Thanh and Anor and Grimshaw
[2015] FCCA 612
•20 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THANH & ANOR & GRIMSHAW | [2015] FCCA 612 |
| Catchwords: FAMILY LAW – Costs – summary judgment application – where one party was wholly unsuccessful – indemnity costs sought – costs ordered in terms of Schedule 1 to the Federal Circuit Court Rules 2001. |
| Legislation: Family Law Act 1975, s.117 Federal Circuit Court Rules 2001, r.21.01, Schedule 1 |
| Bigg v Suzi (1998) FLC 95-799 Collins & Collins (1985) FLC 91-60 In the Marriage of Fisher (1990) 13 Fam LR 806 Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029 |
| Applicants: | MS THANH & MR THANH |
| Respondent: | MR GRIMSHAW |
| File Number: | SYC 7444 of 2013 |
| Judgment of: | Judge Kemp |
| Date of Last Submission: | 19 February 2015 |
| Delivered at: | Sydney |
| Delivered on: | 20 March 2015 |
REPRESENTATION
| Solicitors for the Applicants: | Watts McCray |
| The Respondent appeared in person |
ORDERS
(1)The respondent, Mr Grimshaw, pay the applicants the sum of $10,339.00 in respect of costs, within 60 days of today’s date.
(2)The matter be removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Thanh & Anor & Grimshaw is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 7444 of 2013
| MS THANH & MR THANH |
Applicants
And
| MR GRIMSHAW |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicants filed an application on 5 December 2014 in which they sought an order for costs.
On 8 December 2014, the Court made the following orders in respect of the applicants’ costs application:
1. The applicants in the costs application (being the respondents in the substantive application) file and serve any written submissions within 5 weeks of today’s date.
2. The respondent to the costs application (being the applicant in the substantive application) file and serve any written submissions in response 5 weeks after compliance with order 1 above.
Since at least 12 March 2014, when the applicants (being the respondents in the substantive proceedings) filed their Response, they have sought that the respondent (being the applicant in the substantive proceedings) pay their costs on an indemnity basis.
The applicants rely on the following:
a)The affidavits of the first applicant (“the mother”):
i)Sworn 11 March 2014 and filed 12 March 2014;
ii)Sworn and filed 9 April 2014;
iii)Sworn and filed 23 October 2014; and
iv)Sworn and filed 5 December 2014.
b)The affidavits of the second applicant (“the father”):
i)Sworn 11 March 2014 and filed 12 March 2014; and
ii)Sworn 4 December 2014 and filed 5 December 2014.
The respondent relied on his affidavit sworn 19 February 2015 and filed the same day.
The respondent also filed written submissions on 19 February 2015. The orders sought by the respondent were unclear. However, from his submissions it was apparent that he resisted the applicants’ application that he pay their costs, on any basis.
On 14 November 2014, judgment was delivered in Grimshaw & Thanh & Anor [2014] FCCA 2614 (“the substantive proceedings) and the following orders were made:
(1)The applicant’s Initiating Application filed 16 December 2013 be summarily dismissed.
(2)If any party seeks costs, an appropriate written application may be made within 28 days of today’s date, (supported by any documentary material) to be filed and served within that time period and a copy forwarded to my Chambers. The Court will then deal with that matter by way of written submissions. If no such application is made within the time period specified, there will be no order as to costs.
(3)All outstanding applications (save as to costs, including any reserved costs), otherwise, be dismissed.
The Court’s reasons in the substantive proceedings are incorporated in these reasons, as if fully set out herein, so as to give a background to the dispute between the parties. The substantive proceedings involved the respondent (as applicant) seeking parenting orders in respect of the child, X, born (omitted) 2006 (“the child”) and the child’s biological parents, being the applicants, who were in a continuing relationship, opposed that application.
Given the nature of the proceedings, the parties have not filed financial statements.
The Court’s determination on costs is based only on a study of the documents before it, including affidavits read and the submissions of the parties. Neither party has sought to adduce oral evidence or to cross-examine the other and, accordingly, there is no provision for a more extensive hearing where evidence can be tested in cross-examination and where the Court can make findings of fact, after testing credit and truthfulness.
The Law
The Court’s general power to award costs is found in s.86 of the Federal Circuit Court of Australia Act1999 and, in particular, pursuant to Rule 21.02 of the Federal Circuit Court Rules2001.
In relation to the question of costs, s.117 of the Family Law Act 1975 (“the Act”) states:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
(3) To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children's lawyer for a child has been appointed, if:
(a) a party to the proceedings has received legal aid in respect of the proceedings; or
(b) the court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children's lawyer;
the court must not make an order under subsection (2) against that party in relation to the costs of the independent children's lawyer.
(4A) If:
(a) under section 91B, an officer intervenes in proceedings; and
(b) the officer acts in good faith in relation to the proceedings;
the court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children's lawyer has been appointed, the court must disregard the fact that the independent children's lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.
Section 117 of the Act was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311, where it was said:
“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”.
Section 117 of the Act, provides for a discretionary power in the Court. The Court must examine each of the factors in turn, set out in the section, in relation to justifying a costs order. A costs order can be made on the basis of one or a combination of those factors Brown v Brown [1998] FamCA 115. The discretion to award costs is a broad discretion (see for example Collins & Collins (1985) FLC 91-603).
The issue of costs was outlined in Cachia v Hanes [1994] 179 CLR 403 at paragraph 98 as follows:
“Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, costs as that expression is ordinarily understood in the law.”
Section 117(2A)(a) The financial circumstances of the party
The first applicant (the mother) deposes to being unemployed and the full-time carer of the child.
The second applicant (the father) deposes to being a (occupation omitted).
The applicants depose to living in rental accommodation, owning two motor vehicles, shares, savings and superannuation.
The respondent submits that the applicants have been intentionally vague about their financial circumstances and submits that the reason for this is that it would not have assisted their own application for costs. The Court does not accept that.
The respondent also submits that based on a general search on a website called “payscale.com”, the applicant father is likely to earn approximately $250,000.00 per annum as a (occupation omitted). However, the financial position of the applicants, whatever that may be, does not disentitle them from seeking costs. As the Full Court of the Family Court of Australia stated In the Marriage of Fisher (1990) 13 Fam LR 806: “it would be an intolerable situation if a party with lesser means could on that count alone inflict unnecessary costs on the other”.
The applicants say that they have incurred legal fees in the sum of $40,197.22, as a direct result of defending an application that the Court ultimately found had no reasonable prospects of success. The applicants say that these legal fees were paid by drawing down on their savings and by payments from the second applicant’s income and that that has caused them significant financial hardship. Further, they say that they have incurred $3,000.00 in legal fees for the preparation of their costs submissions.
The applicants submit that the respondent has not provided any details of his financial circumstances, however, from the material he has filed, the following matters appear to be uncontested:
a)The respondent has at all times been in full time paid employment with (employer omitted) in (omitted).
b)In mid-2007, he owned a unit in (omitted).
c)The respondent regularly travelled both interstate and internationally since first meeting the first applicant.
d)The respondent has no dependents.
e)The respondent was in a position to purchase real estate in both 2008 and 2011.
f)At all times during these proceedings (at least up until when the applicants’ solicitors received an unfiled Notice of Address for Service on 8 January 2015), the respondent had engaged privately paid solicitors and had not been in receipt of a grant of legal aid.
The respondent submits that he is of modest financial circumstances and cannot afford to pay the applicants’ costs. The respondent submits that he has the following by way of property:
a)Equity in an apartment in (omitted) $300,000.00
b)Savings $40,000.00
The respondent deposes to earning approximately $2,100.00 per fortnight and spending approximately $1,000.00 per fortnight on day to day expenses. That leaves a balance of $1,100.00 per fortnight.
The applicants submit that the above matters demonstrate that the respondent has the capacity to pay costs from his income or assets.
The applicants further submit that in the event that the respondent claims that he has various demands on his income and asset position, that that ought to have been more thoroughly considered by him prior to and during all stages of this litigation, including when offers to withdraw his application and offers of settlement as to costs were made by the applicants.
The respondent’s current financial position would arguably be far stronger today had he avoided incurring legal fees himself in respect of these proceedings, which he says were in the order of $20,792.00. The Court accepts that position.
The Court is satisfied that the respondent has the ability to meet any costs order either by accessing savings, potentially drawing on the equity in property owned by him or by regular instalment payments from his income.
Section 117(2A)(b) If any party in receipt of legal aid
The parties submit and the Court accepts that this factor is not, relevantly, applicable.
Section 117(2A)(c) The conduct of the parties in relation to the proceedings
The applicants submit that the respondent “doggedly” pursued his application and that his application was ultimately found by the Court to have no reasonable prospects of success. Further, the respondent failed to respond to 3 offers made by the applicants to withdraw his application. Those offers were made as follows:
a)On 10 March 2014, the applicants’ solicitors wrote to the respondent’s solicitors inviting the respondent to withdraw his application, failing which the applicants would seek costs against him on an indemnity basis.
b)On 11 March 2014, the applicants’ solicitors wrote to the respondent’s solicitors, calling for a response to their letter of 10 March 2014 and, again, inviting the respondent to withdraw his application.
c)On 14 March 2014, the applicants’ solicitors wrote to the respondent’s solicitors, again inviting him to withdraw his application.
The respondent did not respond to any of the offers referred to in paragraph 30 above. Weight is attached to that.
Further, the applicants submit that the respondent has refused to respond to an offer to settle the costs application presently before the Court. That offer was made as follows:
a)On 24 November 2014, the applicants’ solicitors wrote to the respondent’s solicitors, making an offer of settlement in respect of their costs for $32,000.00.
The respondent did not respond to the offer referred to in paragraph 32 above. Weight is attached to that.
The applicants also submit and the Court accepts, that the respondent failed to comply with orders made by this Court regarding the preparation of a chronology of agreed and disputed facts (see paragraph 39 below). The Court accepts that the respondent’s explanation for this was unsatisfactory.
The applicants further submit that in contrast to the respondent’s behaviour in these proceedings, the applicants have:
a)made multiple timely offers to the respondent to withdraw his application;
b)made a timely offer for the respondent to inspect documents which would have limited the issues in dispute (and more than likely enabled him to complete the chronology of agreed and disputed facts);
c)made a timely offer to the respondent in respect of the costs application; and
d)complied with the orders of the Court.
The respondent submits that although the letter from the applicant’s solicitor dated 14 March 2014 put him on notice that if he did not withdraw his application, the applicants would seek indemnity costs, likely to be in the vicinity of $25,000.00 to $30,000.00 and that they would engage counsel for the hearing, the applicants did not inform him that they would brief Senior Counsel and that that was unnecessary, in the circumstances of this matter.
Further, the respondent submits that the first applicant had “no right” to adduce any evidence at the summary dismissal hearing stage and that, therefore, any costs sought in respect of the preparation of affidavit material on their behalf were unwarranted. In this regard, the respondent relies on the decision in Bigg v Suzi (1998) FLC 95-799. Noting that the respondent, at least on the face of his submissions, has prepared his submissions himself, this case does not appear to support the proposition that he seeks to make. While Bigg & Suzi is authority that the respondent in a summary dismissal application has “no right to adduce any evidence at that summary hearing to contradict the evidence of the [applicant]”, this does not mean that a respondent cannot file affidavit material. It is merely authority that the applicant’s case must be taken at its highest, on any summary dismissal application. Indeed, it was appropriate for the applicants, in this matter, to bring evidence about their current relationship, their care of the child, their decisions for the child and their decision that the child not spend any time with the respondent, as these were matters that the respondent could not have given evidence about.
Further, the respondent relies on Korsky v Bright & Anor (2007) FamCA 245 and in particular paragraphs 29 to 31. Interestingly, paragraph 31 of that judgment notes that:
Finally, Finn J. referred to the decision in Bain Pacific Associations & Ors. v. Kelly & Ors. (2006) FLC 93-270 in which the Full Court referred to the consideration of the issue in Beck, observing :
. . . that apart from material in the case of the respondent to an application for summary dismissal, the Court may have regard to relevant non-contentious facts, even if raised by the applicant for summary dismissal.
Further, the respondent submits that if the applicants had sought an order for summary dismissal from the outset of the proceedings, their costs would have been greatly diminished. The applicants had always sought that the proceedings be dismissed. Indeed, when the matter was first before the Court on 12 March 2014, the applicants sought that their application for summary dismissal be heard on that date. They opposed any orders for a child dispute conference or other intervention. However, given that the application was listed in a duty list, the Court did not have time to hear the application and, instead, listed the matter for hearing of the summary dismissal application on a future date. On 12 March 2014, the Court, inter alia, made the following orders:
1. The applicant to provide to the respondents a draft of a document setting out the Agreed Facts and Disputed Facts by 23 April 2014.
2. The respondents to complete the draft document referred to in order 3 above and forward the final document to my Associate (and to the respondent) on or before 2 May 2014.
3. If necessary, the parties’ legal representatives are to confer to produce the document referred to in orders 1 and 2 above.
4. The matter be adjourned to 30 May 2014 at 10.00am for the threshold issue/summary dismissal.
5. The respondents’ costs of today are reserved.
On 8 April 2014, the applicants’ solicitors wrote to the respondent’s solicitors, inviting them to attend their offices to inspect the first applicant’s various documents (including medical records, school documents relating to the child, bank statements, utility bills and the like) for the period that the respondent asserted that he and the first applicant were in a relationship. The applicants’ solicitors put the respondent squarely on notice that none of the documents made any reference to him. Again, no response was received from the respondent’s solicitors. Weight is attached to that.
On 23 April 2014, the respondent’s solicitors forwarded to the applicants’ solicitors a one page document purporting to be the first draft of the Chronology of Agreed and Disputed Facts (pursuant to the orders made on 12 March 2014).
On 2 May 2014, the applicants’ solicitors wrote to the respondent’s solicitors suggesting that the above document was deficient and providing them with an alternative Chronology of Agreed and Disputed Facts for their additions/amendments. Again, there was no response received from the respondent’s solicitors. Weight is attached to that.
On 8 May 2014, the applicants complied with order 2 as set out in paragraph 39 above. However, the order clearly stated that it was the respondent who was to prepare the initial draft document setting out the agreed and disputed facts. Given that he had failed to effectively do so, the applicants attempted to comply with the orders, as best they could.
Ultimately, the hearing scheduled for 30 May 2014 was adjourned to 24 October 2014, due to changes in the judicial calendar. Despite the delay, the respondent still did not comply with the Court’s orders of 12 March 2014 and no adequate explanation has been given by him, in that regard, save as referred to below.
The respondent, in his affidavit in support of his submissions, states that he was “not properly advised by [his] solicitors as to the orders made, by the [applicants]’s solicitors to withdraw [his] application and their various offers of settlement as to costs”. The respondent also states that many of the applicants’ submissions are “criticisms … [of his] previous legal representation and were circumstances and events beyond [his] control”. The Court does not accept that submission. The respondent instructed legal representatives who have a duty to the Court and to their client. Any grievances that the respondent has with his own legal representation are more appropriately dealt with elsewhere and should not, otherwise, be a detriment to the applicants.
Section 117(2A)(d) Proceedings necessitated by the failure of a party to comply with previous orders
This factor is not relevantly applicable on the facts of this case.
Section 117(2A)(e) Whether any party wholly unsuccessful in the proceedings
The applicants submit and the Court accepts that the respondent has been wholly unsuccessful in the proceedings.
The applicants submit that at all times the respondent was on notice that they considered his application to be misguided and that it ought to have been dismissed by the Court.
The respondent submits that he was successful on the question of whether he had standing to bring proceedings under s.65C of the Act and that he only failed on the question of the summary dismissal. The respondent’s submissions make much of this distinction. However, the Court is of the view that little flows from that. There may be many people in a child’s life that fall into the category of a person concerned with the “care, welfare or development of a child” and although that may give standing, that does not mean that an application has any likelihood of success and that this is a matter which should have a be carefully considered prior to any filing, so as to avoid putting others to the expense of responding to such an application and should have been considered again when the applicants’ responsive position was known.
The Court accepts that in circumstances where parties pursue unsuccessful issues, the Court is entitled to make an order for costs against them (see In the Marriage of Rouse (1981) FLC 91-073).
However, in Latoudis v Casey(1990) 170 CLR 534, the High Court of Australia 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 the 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.”
In this regard, the applicants submit that they had no choice but to “defend” the proceedings in circumstances where they were living in an intact marriage and the respondent sought to spend time with their only child which in their view was contrary to the child’s best interests and contrary to their exercise of parental responsibility.
The Court is of the opinion that this factor weighs in favour of a costs order.
Section 117(2A)(f) Any offers in writing
A written offer of settlement is “highly relevant” to the question of costs. Such offers provide litigants with an incentive to settle and thereby avoid or reduce the costs of litigation (see Robinson & Higginbotham (1991) FLC 92-209).
As Justice Nygh stated in In the Marriage of Murray (1990) FLC 92-173, a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs:
“If one considers the issue as a matter of policy, that is, on the basis of what the Parliament's objective and purpose was in enacting the legislation, it is clear that the Parliament wished to encourage settlements thereby reducing the cost of litigation to the parties and to the community. That must mean that a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs. At the same time a party cannot sit tight and postpone a decision as to acceptance until a matter is at the door of the court. By that time an offer which might have been acceptable to the offeror because of savings in time and preparation costs, may have become unattractive. In this case the offer was left open for a reasonable period, was clear and capable of acceptance which would have saved the parties considerable costs....”
In Browne v Green (2002) FLC 93-115, the Full Court of the Family Court of Australia (Kay, Coleman and Warnick JJ) said:
“Whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given.”
The applicants submit that they made 3 offers to the respondent for him to withdraw his application referred to in paragraph 30 above. The applicants have also made one offer to settle the costs application referred to in paragraph 32 above. The applicants say that the respondent did not respond to any of these offers. Of note is that at least one of those offers was made prior to the first return date of the respondent’s application.
The applicants submit that the Full Court of the Family Court of Australia in Robinson & Higginbotham (1991) FLC 92-209 has made it clear that:
“…when one looks at [s.117(2A)](f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. In the circumstances of this case, although paragraph (f) does not have a priority per se, the considerations represented by paragraph (f) are of overriding importance.”
In respect of the Court’s workload, the parties would be aware that it is particularly onerous and in this case, the Court had to hear an application for summary dismissal (which was ultimately successful), when there were cases waiting for hearing dates involving child abuse, family violence and parties in deleterious financial positions. Indeed, the Court refers to the matters in paragraphs 34 to 36 above and notes that the respondent’s failure to comply with orders made in an attempt to narrow issues did not assist it in seeking to reduce hearing time and to that extent, prolonged and unnecessarily complicated the matter.
The respondent submits that all offers were simply for him to capitulate and as such, there was no element of compromise. To some extent, the Court accepts his submission in that regard.
The respondent submits that in relation to the offers in respect of costs, the applicants gave no basis for the quantum of the costs claimed and therefore, the respondent could not asses those costs.
However, despite the submission made by the respondent and referred to in paragraphs 60 and 61 above, the respondent then deposes to providing instructions to his legal representatives in response to the applicants’ various offers but says that his solicitors apparently did not act on those instructions. Further, the respondent deposes to seeking advice from his solicitors in relation to the offers and not receiving any response. The respondent also deposes to not receiving any advice from his solicitors in relation to the offers made by the applicants and, therefore, not understanding “really what was meant by their invitation to withdraw [his] application and the implication of them seeking costs”. Of concern, the respondent also deposes to his legal representatives not following his instructions. If that be the case, that is a matter that the respondent may need to take up with his previous legal representatives directly or in another forum.
The respondent further submits that much of the conduct that the applicants complain of is criticism that should be made of his legal representatives, not himself. However, that is not a relevant consideration for the purposes of the present costs application. The respondent had engaged legal representatives to represent him and their conduct (whether or not in accordance with the respondent’s instructions) bound him and was, in any event, relied upon by the applicants and their legal representatives.
The Court is of the view that:
a)the respondent’s application was dismissed as having no reasonable prospects of success, even though his evidence was taken at its highest;
b)the terms of the applicants’ offers were not ambiguous or unclear, were expressed with precision and were objectively capable of being clearly understood (see In the Marriage of Harris (1987) FLC 91-822);
c)the applicants’ written offers of settlement reflect the final outcome ordered by this Court. Had the respondent accepted their proposals, a final determination in this matter would not have been required and the significant legal costs incurred by the applicants could have been avoided; and
d)the applicants’ offers to settle were made seriously and consistently at various stages of this matter.
Section 117(2A)(g) Such matters as the Court considers relevant
The Court accepts, as the respondent submits, that there has been no suggestion that he brought the proceedings for any improper purpose.
The respondent also submits that in matters concerning the welfare of a child, parties should not be “intimidated by threats of indemnity costs”. However, the Court accepts that while the respondent may have believed he was seeking orders in the best interests of the child, he was not a parent of the child and the child’s parents were living in an intact relationship and exercising their parental responsibility. The respondent appeared to have misconceived the intention of the Family Law Act 1975, particularly when he sought to make submissions under subsections of s.60CC which only applied to the parents of the child and which plainly, did not apply to him. Therefore, it does appear that the respondent’s application was, at the very least, misguided and put the applicants to significant costs, even if some of their costs may have been unnecessarily incurred.
While the respondent is critical of the costs sought by the applicants he, himself, deposes to incurring $20,792.00 in legal fees. The respondent did not brief counsel for hearing and his solicitor appeared on his behalf.
Of some note is an email that the respondent himself attaches to his affidavit in support of his submissions, being Annexure “J”, which appears to be an email from the respondent to the first applicant (the mother) which states, inter alia:
Once I commence action through the Family Law Court I will not be pulling out.
You can save us both time and money by doing the right thing now.
Once I pay the solicitors you will need to do the exact same thing if you want to ‘fight’…
… Waiting for me to start this process before you change your ‘mind’ will not prevent me from seeing this through. (emphasis added)
The Court considers that the above email demonstrates that the respondent accepted prior to filing his application that both parties would incur significant legal costs. The content of his email suggests that he had little regard to the exposure of the parties to costs and would “not be pulling out” regardless of the costs incurred by either him or the applicants.
The respondent also deposes to a number of matters that do not appear, however, to be directly relevant to the issue of costs, such as the personal stress that these proceedings have no doubt caused him.
Indemnity Costs
In Munday v Bowman (1997) FLC 92-784 Holden CJ. of the Family Court of Western Australia noted:
“some of the circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis. Some examples which may be of relevance to the present case are as follows:
a. Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
b. Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
c. Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
d. The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
e. An imprudent refusal of an offer to compromise.
In the matter Kohan & Kohan (1993) FLC 92-340, the Full Court of the Family Court of Australia (Strauss, Lindenmayer and Bulley JJ) held:
“The power to order costs on an indemnity basis…
…that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties.
This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under sec 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The proper exercise of the discretion
The intent of sec 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules… The Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind…
Indemnity costs orders are still an exception in this and other jurisdictions… Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income… no more than party and party costs have been awarded.
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them.
However, the Full Court of the Family Court of Australia in Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029 (Lindenmayer, Holden & Mullane JJ) stated:
“All that is required is that the Court asked to exercise the discretion be satisfied that some particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis": per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 223".
In JEL & DDF (No.2) (2001) FLC 93-083, the Full Court of the Family Court of Australia (Kay, Holden & Guest JJ) stated:
“the category of cases in which it would be appropriate to make an order for indemnity costs does not appear to be fully defined.”
The Court held that the failure to accept an offer to compromise was, without more, insufficient to justify the making of a costs order on an indemnity basis. Their Honours stated:
“In our opinion, the failure to accept an offer which in retrospect, perhaps should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis. The rejection of the offer must be at the very least imprudent. We express no opinion as to when the rejection of an offer may be so classified…”
The respondent submits that there is no explanation from the applicants as to why indemnity costs is warranted in this case and, therefore, indemnity costs should not be ordered.
The Court is of the opinion that this matter does not justify an indemnity costs order.
Costs in a fixed sum
The applicants submit that the Court should assess costs in terms of the costs agreement entered into between them and their lawyers, Watts McCray and with their Senior Counsel, Mr Robert Lethbridge. They ask the Court to exercise its discretion to quantify/assess the question of costs rather than making an order for any taxation/assessment process to take its course following an unquantified costs order. The applicants submit that this will minimise further legal costs being incurred and any further delay. It will also not unnecessarily consume the limited resources of the Court. The Court accepts that position.
The Court accepts that the applicants’ costs can be fixed in a specific sum. This is supported by the decision of the Full Court of the Family Court of Australia in Braithwaite & Braithwaite [2007] FamCA 468, (Kay, Warnick and Boland JJ ) where it was said:
“We accept the practicality of the submission that, in an appropriate case, a judicial officer should make an order in sum certain, rather than put the parties to the expense and stress of further proceedings to assess costs.”
and in Bolinger v Ivy [2008] FamCA 274, where the Court stated:
“There is much to be said for fixing costs. The process of assessment of costs is in itself time consuming and expensive. There is also of course, the possibility of a later review”.
The Court proposes to apply Schedule 1 of the Federal Circuit Court Rules 2001. This Schedule was designed to effect the remit of the Court to deal with matters as efficiently as possible in the exercise of its judicial power. The Court applies the Schedule as follows:
a)Costs in opposing an application which includes interim orders up to the completion of the first Court event $2,561.00
b)Costs for a summary hearing as a discrete event (24 October 2014) $1,706.00
c)Costs on a daily hearing fee – applied for a full day $2,048.00
d)Advocacy loading in respect of (c) above (being 50% of the daily hearing fee) $1,024.00
Total $7,339.00
The Court will also allow an additional sum of $3,000.00, being the amount that the applicants have incurred in respect of their preparation of written costs submissions, given that by doing so the need for any further court events was obviated.
On that basis, the respondent will be ordered to pay the applicants the sum of $10,339.00. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
Time to pay
There has been no time limit sought for any payment of costs. The Court is of the view that it will allow the respondent some time to pay costs due to the financial circumstances referred to above and, accordingly, will order that payment be made within 60 days of today’s date.
Conclusion
In all the circumstances of this matter and having considered the parties submissions and the matters referred to above and given them the weight referred to, the Court is of the view that there are sufficient justifying circumstances to ground a costs order in the applicants’ favour against the respondent in the sum assessed in paragraph 79, 80 and 81 above and will so order.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of Judge Kemp
Associate:
Date: 20 March 2015
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Costs
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Stay of Proceedings
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