THOMPSON & FINCH
[2021] FamCAFC 3
•28 January 2021
FAMILY COURT OF AUSTRALIA
| THOMPSON & FINCH | [2021] FamCAFC 3 |
| FAMILY LAW – APPLICATION IN AN APPEAL – INDEMNITY COSTS – Where costs are sought calculated on an indemnity basis – Where the respondent was wholly unsuccessful and her appeal was dismissed – Where the circumstances justify an order for costs – Where there are exceptional circumstances which warrant an order for indemnity costs – Costs fixed in the sum of $13,500 pursuant to r 19.18(1)(a) of the Family Law Rules 2004 (Cth). |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.18(1)(a) |
| Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 |
| FIRST APPLICANT: | Mr Finch |
| SECOND APPLICANT: | Company C |
| RESPONDENT: | Ms Thompson |
| FILE NUMBER: | MLC | 9211 | of | 2017 |
| APPEAL NUMBER: | SOA | 49 | of | 2019 |
| DATE DELIVERED: | 28 January 2021 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | In Chambers |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 23 August 2019 |
| LOWER COURT MNC: | [2019] FCCA 2684 |
REPRESENTATION
| COUNSEL FOR THE FIRST AND SECOND APPLICANTS: | Ms Galea |
| SOLICITORS FOR THE FIRST AND SECOND APPLICANTS: | Lampe Family Lawyers |
| THE RESPONDENT: | In Person |
Order
The respondent pay the costs of the applicants of and incidental to the appeal fixed in the sum of $13,500.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Thompson & Finch has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 49 of 2019
File Number: MLC 9211 of 2017
| Mr Finch |
First Applicant
And
| Company C |
Second Applicant
And
| Ms Thompson |
Respondent
REASONS FOR JUDGMENT
Introduction
On 18 September 2020, this Court dismissed the appeal filed by Ms Thompson (“the respondent”) from certain orders made by a judge of the Federal Circuit Court of Australia on 23 August 2019 (see Thompson & Finch and Ors [2020] FamCAFC 230).
On 14 October 2020, Mr Finch and Company C (“the applicants”), filed an Application in an Appeal seeking an order for costs against the respondent calculated on an indemnity basis. That application was supported by an affidavit filed on the same date.
The Application in an Appeal and the affidavit were served on the respondent by email on 22 October 2020.
On 23 November 2020, at this Court’s direction, the appeal registrar made an order for the filing of written submissions in support of and in opposition to the Application in an Appeal.
On 2 December 2020, the applicants filed their written submissions, but none have been filed by the respondent. Despite this, this Court proceeds on the basis that the respondent opposes the application.
The application for costs
The first question to be addressed is whether a costs order should be made at all.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) governs any application for costs, and relevantly provides as follows:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, 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), (5) and (6) 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.
…
As can be seen, the primary position is that each party is to bear their own costs, but a costs order can be made where there are circumstances that justify it, and in determining that, regard has to be had to the factors set out in s 117(2A).
There is no question that there is a circumstance here that justifies an order for costs, namely that the respondent has been “wholly unsuccessful in the proceedings” (s 117(2A)(e)).
This Court notes that s 117 (2A)(a) requires the court to take into account the financial circumstances of the parties in determining any application for costs, but that is not possible here because no evidence of those circumstances has been provided by any of the parties.
Thus, there is a basis for an order for costs to be made in favour of the applicants as a result of the respondent being “wholly unsuccessful in the proceedings”.
That then leads to the second question, namely, how should those costs be calculated, on the usual party/party basis, or on an indemnity basis as sought by the applicants? The difference is substantial. At the party/party rate the total amount sought is $11,323.89, whereas the total calculated on an indemnity basis is $16,120.
In considering this issue it is helpful to record what the Full Court said in D& D (Costs)(No 2) (2010) FLC 93-435:
26.In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:
The intent of s 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. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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. See Degmam v Wright (No 2) [1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368–70.
Indemnity costs orders are still an exception in this and other jurisdictions.
27.The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):
“2.The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis …
3.This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it …
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course …”
28.Reference was made to the later decision of the Full Court of Yunghanns v Yunghanns (2000) FLC 93-029 in which is [sic] was said (at 87,471, par 31):
“It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.”
In Colgate-Palmolive Co v Cussons Pty Limited, Sheppard J provided some examples of circumstances that might warrant the exercise of discretion to award indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
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. (supra).
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 (unreported, Federal Court, 3 May 1991)).
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 (unreported Federal Court, 5 March 1993)).
e.An imprudent refusal of an offer to compromise.
The circumstances relied on here as justifying an order for costs on an indemnity basis are said to be as follows (paragraph 9 written submissions filed by the applicants on 2 December 2020):
9.There are special circumstances that warrant that the order for costs in favour of the First and Second [Applicants] be indemnity costs:
(a)The previous conduct of the [Respondent] as highlighted above and as described in the first instance decision of [a] Judge [of the Federal Circuit Court of Australia] and in the decision of the Court on this appeal;
(b)The reasonable assessment, based on the failure of the appeal and finding that it had no merit, that a properly advised Appellant should have known there was no prospect of success and may be taken to have brought the appeal for an ulterior purpose.
(c)The making of an unsustainable claim of ostensible bias against the Judge at first instance.
(d)The desirability of the First and Second [Applicants] being compensated for the loss occasioned to them in having to respond to the appeal that was fundamentally hopeless.
(e)The unnecessary prolongation of the proceedings brought against the First and Second [Applicants].
(f)Overall the justice of the case warrants an award of indemnity costs.
(Footnotes omitted)
The “previous conduct” referred to in (a) is first, that the respondent had “previously brought, pursued and then abandoned applications for orders against [the applicants] giving rise to an order for indemnity costs”, secondly, the finding of this Court that “the appeal grounds had no merit”, and thirdly, “[t]he appeal was a further manifestation of the [respondent’s] apparent willingness to pursue meritless proceedings against the [applicants] and put them to further unjustified expense”.
However, it is not open to this Court in determining the application for costs before it, to consider the conduct of the respondent in the proceedings below, which resulted in an indemnity costs order. The other conduct identified though, can be taken into account.
These circumstances fit comfortably within one or more of the examples of circumstances that can be considered so exceptional as to warrant indemnity costs being awarded. In particular, it is readily apparent that the appeal was brought in circumstances where a party properly advised should have known that he or she had no chance of success. It is not a case where the appeal grounds were arguable, and thus it was reasonable for the appeal to be brought.
This Court finds that there are exceptional circumstances here, which plainly justify a departure from the usual basis of the calculation of costs, and indemnity costs should be awarded.
However, having carefully considered the detailed Bill of Costs drawn in accordance with the retainer agreement between the applicants and their solicitors, there are a number of items that cannot reasonably be charged. For example, there is a charge for the solicitor to peruse the transcript before the primary judge, and then a separate charge for the “principal” to peruse the same transcript. Similarly, there is a doubling up of the charges for perusing submissions.
However, I do not propose to undertake a de facto taxation of the Bill of Costs. Rather, it is open to this Court to fix a specific sum for costs pursuant to r 19.18(1)(a) of the Family Law Rules 2004 (Cth), and that is what this Court proposes to do.
The amount that this Court fixes for costs is $13,500.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 28 January 2021.
Associate:
Date: 28 January 2021
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