Warbrick & Warbrick (No. 2)
[2021] FamCAFC 101
•28 June 2021
FAMILY COURT OF AUSTRALIA
Warbrick & Warbrick (No. 2) [2021] FamCAFC 101
Appeal from: Warbrick & Warbrick [2019] FCCA 2944 Appeal number(s): EAA 130 of 2019 File number(s): PAC 4295 of 2017 Judgment of: STRICKLAND, RYAN & WATTS JJ Date of judgment: 28 June 2021 Catchwords: FAMILY LAW – APPEAL – COSTS –Indemnity costs – Where the husband was wholly unsuccessful in appeal – Where the wife made an offer of settlement consistent with the outcome ordered –– Where no exceptional circumstances found to warrant indemnity costs – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) Sch 3, r 19.19
Cases cited: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59
NMFM Property Pty Ltd and Ors v Citibank Ltd (No 2) (2001) 109 FCR 77; [2001] FCA 480
Stasiuk & Guild [2021] FamCAFC 62
Warbrick & Warbrick (2021) FLC 94-016; [2021] FamCAFC 60
Number of paragraphs: 13 Date of hearing: In Chambers Place: Sydney Counsel for the Appellant: Mr Givney Solicitor for the Appellant: Nikolovski Lawyers Solicitor for the Respondent: O’Sullivan Legal ORDERS
EAA 130 of 2019
PAC 4295 of 2017APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MR WARBRICK
Applicant
AND: MS WARBRICK
Respondent
ORDER MADE BY:
STRICKLAND, RYAN & WATTS JJ
DATE OF ORDER:
28 JUNE 2021
THE COURT ORDERS THAT:
1.The respondent wife’s application for indemnity costs be dismissed.
2.The appellant husband pay the respondent wife’s costs of the appeal fixed in the amount of $15,000, within twenty-eight (28) days.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Warbrick & Warbrick (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRICKLAND, RYAN & WATTS JJ:
INTRODUCTION
On 29 April 2021, this Court dismissed an appeal by Mr Warbrick (“the husband”) from property settlement orders made on 4 November 2019 by a judge of the Federal Circuit Court of Australia. Ms Warbrick (“the wife”) seeks her costs of resisting the unsuccessful appeal and it is to this issue that these reasons pertain.
At the appeal hearing and so as to avoid the trouble and expense of a further hearing in relation to the question of costs, we adopted the Full Court’s usual practice and invited submissions on the point. However, we were asked to postpone consideration of the issue and by agreement between the parties, directions were made so that determination of costs could be made after judgment and without a further appearance. In accordance with those directions, on 13 May 2021 the wife filed written submissions and tendered a bundle of documents in support of her claim for costs. On 31 May 2021, the husband filed written submissions in reply. Although the directions permitted the wife to reply to those submissions by the husband, no further submissions were received.
The wife seeks costs on an indemnity basis and, failing that, in accordance with Schedule 3 of the Family Law Rules 2004 (Cth) (“the Rules”). Schedule 3 is an itemised scale of costs that sets out the maximum amount of party/party costs a person may recover unless the court fixes the amount (r 19.19 of the Rules). Calculated on an indemnity basis, the wife claims costs in the amount of $45,359.74. Calculated in accordance with Schedule 3, the wife’s costs as set out in the Schedule of Costs filed 3 September 2020 are said to be $45,150. The similarity between the two amounts is obvious and even the most rudimentary examination of the wife’s Schedule 3 costs, reveals that it is not what it purports to be. Indeed it is obvious that no attempt was made by the wife to calculate her party/party costs. In this respect, the so called Schedule 3 costs simply claims for work undertaken, whether necessary or not, which is charged at a rate other than in accordance with Schedule 3. Senior Counsel’s estimated fee of $10,000 to prepare the wife’s Summary of Argument establishes the point. It bears no relationship with Schedule 3.
Furthermore, an assessment of party/party costs also requires consideration of whether the particularised items “were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed” (as extracted in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 at 63). That exercise was not undertaken. Plainly, it should have been.
IS THE WIFE ENTITLED TO COSTS?
An application for costs falls to be determined in accordance with s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) provides that each party to proceedings under the Act should bear his or her own costs unless the court is of the opinion that there are circumstances that justify the making of a costs order (s 117(2)). Section 117(2A) sets out matters to which the court should have regard in determining whether there are circumstances which justify an order for costs, and if so, what, if any, order should be made. As well as the specific matters listed in s 117(2A), s 117(2A)(g) enables the court to take into account such other matters that are relevant.
In this application, the relevant factors are:
·the parties’ financial circumstances (s 117(2A)(a));
·whether a party to the proceedings has been wholly unsuccessful (s 117(2A)(e)); and
·an offer of settlement made by the wife and the husband’s response (s 117(2A)(f)).
The parties’ financial circumstances
The parties’ financial circumstances are set out in our reasons for judgment given in the appeal (Warbrick & Warbrick (2021) FLC 94-016), in particular at [3], [5] and [45]. The effect of these findings is that each of the parties have modest property and liabilities. Comparatively the wife has tangible assets more valuable than those of the husband. However, he receives an annuity of $982 per week and a salary of about $415 per week whereas the wife has an annuity of $633 per week and no capacity for paid employment. The property settlement orders require the wife to pay the husband $169,600. The suggestion that the husband cannot afford to pay the wife’s costs is thus not accepted, albeit the application of the subsection is moot.
Success
The husband has been wholly unsuccessful in the appeal and thus, the wife has incurred unnecessary legal expenses. These matters support an order for costs in her favour.
Offers of settlement
Between 13 May 2020 and 24 August 2020 the parties exchanged offers of settlement. Relevantly, on 5 June 2020 and 10 August 2020 the wife offered to settle the appeal on the basis that it be dismissed with no order as to costs. The husband did not accept the wife’s offers and in the intervening period he made counteroffers. These include counteroffers dated 16 June 2020 and 25 June 2020 by which the husband agreed that the appeal should be dismissed and the parties’ each pay their own costs with respect to the appeal. However, the husband’s counteroffers went further and required that the wife consent to other matters unrelated to the appeal. As the wife did not agree with these additional matters, the husband’s counteroffers were rejected. The effect of these matters is that although it is accepted that the parties engaged in serious and genuine attempts to compromise the appeal, including in relation to the question of costs, the wife’s offer to settle was given on terms consistent with the outcome ordered. The comparability of her offers of settlement and the outcome of the appeal justifies an order for costs in her favour.
It follows, that there are justifying circumstances for an order for costs in favour of the wife. The question to be answered is then, in what amount.
INDEMNITY COSTS
In Stasiuk & Guild [2021] FamCAFC 62 this Court said of indemnity costs:
8.Central to both grounds of appeal is the unremarkable proposition that the approach to an application for indemnity costs made under the [Act] is well settled by the Full Court decision of Kohan and Kohan (1993) FLC 92-340 (“Kohan”). The Full Court concluded that the costs power under s 117 of the Act includes the power to make orders for costs on an indemnity basis. The Full Court said at 76,614:
[T]he purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges… [T]he 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[.]
(Citations omitted)
…
17.Reference has already been made to Kohan and the principle that an order for indemnity costs in proceedings to which s 117 applies is exceptional. Kohan was cited in Prantage as, in effect, the cornerstone of well-established law in this jurisdiction [77], [147]. As Murphy J said in Prantage:
152.Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (ie “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party … shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context[.]
Citing NMFM Property Pty Ltd and Ors v Citibank Ltd (No 2) (2001) 109 FCR 77 at [82], the wife contends that the husband’s “imprudent or plainly unreasonable” failure to accept the wife’s offer justifies an award of indemnity costs. Merely because an offer of settlement which is consistent or better than the outcome of the application or an appeal is rejected, does not establish that the rejection was imprudent or plainly unreasonable. Context is important and, contrary to the submission by the wife to the effect that the outcome of the appeal was a fait accompli, the appeal was not so devoid of merit that the husband’s decision to continue with it and to reject the wife’s offer was foolish or would justify an order for indemnity costs. Although, in the circumstances of this case, it justifies an award of costs, it does not bring the case into that exceptional category in which an order for indemnity costs would be appropriate.
CONCLUSION AND QUANTIFICATION
Regrettably, the wife has not provided her properly quantified party/party costs. In the event that we determined such an order should be made, the wife proposed that the husband pay her party/party costs as agreed or assessed. We do not intend to permit the costs question to become, in effect, satellite litigation. It is appropriate that the wife’s costs are fixed and this issue is brought to a close. Having regard to the configuration of the appeal and the itemised account which identifies the work undertaken for the wife by her solicitor and counsel, it is our assessment that the wife’s party/party costs should be fixed in the amount of $15,000.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strickland, Ryan & Watts. Associate:
Dated: 28 June 2021
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