Wei & Xia (No 2)
[2024] FedCFamC1A 138
•20 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Wei & Xia (No 2) [2024] FedCFamC1A 138
Appeal from: Wei & Xia (No 5) [2023] FedCFamC1F 679 Appeal number: NAA 246 of 2023 File number: SYC 196 of 2017 Judgment of: ALDRIDGE, HOGAN AND KARI JJ Date of judgment: 20 August 2024 Catchwords: FAMILY LAW – APPEAL – COSTS – Application for indemnity costs – Where the appellant was wholly unsuccessful – Where the cross-appeal was abandoned at the appeal hearing – Not all claimed costs justifiable – Appellant to pay the first respondent’s and second and third respondents’ costs in fixed sums. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.19, 12.13, 13.53, Sch 3
Cases cited: Beckham & Quarrington [2024] FedCFamC1A 136 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Conrad & Conrad (2020) 61 Fam LR 301; [2020] FamCAFC 255
E Pty Ltd & Zunino (No 2) [2020] FamCAFC 272
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Wei & Xia [2024] FedCFamC1A 65
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Number of paragraphs: 52 Date of last submission: 23 May 2024 Date of hearing: Determined in chambers on the papers Place: Sydney Solicitor for the Appellant: Broaden Legal Solicitor for the First Respondent: Metro North Legal Counsel for the Second Respondent: Mr Reynolds Solicitor for the Second Respondent: MLH Lawyers The Third Respondent: Represented by Mr B Xia (the Second Respondent) ORDERS
NAA 246 of 2023
SYC 196 of 2017FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS WEI
Appellant
AND: MR XIA
First Respondent
MR B XIA
Second Respondent
MS SIANG (DECEASED)
Third Respondent
ORDER MADE BY:
ALDRIDGE, HOGAN AND KARI JJ
DATE OF ORDER:
20 AUGUST 2024
THE COURT NOTES THE AGREEMENT OF THE PARTIES THAT:
A.In January 2024, the second respondent was appointed by the Supreme Court of New South Wales as the administrator of the late estate of the third respondent.
AND THE COURT ORDERS BY CONSENT THAT:
1.Pursuant to r 3.19(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), the second respondent, in his capacity as the administrator of the deceased estate of Ms Siang, be substituted as the third respondent.
2.Pursuant to r 3.19(2) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), in respect of costs, the application for costs in the Application in a Proceeding filed on behalf of the second and third respondents on 14 September 2023 that the evidence in support of the costs application and the second respondent’s written submissions in support of the same be taken to be repeated and relied upon by the third respondent mutatis mutandis in support of an application for costs by the third respondent.
AND THE COURT FURTHER ORDERS THAT:
3.If and when the estate of the late Ms Siang complies with Order 8 made by the primary judge on 16 August 2023, it shall first deduct from the sum being paid and retain for itself $68,000 as the costs of the appeal payable by the appellant and, secondly, pay to the first respondent $16,000 as his costs of the appeal before paying the balance to the appellant.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wei & Xia has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE & KARI JJ:
On 24 April 2024 we dismissed the appeal against property settlement orders made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 16 August 2023 (Wei & Xia [2024] FedCFamC1A 65). The first respondent (the appellant’s former husband) and the second and third respondents (the husband’s parents) now seek orders for the payment of costs on an indemnity basis or, alternatively, an ordinary basis.
The third respondent died before the appeal was heard. Letters of administration had not yet been granted and we made an order in the appeal appointing the second respondent as the estate representative for the purpose of the appeal, for reasons set out in the judgment. Whilst the costs judgment was reserved, the parties provided a Minute of Consent Order indicating the second respondent had since been appointed administrator of the late estate of the third respondent by the Supreme Court of New South Wales. The proposed consent orders would substitute the second respondent as the third respondent in accordance with r 3.19(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) and provide for the second respondent’s written submissions to be relied on by the third respondent. We are satisfied these orders should be made.
The appellant’s contention before the primary judge was that several properties held in various combinations of the parties’ names were beneficially owned by her and the first respondent and were therefore available for division between them. The second and third respondents successfully put the proposition that they were the beneficial owners of the properties.
The appellant unsuccessfully appealed against these findings and against the orders dividing the remaining property between her and the first respondent.
THE LEGAL PRINCIPLES
Each party to proceedings under the Family Law Act 1975 (Cth) (“the Act”) is to bear his or her own costs unless there are circumstances that justify a different order. In considering such an order, the Court must take into account the matters set out in s 117(2A) of the Act.
Indemnity costs orders are made only in exceptional circumstances (Kohan and Kohan (1993) FLC 92-340; Yunghanns v Yunghanns (2000) FLC 93-029; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225).
THE FIRST RESPONDENT
There are two difficulties standing in the way of the first respondent obtaining an indemnity costs order. The first is that he did not comply with r 12.13 of the Rules and provide the costs agreements with his lawyers to the Court. Further, his submissions did not identify any matters, save for one, that specifically support an indemnity costs order. The one matter that he relied upon falls short of justifying any order other than an ordinary costs order.
As to the parties’ financial circumstances, the appellant accepted that she will receive approximately $1,978,174 as a result of the orders of the primary judge. Of this sum, $712,500 is to come from the estate of the third respondent which so far has not complied with the order requiring its payment. We have no information as to the financial affairs of the estate and whether it is or will be in a position to comply with the order.
The appellant owes lenders $642,000. These funds were borrowed to pay legal fees, mortgage repayments and living expenses. Jointly with the first respondent, she has a judgment debt of $25,963.46.
If the estate of the third respondent is unable to pay the sum it owes to the appellant, she will not be in a strong financial position.
The appellant is a qualified professional, but there is no evidence that she has been employed lately.
The financial position of the first respondent is unknown. He will receive assets from the property settlement. He is apparently not working but remains supported by the second respondent.
The appeal was wholly unsuccessful.
We do not consider that an offer to settle costs of the appeal made on 8 May 2024 is relevant to the exercise of this discretion because it was made after the determination of the appeal (noting we were not provided with a copy of the offer anyway).
The first respondent submitted that the appellant’s failure to pay a costs order made on 15 May 2018 in divorce proceedings between them and the appellant’s attempts to sell a property in mid-2023 and early 2024 by means outside the primary judge’s orders were both examples of conduct which supported indemnity costs and could be taken into account in this application (s 117(2A)(g) of the Act). We do not agree with either proposition.
Taking into account the above matters, we are satisfied that an order for costs is just. However, that is based on the appellant receiving $712,500 from the estate of the third respondent. Justice will therefore be achieved by these costs being payable from the debt owed by the estate to the appellant and, in the event the estate does not have the funds to comply with the order, the first respondent will bear the shortfall in his costs.
The first respondent’s Schedule of Costs complied with Sch 3 of the Rules and seeks $35,624.70 plus disbursements of $1,430. His solicitor appeared as advocate on the hearing of the appeal.
It has been the practice of the Full Court for many years to fix the costs the subject of costs orders which are much more common in appeals than for trials so as “to save litigants and the court the time and trouble taken in assessing those matters” (Beckham & Quarrington [2024] FedCFamC1A 136 at [56]). To this end, r 13.53 of the Rules requires a party seeking costs in an appeal to file a schedule of the costs claimed seven days before the first of the sitting in which the appeal is to be heard. Rule 13.53(3) provides that if a schedule is filed and served “all parties must be in a position to address the court on the question of costs (including quantum) at the conclusion of the hearing”.
The parties were reminded of this rule by the order made by the appeals judicial registrar at the procedural hearing.
Additionally, the parties in this matter had the added advantage of filing written submission after delivery of the reasons disposing of the appeal.
Given the filing of Schedules of Costs, the appellant was on notice as to the costs sought, both in terms of items claimed and quantum. The appellant did not make any submissions in this regard. Nonetheless, there are items that demand further attention.
Included in the total is $9,193.70 for reading the primary judge’s reasons, a number of items that do not relate to the appeal, two lots of $259.22 and $648.05 for preparation and appearances before the primary judge, $2,000, $1,000 and $3,000 for “estimate” and $3,782.24 for printing of two hard copies of the Appeal Book. As to the latter, the Court conducts appeals electronically and if a party or lawyer wants a hard copy it should be at their expense.
The disbursements do not relate to the appeal.
Clearly not all these claimed costs are justifiable. Doing the best we can, the costs will be fixed in the sum of $16,000.
THE SECOND AND THIRD RESPONDENTS
The second and third respondents filed a cross-appeal which was abandoned at the hearing of the appeal. It was agreed at that time that there would be no order as to costs of the cross-appeal and that the estimate of costs provided by the appellant and the second and third respondents would be reduced by 20 per cent to reflect the costs of the cross-appeal.
We have already set out the appellant’s financial circumstances.
For the second respondent, it was submitted that his resources were finite because he had ceased work in 2017–2018. That may be so, but the extent of his resources is entirely unknown. It is obvious from both the trial and appeal reasons that his known resources greatly exceed those of the appellant.
As we have said, the financial position of the estate of the third respondent is entirely unknown.
The second respondent submitted that the conduct of the appellant was relevant because allegations were made in the appeal that never ought to have been made and groundless contentions were pursued.
This was said to be established by (second and third respondents’ submissions filed 22 May 2024, paragraphs 14–16):
(a)The appellant raising a “broad barrage” of grounds;
(b)Grounds of appeal that “traversed a variety of legal and factual contentions that necessitated almost all of the material below having to be carefully considered”; and
(c)The grounds did not pay sufficient attention to the manner in which the proceedings had been run.
As to (a) and (b), the same may be said of most appeals but, more importantly, those submissions do not challenge the merit of the grounds of appeal, merely the broad nature of them. The fact that a ground is drawn widely does not mean that it is devoid of merit. The submissions add little to the point that the appeal was wholly unsuccessful and that costs should be quantified having regard to the nature of the work that was done to address the matters raised by the appellant.
There is more force in the third point, (c), as this was a common theme throughout the appeal reasons. However, we do not consider that the extent of this approach was sufficient to justify an order for indemnity costs.
As we have said, the appeal wholly failed.
The second and third respondents sought to rely on written offers made on 14 and 15 October 2020, which was early in the primary hearing itself. Whilst those offers may have particular importance to any application for costs of that hearing, they have little relevance to the costs of the appeal. Weight too should be given to the appellant’s submission that, at that early stage of the hearing, the offers were of less significance as issues of disclosure remained outstanding.
The second and third respondents were not parties to the marriage and had the claims against them been made in another court, the default position would be that costs follow the event (Conrad & Conrad (2020) 61 Fam LR 301 at [43]; E Pty Ltd & Zunino (No 2) [2020] FamCAFC 272 at [17]).
These matters justify the appellant paying the second and third respondents’ costs (they had just the one set of lawyers between them). We are not persuaded that any of the matters raised support an order for indemnity costs.
As earlier identified with respect to the first respondent, we consider that justice will be best served by deducting those costs from the amount payable by the estate of the third respondent to the appellant.
The costs of the second and third respondents also include a claim for $9,193.70 for reading the primary judge’s reasons, $1,410.40 for printing, “estimates” of $2,000, $1,000 and $3,000, $3,782.24 for printing of the Appeal Book, $4,147.52 for the solicitor’s preparation and attendance at the appeal hearing and a further $1,344.40 for preparation. For the same reasons given earlier, these charges (approximately $25,878) will be removed.
Senior and junior counsel appeared for the second and third respondents on the appeal. Junior counsel charged $62,156.10, including estimates, for 16 days of work. Senior counsel charged $86,893.40, including estimates, for 11 days of work. The amounts claimed accord with Sch 3 of the Rules however, although the appeal was complex, the number of days claimed do not appear to be reasonable or proportionate.
Doing the best we can, we fix the costs at $85,000. After deducting 20 per cent as the agreed amount for the cross-appeal, this leaves costs of $68,000.
The appellant made no claim for costs of the cross-appeal.
HOGAN J:
I have read the reasons of Aldridge and Kari JJ and agree with their conclusion, generally for the reasons expressed, that the circumstances here justify the making of orders requiring that the appellant pay the respondents’ costs of and incidental to the appeal. I also agree with their Honours’ conclusions, generally for the reasons expressed, that such costs should be paid on the party and party basis and that the exceptional circumstances required by long-standing authority to found an order for costs on the indemnity basis are not established.
Where I respectfully disagree with their Honours is in relation to the conclusion that the amount of costs to be paid by the appellant to the respondents should be fixed.
Instead, I consider that the order which is just is one which would require the appellant to pay the respondents’ costs of and incidental to the appeal, with such costs to be assessed on the party and party basis and to be paid in an amount agreed or, failing agreement, in the amount assessed on that basis.
I have arrived at this conclusion because I consider that the appellant did not have notice of the possibility that an order fixing the amount of the costs she would be ordered to pay may be made and, consequently, was deprived of:
(a)the opportunity to challenge whether aspects of the costs sought by each of the respondents should not be allowed because, for example, the same was for work not reasonably required to be done for the appeal or was not reasonably or proportionately incurred in opposing the appeal; and
(b)the opportunity to make submissions about why she should not be allowed to challenge the reasonableness and proportionality of claimed costs and whether the work for which costs is claimed was reasonably necessary in the manner provided for by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Such conclusions have been reached having regard to the following.
At the conclusion of the hearing of the appeal on 24 November 2023, senior counsel who then appeared for the parties sought the opportunity to provide written submissions about costs once the outcome of the appeal was known. No indication was then given by the Court that it may consider making an order fixing the amount of costs a party may be ordered to pay to another.
On 24 April 2024, the appeal was dismissed for the reasons published that day. Order 7 of the orders made that day provided that:
In the event of the parties being unable to reach an agreement in respect to costs, within 28 days of the date of these orders, the parties are to file written submissions of no more than five pages as to what costs order, if any, should be made in respect of the appeal.
No indication was given in either the orders made or the reasons for judgment delivered that, in considering any submissions about costs, the Court may consider making an order fixing the amount of costs to be paid by the appellant if the respondents succeeded in persuading that the circumstances justified the making of an order that she pay, on whatever basis, their costs of and incidental to the appeal.
On 22 May 2024, each of the respondents filed written submissions in relation to costs. Each sought that the appellant be ordered to pay their costs on an indemnity basis. None sought that the Court make an order fixing the amount to be paid by the appellant.
Further, the first respondent’s submissions included that he sought an order that the appellant pay his costs of and incidental to the proceedings on an indemnity basis from 16 August 2023, “as agreed or assessed” (First Respondent’s Submissions: Costs sealed 22 May 2024 at paragraph 36) and the second and third respondents’ Schedule of Costs (sealed 13 November 2023) makes clear that aspects of its contents are nothing more than “estimates” about the costs of work done by both solicitors and counsel – in fact, the total amount asserted based on such “estimates” is $155,049.50 of the total of $185,873.61 asserted to be the costs of and incidental to an appeal that occupied only one day of hearing time.
On 23 May 2024, the appellant filed an affidavit to which was attached, amongst other documents, a written submission as to costs in which her alternative position was that there be an order that she pay costs on a party and party basis, as agreed or assessed. The written submission also included the assertion that there were no particularised invoices in relation to costs before the Court – an assertion which, when considered in the context of the first respondent’s position that costs be assessed, and the “estimates” within the Schedule relied on by the second and third respondents, seems to me to amount to a challenge to the quantum sought.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Aldridge, Hogan and Kari. Associate:
Dated: 20 August 2024
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