Taronite and Mabra (Costs)

[2017] FCWA 72

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: TARONITE and MABRA (COSTS) [2017] FCWA 72

CORAM: O'BRIEN J

HEARD: WRITTEN SUBMISSIONS

DELIVERED : 12 JUNE 2017

FILE NO/S: PTW 5699 of 2014

BETWEEN: MS TARONITE

Applicant

AND

MR MABRA
Respondent

Catchwords:

COSTS - where wife seeks indemnity costs of over $438,000 - where the costs charged are entirely disproportionate to the matters in issue - where the Court expresses serious concern as to the propriety of the fees charged - where there are circumstances which justify an order for costs but not indemnity costs - where it is appropriate to award costs in a fixed sum - husband ordered to contribute towards the wife's costs in the sum of $20,000 - consideration of referral to Legal Practitioners Complaints Committee.

Legislation:

Family Law Act 1975 (Cth), s 117
Family Law Rules 2004 (Cth), r 1.08, r 19.18(1)
Legal Profession Act 2008 (WA)

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr F Castiglione QC

Respondent: Ms J Sacino

Solicitors:

Applicant: Avon Legal

Respondent: HFM Legal

Case(s) referred to in judgment(s):

Alsop v Lord Oxford (1833) 39 ER 794

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160

Braithwaite v Braithwaite [2007] FamCA 468

Browne & Bloomfield (2003) FLC 93-155

Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23

Kohan & Kohan (1993) FLC 92-340

Madin & Palis (Costs) (2016) 55 Fam LR 59

Nada and Nettle (Costs) (2014) FLC 93-612

Parke & the Estate of Parke (2016) FLC 93-748

Re Felton (1942) 60 WN (NSW) 16

Wrenstead v Eades (2016) FLC 93-697

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1The substantive proceedings between [Ms Taronite] (“the wife”) and [Mr Mabra] (“the husband”) in relation to both parenting and financial matters were commenced by application filed on 2 October 2014 and went to trial in July 2016. Judgment was delivered on 31 October 2016.

2The present dispute relates to the quite extraordinary costs of those proceedings.

3The wife seeks orders in the following terms:

1.That the Respondent Husband pay the Applicant Wife’s costs of and incidental to the Application filed on 2 October 2014 on the following basis:

(a)such costs to be paid on an indemnity basis; or

(b)in the alternative, such costs be paid on a party-party basis as assessed or as may be fixed.

4In short, therefore, the wife seeks an order that the husband pay the whole of her costs of the proceedings. Those costs are quantified in her submissions as totalling $438,653.84 as at 25 November 2016.

5The husband incurred costs and disbursements in a total sum of approximately $135,000.00 in the substantive proceedings. He seeks orders whereby each party would bear their own costs of those proceedings and the wife would pay his costs of responding to her application for costs, fixed in the sum of $5,000.00.

6The asset pool available for division between the parties was found by me at trial to amount to $2,723,383.00. The expenditure by the parties of something in excess of $570,000.00 in legal fees, in a case which raised no difficult issues of law and was not forensically complex, is, to state the observation as neutrally as possible, both unfortunate and difficult to understand.

7No doubt that unfortunate position has been compounded still further by expenditure incurred in the preparation of the voluminous written submissions filed by each of the parties in relation to the question of costs.

The law

8There are two primary matters for determination; whether there are circumstances that justify an order for costs and if so, what order for costs is just. The determination of the husband’s application for an order that the wife pay his costs of the costs application will self-evidently be influenced by the determination of the two primary matters.

9Subsection 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that, subject to s 117(2), each party to the proceedings shall bear his or her own costs.

10Subsection 117(2) provides that if the court is of the opinion that there are circumstances that justify doing so, the court may, subject to s 117(2A), make such orders as to costs as it considers just. Subsection 117(2A) provides 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.

11The discretion conferred by s 117(2) is broad. The factors set out in s 117(2A) are not to be read in a restrictive way and any one of those factors may in appropriate circumstances be the sole basis for an order for costs. That said, the relevant matters in the subsection must be taken into account and balanced in order to determine whether an order for costs is justified.

12In this case, neither party is in receipt of legal aid. The proceedings were not necessitated by the failure of either party to comply with previous orders of the court. Neither party was wholly unsuccessful in the proceedings.

13Accordingly, in considering what order (if any) for costs should be made, I must have regard to:

(a)the financial circumstances of the parties;

(b)the conduct of the parties in relation to the proceedings;

(c)whether relevant offers in writing have been made and, if so, the terms of those offers; and

(d)such other matters as I consider relevant.

14An order for costs is compensatory, not punitive: Braithwaite v Braithwaite [2007] FamCA 468.

15The legislative provisions in relation to costs do not draw any distinction between parenting cases and financial cases, nor is the breadth of the Court’s discretion subject to any such distinction: Wrenstead v Eades (2016) FLC 93-697.

16If an order for costs is to be made, the principle that such costs should be calculated on a party-party basis should not be “lightly departed from” unless circumstances of an exceptional kind exist: Kohan & Kohan (1993) FLC 92-340.

17The Full Court’s more recent admonition in Madin & Palis (Costs) (2016) 55 Fam LR 59 at [23] bears repeating:

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. Unfortunately, however, applications for indemnity costs are increasingly being made in this jurisdiction, thereby imposing further burdens on the court’s limited resources and causing further unnecessary expense for litigants.

The materials before the court

18At the hearing on 31 October 2016 Senior Counsel for the wife foreshadowed an application for costs, but indicated that he was not ready to make submissions in support of that application. I made orders in the following terms:

47.Within 28 days from the date hereof, the Applicant file and serve any submissions upon which she intends to rely in relation to her application for costs.

48.By no later than the close of Registry on 13 January 201[7], the respondent file and serve any responding submissions upon which he intends to rely.

19The wife filed written submissions which, including annexures, amounted to some 90 pages. Those submissions were filed on 28 November 2016.

20Having set out the quantum of her claimed costs, the wife’s solicitors in the penultimate paragraph of their submissions said the following:

In the event these costs are generally disputed we will as may be necessary file the required schedules, itemising each account rendered to the client, including as may be necessary the trust ledger.

21The answering submissions on behalf of the husband, amounting to some 73 pages including annexures, were filed on 13 January 2017.

22Among other things, those submissions made it clear that the quantum of costs sought by the wife was “generally disputed”.

23On 25 January 2017, I therefore directed the solicitors for the wife to file the foreshadowed schedules of costs if indeed indemnity costs were still to be pursued.

24The schedules were filed in accordance with that direction on 9 February 2017.

25For reasons best known to themselves, and without seeking or obtaining permission to do so, the solicitors for the wife simultaneously filed further submissions in response to the written submissions filed on behalf of the husband.

26The solicitors for the wife took umbrage at that, and immediately wrote to the court objecting to the filing of the submissions in response, asking that they not be accepted for filing.

27So as to ensure procedural fairness to both parties, and bearing in mind the significance of the costs orders being sought, I directed the parties to confer as to those issues and, in the event that no agreement was reached in relation to them, to attend at a further hearing before me.

28The parties conferred and agreed that the husband should be permitted to file further written submissions in response. Those submissions were filed on 1 May 2017.

The financial circumstances of the parties

29The husband was nearly 59 years of age at the time of trial. He was not working and had not worked since May 2015. He gave evidence that he had been looking for work, but that evidence was less than convincing. While I anticipated in my substantive judgment the possibility that his efforts to obtain work might gather momentum once the proceedings were completed, there is nothing in the submissions filed on his behalf to suggest that has transpired.

30Pursuant to my orders, the husband received a cash sum of just over $781,000.00. As foreshadowed at trial, he applied the bulk of those funds to purchase a property in [Suburb A]. The total cost of that purchase was approximately $662,000.00. Otherwise, he spent just over $41,000.00 in paying outstanding legal fees and some $15,000.00 in relation to other debt. It appears from correspondence between the solicitors exhibited to the various submissions that he has undertaken to retain not less than $30,000.00 pending determination of the wife’s application for costs.

31The wife was 46 years old at the time of trial. While she has faced serious health issues, she continues to work. She retained significantly more in the form of assets than did the husband. She is primarily responsible for the care and support of the children, including payment of their private school fees, with little or no assistance in that regard from the husband.

32The husband argues that his expenditure of the bulk of the monies he received pursuant to my orders on the acquisition of a home was both reasonable and anticipated. That submission is accurate.

33That said, the impecuniosity or alleged impecuniosity of a party is not of itself a barrier to a costs order being made against that party: Nada and Nettle (Costs) (2014) FLC 93-612. Rather, it is but one of the matters to be taken into account in considering both whether circumstances exist which would justify an order for costs and if so what order for costs is just.

34In this matter, the respective financial circumstances of the parties do not, in my view, influence the determination of either question.

The conduct of the parties in relation to the proceedings

35Both parties were critical of the conduct of the proceedings by the other.

36The wife’s submissions summarised her criticisms of the husband by saying that he had:

(a)failed to provide adequate disclosure;

(b)failed to provide timely responses to progress the matter;

(c)pursued lines of enquiry and issues on which nothing turned at trial; and

(d)maintained a position in both parenting and property matters, which made it necessary for the wife to pursue [the] matter to trial.

37The wife’s submissions in relation to the asserted failure on the part of the husband to provide adequate disclosure in a timely fashion were (unusually in this matter) very brief and lacking in detail. Nothing turns on them.

38It appears from the examples cited in the wife’s submissions that the husband’s responses through his solicitors to various enquiries during the course of the proceedings were less than timely. While it is understandable that a level of frustration on the part of the wife and her advisers would have resulted, there is no evidence or submission to demonstrate that the wife was put to additional cost, other than the identification of one specific example.

39In August 2015, the wife proposed that Dr Watts be appointed as the Single Expert Witness to prepare a report in relation to parenting matters. No response was received from the husband’s then solicitors prior to him changing his representation in September 2015. It appears there was still further delay in a response from those solicitors, notwithstanding letters following up, with no substantive response being received until February 2016. There was then an exchange of correspondence as to the appropriate terms of reference, before the husband consented to the proposed appointment on 12 April 2016.

40The wife’s submissions indicate that during the period 14 March 2016 to 18 March 2016 she incurred fees of $4,826.25 for the preparation of a Form 2 application and affidavit in support of the proposed appointment. Those documents were never filed, given the husband’s eventual consent. The wife contends that their preparation by her solicitors was reasonable in all the circumstances and only made necessary by the husband’s inattention to the matter.

41Leaving aside the question of whether the fees charged for the preparation of those documents were reasonable, about which I have some concerns as outlined further below, the submission, as framed, ignores the fact that the documents were prepared not during the period of silence on the part of the husband, but after he had, through his new solicitors, engaged with the request and commenced a dialogue in relation to it.

42Nevertheless, I accept that in a general sense the husband failed at times to meet his obligation to conduct the proceedings in a timely fashion. While his failings in that regard are not, in my view, of themselves sufficient to constitute circumstances justifying an order for costs, they are appropriately to be taken into account when considering whether in a cumulative sense such circumstances exist.

43In criticising the husband for “pursuing lines of enquiry and issues on which nothing turned on at trial” (sic) the wife’s submissions refer only to the exchange of correspondence regarding the value of her interest in a property in [Country A]. She spent $1,482.15 in legal fees associated with correspondence on that issue, in addition to unspecified fees in seeking advice in relation to it.

44Quite why that issue is specifically pursued by the wife, presumably at some cost, in the context of her overall legal expenses exceeding $430,000.00 is not readily apparent. In any event, it was to be anticipated that the parties would exchange correspondence in relation to the value of real estate owned by the wife; ultimately, both parties sensibly adopted the position that the cost involved in obtaining proper valuation evidence from Country A was disproportionate to the impact on the overall result of the determination of that question.

45The conduct of the husband in relation to that issue does not ground nor support an order for costs.

46The wife then complains that the husband “maintain[ed] a position” in relation to both parenting and property matters which left her with no alternative but to proceed to trial. The submissions on behalf of the wife in that regard are somewhat confused with her subsequent submissions in relation to the offers of settlement made by each party; the thrust of the complaint appears to be that the husband “capitulated” in relation to various matters only during the trial, that she was put to additional expense as a result, and that the husband’s actions in that regard were somehow strategic.

47It is true that significant modifications to the relief sought by the husband were made at the commencement of and during trial. Of course, that is by no means unusual. It should also be borne in mind that the financial relief sought by the wife at trial, which she did not modify, itself exceeded her eventual entitlement.

48Absent any evidence of an inappropriate strategic motivation on the part of the husband for the concessions which he made late in the proceedings, any criticism of him for making those concessions is misplaced. The thrust of the criticism made of him, however, is as to the timing of the concessions rather than the making of them. That criticism is raised in relation to both the parenting and financial aspects of the dispute.

49Consistently from the filing of his amended Form 1A response on 17 August 2015 until the commencement of trial, the husband sought orders that the children live with each party equally, on a week about basis. The wife consistently sought that the children live with her and spend time with the husband each alternate weekend during school term.

50The husband’s position changed significantly only at the commencement of the trial, when his counsel handed up a minute of proposed orders. In that minute, the husband proposed that the children live with the wife, rather than with each party equally as had, prior to that point, been his case. He proposed that the children continue to spend three weekends out of four with him for as long as he remained living in [Suburb B], which he acknowledged to be short-term, and that once he moved to a closer location they spend each alternate weekend with him.

51The dispute between the parties, accordingly, was narrowed to the precise details of an alternate weekend arrangement.

52The husband’s late change in position must be considered in the context of the evidence of Dr Watts to the effect that both the children (who were aged 14 and nearly 11 at the time of trial) had expressed a preference to spend equal time with each parent once the husband moved within a reasonable distance of their school. While Dr Watts formed the clear view that the expressed wishes of the children were based primarily on their perception of what would be “fair” as between their parents, and that evidence was unchallenged, nevertheless it must be observed that the husband’s position before it was modified at trial was consistent with those wishes.

53It cannot, accordingly, fairly be said that the late amendment of the husband’s position represented a tardy abandonment by him of an obviously untenable position.

54Nevertheless, the husband’s change in position was to a significant degree unexplained. It came very late in the proceedings and well after both parties had ample opportunity to consider all the evidence before the court.

55The wife was no doubt put to additional expense as a result of that aspect of the husband’s conduct of the parenting proceedings.

56At the commencement of the trial the wife sought orders for alteration of property interests which would result in a division in the proportions of 70 per cent by value of the net assets to her and 30 per cent to the husband.

57In his Form 1A response, the husband sought orders which would have effected a division in the proportions of 60 per cent to him and 40 per cent to the wife. In his papers for the judge received by the court only a few days prior to trial he modified that position, to propose an overall division which would see him receive 52.5 per cent of the net assets by value and the wife receive 47.5 per cent.

58As with the parenting case, the husband’s position changed still further. In a minute of proposed orders handed up at trial (on the basis of a proposal that the parties agree that the wife pay 60 per cent of the children’s private school fees and the husband pay 40 per cent) he sought an overall division of the net assets and liabilities in the proportions of 60 per cent to the wife and 40 per cent to him.

59Again, the husband cannot fairly be criticised for moderating his position in the proceedings. It is always appropriate for parties to litigation to “adjust their sights” so as to ensure that the orders sought by them are reasonable in the circumstances of the case; indeed, parties and their solicitors have a responsibility to do so: r 1.08 Family Law Rules 2004 (Cth) (“the Rules”).

60Again, however, that obligation extends to making such adjustments in a timely manner whenever possible.

61The husband’s position at trial in relation to the financial case was, in the end, objectively reasonable. Coincidentally, both he and the wife sought relief which would have seen them receive 5 per cent more than the share of the property which was awarded to them.

62The wife’s criticism of the husband in relation to the timing of the moderation of his position, however, is well-founded. There was never any reasonable prospect of the husband receiving a greater share of the property than that to be received by the wife; the moderation of his position which occurred only at trial should have occurred earlier.

63That is a matter appropriately to be taken into account in considering the overall conduct of the proceedings by the parties, informed also by any offers made.

64In considering the wife’s criticisms of the husband’s conduct of the proceedings, it is appropriate also to consider the husband’s own complaints about the wife’s conduct.

65The husband too complains about occasions on which he says there was an absence of any timely response from the wife’s solicitors to correspondence. Consistent with my views as to the wife’s complaints of that nature, I do not consider that anything turns on the issues raised.

66As already noted, the wife is critical in a general way of the husband’s approach to disclosure during the proceedings. The husband’s complaints in relation to the wife’s approach to disclosure have more specificity.

67The competing interim applications of the parties, which included applications in relation to the occupation of properties and the interim partial division of the proceeds of sale of the [Suburb C] property, came before the court for argument on 7 April 2015. Prior to that hearing, an agreement was reached to the effect that each party would receive $150,000.00 as an interim payment. However, the competing applications in relation to the occupation of the other properties were unresolved, and fell to be determined in the judgment delivered by Acting Magistrate De Maio on 5 June 2015.

68Documents exhibited to the wife’s trial affidavit showed that she had notified her insurer of her illness in January 2015 and commenced enquiries as to her entitlements under her insurance policy. By letter dated 22 January 2015 her insurer had drawn to her attention her potential entitlement to the “living benefit” described in the relevant policy. The wife lodged claim documents in late February 2015. She commenced receipt of interim payments immediately. She received a lump sum payment of $164,705 on or about 28 April 2015, during the period in which the interim decision was reserved.

69The husband complains that no disclosure in relation to those matters was given until documents in relation to the wife’s application under the policy, receipt of interim payments and receipt of the lump sum were included in the wife’s list of disclosure documents provided on 12 November 2015. Even then, the documents were described in a generic fashion as “correspondence re: loan protection policy” and “form of discharge”.

70The husband argues that the wife’s criticisms of him in relation to their respective offers of settlement at the relevant time should be viewed against the background of that non-disclosure.

71In her supplementary trial affidavit filed on 15 February 2016 the wife said:

I admit to receiving payments from my income protection policy in February 2015 and that it was not disclosed at the time of the interim hearing on 7 April 2015.

72She goes on to say by way of explanation:

Early 2015 was an overwhelming time for me, especially in light of my cancer diagnosis, and it did not occur to me that I had not disclosed this information. I realise now that I should have.

73It is of course entirely understandable that the wife’s cancer diagnosis would have come as a shock to her and caused her great distress. I note, however, that in relation to the interim proceedings in question she swore a lengthy affidavit on 30 March 2015 and a further supplementary affidavit on 1 April 2015. The schedule of costs produced by her solicitors indicates that she engaged regularly with them during February, March and April 2015 and that further disclosure was provided during that period, such that her index of disclosure documents was updated on 2 April 2015.

74The wife provided instructions to her solicitors to consent to the orders sought by the husband whereby each party would receive $150,000.00 from the proceeds of sale of the Suburb C property, in sufficient time to make it unnecessary for her to address in her interim affidavit issues relevant to that distribution. The receipt or pending receipt by her of a substantial insurance payment would clearly have been such an issue.

75The evidence does not permit of a conclusion as to whether the wife’s failure to disclose in a timely fashion her significant insurance payout was innocent, as she contends, or otherwise. That said, and without minimising or trivialising the understandable impact on the wife of her cancer diagnosis, her explanation for the non-disclosure is unconvincing, bearing in mind the matters set out above and the high level of activity on her file (and her direct involvement in that activity) over the relevant period.

76The wife’s own complaints about the husband’s conduct of the proceedings are appropriately to be viewed in that context.

77Overall, the conduct of the proceedings does little credit to either party. While both must accept their share of responsibility in that regard, in my view an overall assessment of the conduct of the proceedings supports the wife’s contention that there are circumstances which justify an order for costs in her favour.

Offers

78The wife contends that various offers of settlement made both before and during the proceedings support an order for costs in her favour.

79She points firstly to an offer she made prior to the commencement of proceedings on 27 February 2014, acceptance of which she calculates would have effected an equal division of the assets and liabilities and thereby a result significantly more favourable to the husband than that achieved by him at trial.

80One of the difficulties with that proposition is the fact that the wife included in those calculations, as a “liability” to be retained by her, the sum of $180,000.00 for future school fees, thereby depressing her share of the property. A further difficulty emerges when it is noted that the offer was also based on the premise that the husband retain the [Suburb D] property at a value of $1,400,000.00; at trial, it was agreed that the value of that property was $980,000.00.

81That offer was apparently repeated by the wife in April 2014 and rejected by the husband in May 2014.

82It does not appear that any further offer in relation to financial matters was made until the husband made an offer in October 2015 which he in turn claimed represented an equal division by value of the assets and liabilities. Again, there is at least one difficulty with that proposition; the husband included in his calculations as an asset in the hands of the wife an amount of $100,000.00 in cash that he alleged had been retained by her from the safe at the Suburb D property. That allegation was not pursued at trial.

83In the same letter, the husband proposed to settle the parenting proceedings on the basis that the children live with each parent on a week about basis. He also proposed that neither party pay the other child support. The offer made it clear that the proposals with respect to parenting and financial matters were not contingent on each other.

84In July 2016 the parties exchanged offers in relation to the parenting proceedings. On 8 July 2016 the wife offered to consent to orders whereby the children would spend each alternate weekend with the father from after school Friday until the commencement of school on Monday (in the event that the father was residing outside a 20 kilometre radius of the children’s school), or from after school Thursday to 5.00 pm on Sunday (if he was living within the 20 kilometre radius).

85The husband rejected that offer on 18 July 2016 and on 21 July 2016 the wife made a further counteroffer.

86On 19 July 2016 the wife offered to settle financial matters on the basis of a 70 to 30 percentage division in her favour, as set out in her papers for trial. Two days later she modified that position slightly to propose a division in the proportions of 67.5 per cent to her and 32.5 per cent to the husband.

87The day before trial, the husband made an offer to settle the financial case on the basis that the wife retain both the Suburb D and Suburb B properties and that he retain the entire net proceeds of sale from the Suburb C property.

88It is unnecessary for the purposes of these reasons to recount the submissions made by each party as to the circumstances in which the various offers were made, the level of disclosure which had been received or given by either of them at the relevant time, and the valuation issues which then remained unresolved. It is sufficient to say that there is nothing in the evidence or submissions in relation to offers made that supports a conclusion that any of those offers, or the rejection of them, constitute a circumstance justifying an order for costs.

89There are no other matters which I consider relevant to the question of whether an order for costs is justified.

90I conclude, as foreshadowed above, that an order for costs in favour of the wife is justified on the basis of the conduct of the parties in relation to the proceedings.

The second question – what order for costs is just?

91As already noted, the wife seeks her costs of the whole of the proceedings on an indemnity basis in the amount of $438,653.84.

92For the reasons set out above, it is in my view abundantly clear that this is not a case in which an order for indemnity costs could conceivably be justified, even if the quantum of costs claimed on an indemnity basis was reflective of the charges raised having been reasonable, necessary and proportionate.

93Nothing in the submissions made on behalf of the wife approaches, let alone clears, the threshold which must be crossed if an order for costs on an indemnity basis is to be made. It is, to put it mildly, regrettable that the application was pursued on that basis particularly when the wife was represented by Senior Counsel, who was of course aware not only of the more long-standing authorities on point, but also of the admonition of the Full Court in Madin & Palis. The limited resources of both the parties and the Court have been wasted by the pursuit of an entirely unmeritorious submission.

94Quite apart from the observations already made, there are certain elements of the wife’s claim in respect of which it is patently inappropriate for her to seek any order for costs, let alone on an indemnity basis.

95Two examples are illustrative; I do not suggest they are exclusive.

96The wife includes in her claim against the husband the costs incurred by her in relation to the competing interim applications of the parties which were determined by Acting Magistrate De Maio in a judgment published on 5 June 2015. The submitted schedule of the wife’s costs shows that the amount now claimed by her in relation to those interim proceedings totals no less than $20,000.00.

97The fundamental difficulty with that claim is that orders were made by consent on 27 July 2015 disposing of the respective claims of both parties for costs related to those interim proceedings. Those orders required the wife to pay the husband the sum of $2,000.00 with the parties to each otherwise bear their own costs.

98Also included in the wife’s present claim against the husband are the costs incurred by her in relation to the preparation of an affidavit sworn by her mother for the purposes of trial. I dismissed the wife’s application for leave to file that affidavit significantly out of time in circumstances where it was conceded by her counsel that there was simply no excuse for it not having been filed within the timeframes set by the procedural orders made earlier in the proceedings.

99The proposition that the husband should pay the wife’s costs incurred in the preparation and attempted filing of an affidavit which, because of the wife’s non-compliance with the court’s orders, was not admitted into evidence, does not bear further comment.

100There is a further significant difficulty faced by the wife.

101Even when it is established, as it is in this case, that there are circumstances which justify an order for costs, the court is empowered only to make such order for costs as it considers just.

102That in turn necessitates a consideration of the reasonableness of the costs incurred and for which compensation in the form of an order is sought. Even the most recalcitrant of litigants cannot be ordered to compensate the other party for fees incurred which are themselves unreasonable or unnecessarily incurred, as distinguished from reasonable fees necessitated only by reason of conduct attributable to the party from whom the compensation is sought.

103The fees charged to, and paid by, the wife in these proceedings are staggering. They are entirely disproportionate to the complexity of the case and the nature of the matters in issue in the proceedings.

104The wife may, by the nature of her instructions, have contributed to that result or she may not. Any lawyer practising for a significant time in family law will experience the difficult, demanding or “high maintenance” client who by his or her actions and attitudes generates additional work in the lawyer’s office, or who seeks to insist on unnecessary work being performed.

105The lawyer’s obligation in such circumstances, however, is clear and long established.

106A solicitor has a duty to advise and protect a client against unnecessary expense: Alsop v Lord Oxford (1833) 39 ER 794.

107In Browne & Bloomfield (2003) FLC 93-155 at [10], the Full Court, after referring to that duty, cited with approval the observation of Maxwell J in Re Felton (1942) 60 WN (NSW) 16 at [21] where His Honour said:

The essence of the rule is that the client must be protected; he is embarking upon a field which – it can invariably be assumed – is completely strange to him, and which is or must be taken to be familiar to the solicitor. It is therefore the duty of the solicitor to place his client in a position where he can so far as possible be able to fully appreciate the nature and extent of his financial liabilities in the course of litigation.

108The long-standing position at common law is reflected succinctly in the Rules.

109Rule 1.04 states the main purpose of the Rules in the following terms:

The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.

110Rule 1.08 states the responsibility of parties and their lawyers to assist the “just, timely and cost-effective disposal of cases”.

111Lawyers are entitled to charge reasonable fees for work reasonably required to be done and which requires the skill of a lawyer. They are not entitled to charge for unnecessary work, duplication of work or work related to the administration of their practice. They are not entitled to charge at a lawyer’s hourly rate for work which could, for example, readily be done by a courier or an unskilled clerk.

112I do not propose to undertake an informal assessment of the quantum of fees charged to the wife by her lawyers, nor would it be appropriate for me to do so. It is sufficient for present purposes to note the following examples, which I do not suggest are exhaustive, and which raise what are to my mind significant concerns about those fees:

1)The wife was charged “disbursements” for the preparation of the costs agreement into which she entered with the firm. It is fundamental that a client may not be charged fees for work done for the administration of the lawyer’s own office. The characterisation of such fees as a “disbursement”, whether or not intended to avoid that fundamental rule, is a nonsense.

2)The wife was charged fees for the preparation of notifications as to costs, when the solicitor’s obligation to give such notifications arises from the Rules. It is in my view inappropriate for a solicitor to charge a client for the preparation and provision of a compulsory notification as to fees charged.

4)The preparation of a brief to counsel for the purposes of an interim argument led to a fee of $3,533.00, which in turn included a charge of $173.25 for hand delivery (presumably by a solicitor) of the brief to chambers. There were other examples of delivery charges being raised at a rate of $346.50 per hour. Reference to the wife’s costs agreement with her solicitors confirms that that hourly rate falls within the range of rates for lawyers employed by the firm who do not hold the status of Director, Associate Director, Senior Associate or Special Counsel.

5)An interim hearing took place on 7 April 2015. That hearing occupied roughly two hours of court time. The wife was charged $1,732.00 for a solicitor to prepare and attend that hearing and for perusal of the report which was subsequently provided by independent counsel who was briefed and appeared. The wife was then charged a further $1,282.00 for the drafting of a letter reporting the outcome of the same hearing, on the basis that the preparation of that letter supposedly involved 3.7 hours of work on the part of the solicitor. It is not clear from the documents whether the wife was present at the hearing in any event, nor whether counsel’s report was forwarded to her.

6)Judgment on the interim application was delivered on 5 June 2015 at a hearing that ran for 23 minutes. Counsel attended to receive judgment. In addition to counsel’s fee, a charge of $1,395.90 was raised for 2.7 hours work by a solicitor to attend that hearing, with a further separate charge for subsequently reviewing the judgment.

7)A charge of $485.00 was then raised for “reviewing the law re-appeals and stay” following that hearing.

8)The preparation of a letter apparently dealing with issues regarding the children missing [sport events] and the like, led to charges of somewhere between $510.00 and $720.00 being raised.

9)On multiple occasions, separate charges of $34.65 were raised first for the drafting of a letter and then again for emailing it to the recipient.

10)Charges of over $54,000.00 were attributed to the preparation of the wife’s trial affidavit. As I observed in my judgment in the substantive proceedings, the affidavit as originally filed had some 75 annexures, comprising 527 pages. After orders were made by me at the status hearing in relation to that issue, the wife’s solicitors confirmed that she sought to rely on only 44 of the original 75 annexures. Even then, many of the annexures were of limited, if any, evidentiary value.

11)After charging for 2.0 hours work for attendance at the readiness hearing, which was listed for 3.15 pm and concluded at 3.30 pm, the solicitor charged a further $365.24 for perusing the orders made at that hearing and reporting to the client. The very few orders made at that hearing were entirely standard and non-contentious procedural orders.

12)A charge of over $4,800.00 was raised for the preparation of an application and affidavit in support of the appointment of the single expert witness, who was appointed by consent. While the preparation of the affidavit may possibly have been justified given the delayed response by the husband to efforts on the part of the wife’s solicitors to have the appointment agreed, the amount charged raises some concern.

13)A charge of over $2,000.00 was raised for attending at the client’s home to view the contents of her safe and to “review and catalogue” the same.

14)In addition to fees raised by Senior Counsel, the wife was charged $3,739.00 for the attendance at day one of trial by two lawyers from her solicitor’s office, and a further $2,070.00 for the preparation of “trial notes” and number of other minor tasks.

15)On the second day of trial, apart from a charge of $2,810.00 for the attendance of an instructor with counsel, charges of $1,696.00 were raised for the preparation of “trial notes”, a telephone call from Senior Counsel and “reviewing legislation”. Similar, though lesser, charges were raised for the third and fourth days of trial.

16)A charge of $1,204.50 was raised for the drafting of a letter to the client “reporting on attendance” at the trial, on the basis that the task of drafting that letter took three hours of a solicitor’s time. The client, of course, was present throughout the trial.

113I note further that Senior Counsel raised charges for reading and “extensive preparation for trial” on the basis that 5.6 days were spent in that task, over and above charges raised for conferences and telephone conferences.

114As is obvious from the recital of what are only limited examples above, I hold serious concerns as to the reasonableness of the fees charged by the wife’s solicitors.

115Having raised those concerns, I make no determinative findings in relation to them. As already noted, the bills raised by the solicitors have not been the subject of any formal assessment, nor have the solicitors had the opportunity to explain them.

116That said, I propose to refer a copy of these reasons to the Legal Practitioners Complaints Committee, which has statutory responsibility under the Legal Profession Act 2008 (WA) for supervising the conduct of legal practitioners in Western Australia. I am prepared to hear any submissions counsel may wish to make before taking that step.

117As I have already observed, this was not in any sense a complex case. The legal issues raised, such as they were, were not difficult. The asset pool was simple. The factual disputes were not complicated, nor of great significance to the outcome.

118The expenditure by the parties of legal fees in excess of $570,000.00 in those circumstances is entirely disproportionate to the matters in issue. I accept that to a certain degree at least, as reflected in my findings above regarding the conduct of the proceedings by the husband, it was at times necessary for the wife to take the initiative and the steps required to progress the matter. I accept, therefore, that it might reasonably be expected that she would in those circumstances incur legal fees somewhat higher than those incurred by the husband, and that it is reasonable for her to look to him for some compensation relative to that imbalance.

119I cannot accept, however, that the nature of the proceedings nor the way in which they were conducted by the husband could in any sense justify the wife incurring legal fees in an amount more than treble those incurred by him.

120For the most part, the responsibility for the significant disparity in fees incurred by the parties must be borne by the wife and those advising her; it is not possible on the information available to me to properly apportion that responsibility between client and lawyer nor on the present application is it my function to do so.

121The husband does, however, for the reasons outlined earlier bear some responsibility for the disparity. It is appropriate in all the circumstances for him to make a contribution to the wife’s costs proportionate to that responsibility.

Amount of costs to be paid

122Rule 19.18(1) provides:

(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.

123The purpose in all courts of rules enabling an order for costs in a specific amount, without formal assessment or taxation is to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162.

124As Murphy J observed in Parke & the Estate of Parke (2016) FLC 93-748 at [130]:

If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” … The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”...

125The court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”: Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [10].

126That is particularly so in a case such as this, where an order that the husband simply pay the wife’s costs of the proceedings is not justified, and the amount by which the wife’s costs were increased by virtue of the husband’s conduct of the proceedings cannot be accurately quantified, nor can there be any calculation of what might be described as the “offsetting” effect of those aspects of the wife’s conduct of the proceedings which themselves are susceptible to criticism.

127As in many cases, this is a matter in which it is appropriate for the husband to be ordered to contribute towards the wife’s costs, as distinguished from being ordered to pay her costs of the proceedings or any specific component of them.

128For the reasons set out above, that contribution will only be modest by comparison to the amount of fees actually incurred. While I am satisfied that the husband’s conduct of the proceedings increased the wife’s costs I reject any suggestion that the entirely disproportionate total of those costs is attributable to him, beyond the limited extent reflected in the order which I propose to make.

129In all the circumstances, I consider that an order requiring the husband to contribute towards the wife’s legal costs in the sum of $20,000.00 is just.

130I will hear from counsel in relation to the husband’s foreshadowed application for an order that the wife pay his costs of the costs application.

I certify that the preceding [130] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate
12 June 2017