Casey[5] the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.”[6]
[5] (1990) 170 CLR 534
[6] Referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane [2012] FMCAfam 984 at [17]
In determining what order, if any, should be made under s117(2), the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
Rule 21.02(2) Federal Circuit Court Rules2001 provides that in making an order for costs the Court may set the amount of costs; or set the method by which the costs are to be calculated; or refer the costs for taxation.
The Court finds, for reasons outlined below, that there are circumstances justifying the making of a costs order.
The Court has the power to order costs on an indemnity basis.[7] The principles in respect of indemnity costs orders are also well known[8], and in essence may be summarised as follows:
a. the application of the ordinary well-settled rule of costs being ordered on a party and party basis will usually result in the amount received by the successful party falling short of a complete indemnity;
b. some special or unusual feature of the case must, in the circumstances, warrant departure from the well-settled practice of awarding costs on a party and party basis including an imprudent refusal of an offer of compromise; and
c. even if facts exist to justify the making of an indemnity costs order, such an order need not necessarily be made because costs are always in the discretion of the court. [9]
[7] See for example: Kohan & Kohan (1993) FLC 92-340; Latoudis v Casey (1990) 170 CLR 534.
[8] See generally Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 46 FCR 225 at
[9] Sala & Habner (No. 2) [2018] FCCA 2738 at [3]
Court’s Considerations
The financial circumstances of the parties are known in so far as they are set out in their respective Financial Statements. At the time of hearing this application, the husband had not filed an updated Financial Statement, although the wife had.
The wife is employed and earns a reasonable income. She has reasonable and not unusual expenses. She has some savings, although the savings which she held in February 2018 have at least in part been spent on her own legal fees.
The husband’s financial position is on all accounts better than that of the wife in terms of resources and assets. However, the costs he has incurred in these proceedings are not insignificant and are a burden which he otherwise would not have had but for the commencement of the proceedings by the wife.
The conduct of the parties in relation to the proceedings is not in any way extraordinary or particularly troubling.
As noted earlier, the wife filed a Notice of Discontinuance shortly after commencing proceedings. The submissions made on her behalf in respect of that issue seem to suggest that she received incorrect advice about prospects and has now made complaints against her former solicitors. When the security for costs application came on for hearing in February 2018, the matter had been stood down before it was heard to allow the wife the opportunity of providing instructions after some preliminary comments from the Bench were made in respect of the wife’s substantive plea for relief.
Importantly, there is no evidence before the Court as to what advice the wife actually received from her former solicitors. Furthermore, there is no evidence before the Court which would suggest that the wife does not any redress available to her against her former solicitors in respect of what she alleges[10] is, in essence, negligent advice.
[10] Through her submissions not her evidence
Lastly, the wife did not join in the costs application by seeking costs against her former solicitors, instead the following submission is made:
1. The Court has power to make orders against Third Parties…
2. If the Court were to consider the making of a costs order against a third party, that party should be given an opportunity to be heard on the matter.
3. In those circumstances, an adjournment of 8 weeks would be appropriate.
While this Court, in proceedings before it, must proceed without undue formality[11] a submission such as the one made in the wife’s case, cannot be taken to be a de facto application for costs against an unnamed third party. It is an entirely inappropriate submission.
[11] S 42 Federal Circuit Court of Australia Act1999 (Cth)
The wife has not complied with the Court’s orders for security for costs.
The wife has been wholly unsuccessful in the proceedings, not only in respect of the substantive proceedings (which were discontinued) but also with respect to the security for costs application.
As noted earlier, the husband made a written offer to settle the proceedings. Had that offer been accepted it would have seen the wife substantially better off than she ultimately has been.
At the time of the filing of the security for costs application, the husband’s costs had been $15,000. At the time of filing of the costs application, the husband’s costs were $22,885. The husband’s costs have been entirely wasted.
In all of the circumstances of this case, and in the exercise of the Court’s discretion an order that the wife pay the husband’s costs in the amount sought by the husband is appropriate.
Orders are made accordingly.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 30 November 2018
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