Theo & Theo

[2007] FamCA 209

FAMILY COURT OF AUSTRALIA

THEO & THEO [2007] FamCA 209

FAMILY LAW – APPEAL FROM DECISION OF FAMILY COURT JUDGE – COSTS - Discretionary decision – Denial of natural justice - Assessment of the quantum of costs – Appeal allowed – Costs to be remitted for reconsideration - Wife to hold monies on trust pending the determination of the application.

FAMILY LAW – APPEAL – COSTS - Costs certificate granted to the appellant pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 – Costs certificate granted to the respondent pursuant to s 6 of the Federal Proceedings (Costs) Act 1981- Costs certificate granted in relation to the rehearing of the application pursuant to s 8 of the Federal Proceedings (Costs) Act 1981.

Family Law Act 1975 (Cth)
Family Law Rules 2004
Federal Proceedings (Costs) Act 1981

De Winter & De Winter (1979) FLC 90-605

APPELLANT: THEO

RESPONDENT: THEO

FILE NUMBER: BRF 8564 of 2001

APPEAL NUMBER: NA 18 of 2006

DATE DELIVERED: 16 March 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: KAY, WARNICK & MAY JJ

HEARING DATE: 26 February 2007

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 22 December 2005

LOWER COURT MNC: [2005] FamCA 1241

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Kent

SOLICITOR FOR THE APPELLANT: Carter Naughton Rice Family Law

COUNSEL FOR THE RESPONDENT: Mr Hodges

SOLICITOR FOR THE RESPONDENT: Egan Simpson Solicitors

Orders

1. That the appeal be allowed.

2. That the application of the wife for costs be remitted to Jordan J for reconsideration.

3. That the moneys paid to the wife pursuant to paragraphs 1 and 2 of the order made on 22 December 2005 on account of costs in the sum of $200,000 be held by the wife on trust for the husband and wife until the further hearing and determination of the application.

4. That the Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

5. That the Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.

6. That the Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by the appellant in relation to the re hearing of the application.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Theo and Theo.

FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 18 of 2006
File Number: BRF 8564 of 2001

THEO

Appellant

And

THEO

Respondent

REASONS FOR JUDGMENT

1. In December 2005, Jordan J heard the wife’s application for property settlement and made various orders on 22 December 2005 after a five day hearing based on a finding that the property pool to be divided was $2,047,794 allocating 30 per cent to the wife and the balance to the husband.

2. The trial Judge in making the orders deducted the sum of $200,000 from the husband’s share by way of costs. It is this part of the orders from which the husband appeals in the Further Amended Notice of Appeal filed 7 February 2007.

3. As the trial Judge recorded (para 14 Reasons) in the years since the parties separated on 8 November 2001 they together spent a total of 47 days in hearings in the Family Court during 40 different court events. It is estimated that between them they have spent $700,000 in legal costs in the Family Court, the Supreme Court of New South Wales and the High Court of Australia.

4. A complicating factor in this appeal is that there were nine costs orders in existence at the time of the trial. One of these costs orders fixed the quantum, the others were to be assessed. None of the orders have been assessed nor paid by the husband. His Honour’s reasons do not demonstrate that they were taken into account in any way.

5. Although there was some attempt by counsel for the wife to deal with this problem by first conceding that fact and then suggesting that should the quantum of $200,000 by way of costs not be interfered with then the wife would not seek to enforce the earlier cost orders, we are of the view that it is not possible to make such an order other than by consent. On its own, this factor inevitably leads to the appeal being allowed.

6. As there are other difficulties, and since we intend to allow the appeal, it is necessary to explain them so that in returning the matter for further consideration by the trial Judge, all those concerned will know the particular matters that, in our opinion, should be considered. As the grounds of appeal do not attack the findings of fact made by the trial Judge we see no difficulty in this course.

7. The appellant asks that should the appeal be allowed, the wife refund the sum of $200,000 to him until the further hearing and determination of the wife’s application for costs. In our view, the better course is to impose upon the wife an order that she holds those monies on trust for herself and the husband until the determination by Jordan J of her application for costs. At that time orders can be made for the payment by the wife to the husband of monies or other orders appropriate to the decision.

Background

1. The wife’s allegation that the conduct of the husband caused a considerable amount of legal expenses being incurred is not denied by him. This was understood by the trial Judge commencing at paragraph 16 of the judgment (AB p27). We will refer to parts of the judgment in this respect.

2. The relevant facts begin when after separation the wife’s solicitors wrote on 19 November 2001 indicating that the wife wished to make a claim for property settlement and seeking:

   “16.…a written assurance from the husband that he would not dispose of any property without first obtaining the wife’s written consent to do so.  The husband was advised in the letter that, in the absence of such written assurance, the solicitors held instructions to institute proceedings for a restraining order.  The letter concluded by observing that the wife would prefer to resolve the matter by negotiation, rather than litigation.”

3. The husband responded by telephoning the solicitor who made a diary note of the conversation. The trial Judge accepted the solicitor’s evidence which included the husband’s agreement not to dispose of any property. The husband shortly after went to Greece as he had previously advised the solicitor.

4. The application of the wife for property settlement was filed on 11 December 2001. In the application, in addition to seeking orders for property settlement of just over $1,000,000, the wife asked for spousal maintenance of $1,000 per week. The trial Judge was satisfied that the husband received notice of those proceedings.

5. As recorded by the trial Judge:

   “22.The day after service upon him, the 8th of February, the husband forwarded $202,000 from the term deposit to his mother in Greece, allegedly in payment of an earlier purchase price for [the family property].” (This is a residential property previously owned by the husband’s family in Greece).

   23.At about the same time in February, the husband transferred his three Victorian properties to his brother-in-law by way of sale, for which he received net proceeds of some $477,631.

   24.On 12 February, the husband executed a Memorandum of Transfer purported to transfer his interest in [a property at H Street]  to his sons at a sale price of $189,000.

   …

   26. On 17 February, the husband and his two sons signed a contract for sale of the [H Street] property, the subject of the earlier Memorandum of Transfer.

   27On 18 February, the husband’s mother returned the $200,000 paid by the husband to her allegedly as a gift, or as an advance on an inheritance, to the husband’s sons.  The sons, in turn, used those funds to pay the contract price on the [H Street] property.  It is common ground that the [H Street] property was worth much more than the sale price and no less than some $300,000.

   28Shortly after the transfer of the [H Street] property to his sons, the husband personally made an application to [the Bank] for a loan of some $600,000, which borrowing was secured against the [C Street] property.  In correspondence to the [Bank] at that time (Annexure “J” to the wife’s affidavit of evidence-in-chief), the husband informed the bank that it was his intention to gift the $600,000 to his sons to enable them to develop their newly acquired property at [H Street].

   29On 6 March, the husband transferred the $600,000 borrowed from the [Bank] for the redevelopment of [H Street] from Australia to Greece.

   30On the same day, the husband transferred a further $600,000 from Australia to Greece, being the proceeds of sale of the Victorian properties to his brother-in-law and the proceeds of the purchase price paid by the sons.”

6. As his Honour said of these actions:

   “31As a consequence, in the space of but a few days, the husband had divested himself of all property in Australia, other than the [C Street] property, which properly was, at that point, encumbered to some $900,000, which was in excess of its market value.  All of the proceeds of those transactions were then offshore.

   32All such transactions were undertaken in the context of the husband being aware of the wife’s claim for property settlement, the request of the wife and her solicitors for notice of any intention to dispose of property and of the pending proceedings before the Family Court.  The end result was that, as at 6 March 2002, if all transactions stood, there was nothing left in Australia for the Family Court to divide.

   33The husband maintains that these transactions were entirely consistent with the earlier plans of the parties to realise property in Australia and to move to Europe.  He says that those proposals were reiterated in correspondence sent to the wife by him at that time.  At the same time, the husband says that he fully appreciates that the wife and her solicitors would have been alarmed by the sudden developments and that a Court appraised of such matters might be very suspicious of his motives and intentions.  However, the husband strongly asserts that the consequences of his transactions in February were speedily rectified in ways which should have reassured both the wife and the Court.”

7. The wife was so alarmed by the husband’s behaviour that she took a number of steps as described by the trial Judge. The husband’s position was that he rectified these transactions within a short space of time and the wife should have been reassured. The judgment of his Honour otherwise deals with the wife’s application that transactions should be set aside and that monies should be added back into the pool. It is not necessary for us to refer to that part of the judgment in any other detail because the only appeal issue is the one of the question of costs.

Reasons of the trial Judge

1. The reasons in relation to the ultimate decision and orders made in relation to costs commence at paragraph 132 of the judgment (AB p61). His Honour recorded that each of the parties’ asked for costs. The wife asked for costs on an indemnity basis in the Minute of Orders filed 22 November 2005.

2. The approach taken by his Honour is contained in paragraph 131:

   “131.However, in this case, there is also the most significant issue of the costs of the proceedings.  Whilst those considerations are, at one level, entirely separate from the issue of the entitlement of the parties to property settlement and they have not formed any part of my deliberations in determining that part of the wife’s claim, such matters need to be considered in determining the final orders between these parties.”

3. The trial Judge explained that the matter listed for five days had taken up all of that time in relation to the substantive applications for property settlement. He expressed concern about the contention contained in the material about questions of responsibility for the various court events and said:

   “134.…that a detailed examination of the circumstances surrounding every application and every hearing was likely to be complex and involve evidence and cross-examination of not only the parties, but many of the principal participants, including various legal representatives who acted for each of the parties from time to time.  I feared that a review of so many Court events in multiple jurisdictions over four years since the date of separation was likely to be longer than the trial proper, would expose the parties to further expense, and would be likely to delay the finalisation of the matter until I became available again in the second-half of 2006.

4. Whilst no doubt these concerns expressed by the trial Judge were properly based he then assumed that the husband, who appeared for himself, and the legal representatives for the wife agreed that something described by him as a “broad brush approach” should be adopted. The main difficulty with this is that the transcript does not reveal that the husband ever understood or agreed to this course.

5. The arguments of the parties are recorded in the judgment. The wife’s argument in essence was:

   “138.…that it was the husband’s conduct in February and March of 2002 which served to grossly complicate the matter .... In addition, she argues that his failure to comply with Court orders and his propensity to pursue flawed remedies by way of appeals, stay applications and the institution of related proceedings in other jurisdictions, further greatly added to the costs.  Finally, she argues that many stages of the process towards the final hearing were frustrated by the husband’s failure to comply with directions and/or his failure to appear.”

6. The husband’s argument was that the transactions entered into by him:

   “139.…were not designed to deprive the wife of her entitlement, but rather were part of the longstanding plans of each of the parties to liquidate property in Australia and create a fund which would enable them to acquire property in Europe...

   and further:

   “141.However, the husband’s central argument is that, whatever may have been the understandable reaction of the wife, her legal representatives and the Courts to the events of February and early March of 2002, within but a few days thereof any threat to the wife’s claim was entirely redressed by the repatriation of funds and the lodging of security against the remaining Australian properties.  The husband contends that, thereafter, the wife and her legal representatives engaged in an extraordinary level of legal overkill.  He points out that, within days, the first $600,000 borrowed against the [C Street] property was returned and repaid to the bank.  The bulk of the second $600,000 was repatriated as promised at the expiration of the term of the investment.  Pending the return of that principal sum, he points out that he utilised the $150,000 borrowed from his brother against that sum to reduce the pre-existing mortgage debt on [C Street].  In the meantime, he observes that the wife had secured her interests against the remaining Australian properties by both restraining orders and caveats.”

7. Further at paragraph 142:

   “142.…The husband contends that, given he brought all the property into the marriage, the wife was always going to receive substantially less than 50%.  He submits that, even with the second $600,000 remaining invested overseas for twelve months, substantially more than 50% of the property of the parties had been secured for the wife in Australia from a point early in 2002.

8. Of this submission his Honour said:

   “147…the husband was clearly the author of so much of what resulted in the weeks and months thereafter.  Once trust is so clearly lost, it is not readily restored.

   148Litigation is inherently difficult and costly and parties are encouraged at all times to resolve their disputes.  However, resolution is most likely to be viable in cases where there is some level of goodwill, or some capacity to accept that there has been full and frank disclosure on both sides.  The husband says that he endeavoured to engage in settlement negotiations and that he was met with resistance.  The difficulty is that I accept that the husband engaged in some seriously threatening behaviour in his early exchanges with the wife’s solicitors and that they were entitled thereafter to decline to engage with him directly and thereafter insist on communications being in writing or between legal representatives.  Further, the wife became engaged in battles on so many fronts that, no doubt, it was very difficult for those advising her to provide clear guidance in any such proposed discussions.

   …

   151However, the difficulty for the husband is that the wife should not be required to bear the financial responsibilities arising as a result of the husband’s poor conduct, poor judgment and/or poor legal representation.

   152On any view, what the husband did at the beginning of 2002 was, at the very best, extremely ill-conceived.  There is absolutely no doubt that the transfer of properties and the transfer of funds after the institution of proceedings has been the single biggest cause of the complications that have now engulfed these parties for the following four years.

   153Further, whatever be the merits of the wife’s entitlement for interim maintenance, there can be little doubt that the level of opposition mounted by the husband was entirely disproportionate, given the estate is worth over two million dollars and that the interim maintenance in the ordinary course would have been but a few thousand dollars over what should have been a comparatively short time frame to the final hearing.  His continued opposition of the wife’s application, his reviews, appeals and stay applications were legally and commercially unsound.

   …

   155On the other hand, at least with the benefit of hindsight, there is some merit in aspects of the husband’s arguments.  I have determined that the wife should receive 30% of the estate of the parties.  Given the agreed facts, she was always likely to receive significantly less than 50%.  Once the wife had secured [H Street] and [C Street], she had secured the bulk of the value of the estate.  The continued pursuit of the return of funds from overseas can now be seen to be surplus to the wife’s entitlement.

   156Again, at least with the benefit of hindsight, the wife’s resistance to the husband’s recent claims for access to further funds to enable him to have legal representation at trial may be viewed as being somewhat unreasonable.  If the husband had been permitted to draw down another $25,000 for legal representation at trial, the wife’s position would not have been compromised in the slightest. …”

9. The key paragraphs in relation to his Honour’s determination about costs are contained in paragraphs 158 and 159 as follows:

   “158.In weighing up all of these matters, I note that the husband has incurred legal expenses in excess of $200,000 and that he was deprived of access to funds to secure legal representation at trial.  I note that the wife’s costs of and incidental to the Family Court proceedings are estimated to be of the order of $360,000.  I have already observed how I am satisfied that the husband’s conduct at the beginning of 2002 was the single biggest factor in complicating these proceedings and exposing the parties to unnecessary costs.  I am also satisfied that, from time to time, his subsequent conduct has caused costs to be incurred unnecessarily.  As against that, there have no doubt been costs which would have been incurred in any event in the course of less complicated litigation, and there are some aspects of the wife’s conduct in the proceedings which have either contributed to delays or resulted in costs being incurred, which at least now can be viewed as somewhat excessive.

   159Doing the best I can, I have concluded that, in addition to paying his own costs, the husband should make a substantial contribution to the costs incurred by the wife fixed by me at the level of $200,000 of her costs.”

1. Having decided that the husband should contribute the sum of $200,000 to the wife’s costs his Honour said as follows:

   “164.The husband’s entitlement under my determinations would be $1,433,000.  He has already had the benefit of some $331,000, so that the balance of his entitlement would be 1.1 million dollars.  Pursuant to my orders, the husband is required to pay $200,000 towards the wife’s costs, so the bottom line for the husband is a distribution to him of some $900,000.

   …

   170.In round figures, the balance payable to her is some $497,000 and the balance of invested capital is $528,000.  I am satisfied that the wife should receive the entirety of those proceeds as and by way of payment of her property settlement and as and by way of payment of $31,000 of the legal costs payable by the husband.  The balance payable by the husband would then be some $169,000.”

Grounds of Appeal

1. There were four grounds which were dealt with in the submissions individually.

Ground One - The broad brush approach

1. We have already referred to that part of the judgment contained at paragraph 135 where his Honour said that the parties had:

   “135.…very appropriately agreed to conduct that aspect of the case using something of a broad brush approach.  My determinations on this issue are thus also defined by the appropriate limitations to that evaluation process.  I am satisfied that I can do justice between the parties on that broad basis, as the fundamentals in this case are quite clear.”

2. It was submitted first that there was no agreement that such an approach should be taken, and secondly, that it was not the proper approach to take in the circumstances especially as the husband was without legal representation.

3. In the written submissions it was contended “that the learned trial Judge erred in fact in concluding that the parties agreed to conduct the cost aspect of the case using something of a broad brush approach”. This certainly appears to be correct. It was conceded that “even if the Court was to be satisfied that the learned trial Judge had erred in fact, it does not automatically follow that an appeal will succeed the question is whether the error was material.” Reference was made to De Winter & De Winter (1979) FLC 90-605 per Gibbs J at p.78,092. It was submitted that in this case the error “was material to the manner in which the learned trial Judge approached the determination of the issue of costs” and that as the result could not be said to be ‘plainly right’ it should not be allowed to stand.

4. Whilst we would observe that the approach taken by the trial Judge is attractive, unfortunately, apart from the fact that the parties did not agree to it, in this case there was considerable contention about questions of responsibility for the numerous occasions that the parties had come to Court and incurred expenses. There remains the difficulty that at no time did the appellant agree to the determination of this issue using such an approach and as counsel emphasised, added to that the fact that the appellant was unrepresented “it was incumbent upon the trial Judge to fully explain the potential consequences of the adoption of such an approach.” Counsel correctly we think submitted that the trial Judge was obliged to follow a three stage process: -

   “(a)first, to determine whether there should be a departure from the legislative starting point, by virtue of a consideration of the matters prescribed, that each party should bear their own costs; and

   (b)      secondly, to ascertain the quantum of costs; and

   (c)thirdly, to determine what proportion or amount of the same that the Husband or Wife should pay to the other.”

   (Paragraph 8 submissions of appellant)

5. In our view, the adoption of the approach taken by his Honour failed to give   consideration to those important matters. The difficulty that this caused was exacerbated by the lack of reasons.

6. Finally, on this topic it is argued that it is clear that the result could not be said to be ‘plainly right’. His Honour was provided with two documents in relation to the costs of the respondent. One was the Bill of Costs.  (AB 8) Even a cursory reading of this document reveals there are many matters that could not be properly included as costs of the legal proceedings. A useful summary of these comes from the appellant’s submissions:

   18(a)the inclusion in the Bill of Costs of a number of matters which, it is submitted, are not matters which should properly be accounted for as costs of legal proceedings in the Family Court in respect of which it could be asserted the Appellant should be responsible:

   (i)the amount of a maintenance payment to the Respondent in the amount of $3,200.00;

   (ii)the costs relating to contact with officers of the Registrar of the High Court;

   (iii)the costs identified as relating to the drafting of documents (such as Cross Claim) not used in the Family Court;

   (iv)the costs identified as relating to perusing material from and creating material to the Second and Third Respondents;

   (v)the costs identified as being associated with perusing correspondence from and creating correspondence to the Legal Services Commission;

   (vi)the costs identified as being associated with perusing material from the Qld Bar Association;

   (vii)the costs identified as being associated with perusing Reasons for Judgment and Order and amended Order in respect of contravention proceedings brought by the Respondent against the Second and Third Respondents;

   (viii)the costs identified as being associated with perusing a number of authorities relating to the law of constructive trusts;

   (ix)the costs identified as being Counsel’s fees (totalling $5,104.00) in respect of Counsel who do not appear , from a reading of the face of the Orders, to have appeared in the Family Court in respect of the matter.

7. Exhibit 18 (AB V 14) contains what is described in the respondent wife’s case as further particulars provided on 15 December 2005. The costs claim total $395,753.21. These include costs in the Supreme Court and the High Court and various references to maintenance. Those said to be referrable to the Family Court proceedings were in the sum of $364,000.

8. The origin of the Bill of Costs is that on 22 June 2005, the trial Judge made procedural orders including order 7(vi) requiring the parties to file and serve particulars of the quantum of any intended applications for costs. The document was to be provided on or before 21 September 2005. It was filed on 22 November 2005. The appellant did not file any such document but objected to the late filing by the wife. The document which is now Exhibit 18 was requested by the trial Judge on 12 December 2005 (see transcript p 26).

9. It can thus be seen that any estimate attempted by the trial Judge despite his best efforts in ascertaining the costs of the parties in the Family Court was unlikely to be accurate. This must also have affected his reasoning when settling upon the sum of $200,000 to be deducted from the husband’s share.

Ground Two – the learned trial Judge erred in law when considering the exercise of the discretion to award costs in that he failed to take account of a relevant consideration, namely those orders for costs which had previously been made against the Husband.

1. Reference has already been made in this judgment to this ground. The costs orders made prior to trial conveniently appear at Annexure “A” to the written submissions of the appellant. The trial Judge knew about these orders.

2. The costs orders begin on 16 October 2002 when a Registrar made orders that the husband pay $1,000 per week by way of maintenance and pay the wife’s costs of and incidental to the application for maintenance including some reserved costs.

   ·    On 31 January 2003, Barry J in considering a review of that order reduced the maintenance to $800 per week, made orders in relation to the return of monies from Greece and ordered that the husband pay the wife’s costs of and incidental to the wife’s application for spouse maintenance.

   ·    On 20 March 2003, Warnick J struck out the husband’s application for leave to appeal and made an order for costs.

   ·    On the same date, Jordan J considered the husband’s application for a stay which was refused and ordered that the costs be as agreed or failing agreement to be taxed.

   ·    Orders then were made in relation to enforcement on 28 July 2003, 17 November 2003 and 24 February 2004 in which cases costs orders were made to be assessed and on 30 March 2005 the husband was ordered to pay the wife’s costs fixed at $1,000.

   ·    On 21 October 2005, Jordan J heard an application of the husband seeking a payment of $35,000 to meet his legal expenses which was dismissed and the Judge ordered that the husband pay the wife’s costs of and incidental to the application.

3. It can therefore be seen that these costs may well be quite substantial. As none of these orders have been challenged on appeal they remain binding on the parties and cannot be altered by an Appeal Court.

4. It is also submitted that despite the two documents provided by the wife’s solicitor about her costs, the trial Judge was no doubt acting on an incorrect premise as to the foundation upon which he determined the amount he ordered the appellant to pay to the wife by way of costs. Reference was made to Rule 19.18 of the Family Law Rules 2004:

   19.18 Maximum amount chargeable

   (1)This rule sets out the maximum amount of costs a lawyer may charge and recover for work done for a case:

   (a)      for a client;

   (b)if the court orders that costs are to be paid and does not fix the amount; and

   (c)        if a person is entitled to costs under these Rules.

   (2)The maximum amount of costs that a lawyer may charge and recover is as follows:

   (a)for fees — an amount calculated in accordance with Schedules 3 and 4;

   …

   19.19 Party and party costs

   (1)The court may order that rule 19.18 does not apply and that a party is entitled to costs:

   (a)       of a specific amount;

   (b)       as assessed on a lawyer and client basis or an indemnity basis;

   (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.

5. It was not apparent from the reasons what approach was taken by his Honour. It is submitted that in this case the trial Judge did not make an order that the wife was entitled to costs of a specific amount and there is nothing in the reasons to conclude that the learned trial Judge was acting pursuant to Rule 19.19 (1)(a). Further, it was submitted and in our view correctly that since a Registrar, in performing the assessment procedure, must determine whether costs were reasonably incurred, were of a reasonable amount and were proportionate to the matters in issue (Rule 19.33(1)(j)) it was incumbent upon the trial Judge not to conduct an assessment and too demonstrate this as part of his reasons when he took the step apparently of fixing the amount.

6. It was submitted on behalf of the respondent that the trial Judge had not acted on an incorrect premise that is, that the costs were calculated according to scale, because the learned trial Judge was looking at the “costs incurred” of the parties. This in itself raises an important issue, that being whether the trial Judge intended to make an order on an indemnity basis. If that had been his intention no reasons were provided as to why this case fell into the exceptional category.

Ground Three – the learned trial Judge erred in the exercise of the discretion conferred by s. 117(2) of the Family Law Act (“the Act”) in that his Honour:

(a) failed properly to consider the matters prescribed by s. 117(2) of the Act contrary to principle;

(b)     approached the assessment of the quantum of costs on an indemnity basis;

(c)     failed to afford to the self-represented husband natural justice by approaching the assessment of the quantum of costs on an indemnity basis without making it clear to the husband that he had the opportunity to make submissions contrary to a costs order on that basis;

(d) failed first to arrive at an order for the settlement of property before considering whether to make a costs order and, in particular, failed to determine that question before in turn considering s. 117(2A) of the Act.

1. It is accepted that at the least the trial Judge did not explain on what basis the order for costs was being made and that the figure reached appears to be on an indemnity basis. Further, that the husband who was self represented should have been told clearly that he could challenge the amount being sought by way of costs in addition to being invited to cross examine the wife’s solicitor.

Ground Four – Failure to give adequate reasons

1. We intend to deal with this ground, although it may seem otherwise unnecessary, to provide some guidance as to the future hearing and determination of this case. First, we accept that there is no costs order as such. Secondly, the trial Judge did not explain if he had taken into account the existing and enforceable costs orders. Thirdly, it is unclear whether the trial Judge actually undertook some decision making process about the quantum of the costs or adopted another approach.

2. In particular it was submitted that it is impossible to ascertain the reason why the sum of $200,000 was considered appropriate and there is nothing to distinguish that decision from an arbitrary decision. As we have already said we are entirely mindful of the significant cost to the parties already of these proceedings but unfortunately in this case, the approach taken by his Honour has led to a result that is impossible to understand how he reached important conclusions and made orders in relation to costs.

Conclusions

1. In remitting the matter to the trial Judge the task as we see it in accordance with the Act and the Regulations is to determine if there are circumstances that justify an order for costs. If so:

   (1)After at least obtaining a general view of the quantum of the costs of the wife some account be given to the costs orders pre existing the trial. This might be achieved by the parties consenting to those orders being set aside;

   (2)Relate the circumstances found to justify an order for costs to the portion of the costs to be met by the husband in percentage terms;

   (3)In relation to any proposed order:

   (a)On what basis such an order is to be made e.g. party/party or indemnity;

   (b)Whether the costs are to be fixed or assessed.

2. In our view, in the absence of any agreement between the parties, the better course may be to order that the costs be assessed with the husband to pay a certain percentage of those costs. In the absence of consent, it may be necessary to further direct that there be deleted from the assessment any costs referable to the interlocutory proceedings where costs orders have already been made.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court 

Associate: 

Date:  16 March 2007