Xin & Qinlang (No 9)
[2024] FedCFamC1F 811
•29 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Xin & Qinlang (No 9) [2024] FedCFamC1F 811
File number(s): CAC 1782 of 2018 Judgment of: GILL J Date of judgment: 29 November 2024 Catchwords: FAMILY LAW – Costs – Where the wife seeks indemnity costs following the delivery of final judgment in relation to property proceedings – Where the husband and the second and third respondents were found to have relied upon fraudulent manufactured evidence during the trial – Whether the imposition of indemnity costs would be considered punitive rather than compensatory – Determination that the circumstances warrant an order of indemnity costs Legislation: Family Law Act 1975 (Cth) – s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – r 12.17
Cases cited: Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Hawkins & Roe [2012] FamCAFC 77
In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321
Kohan & Kohan (1993) FLC 92-340
Penfold v Penfold (1980) 144 CLR 311
Quickley & Pelissier [2016] FamCAFC 124
Roydon & Roydon [2024] FedCFamC1A 105
Division: Division 1 First Instance Number of paragraphs: 91 Date of hearing: 15 November 2024 Place: Canberra Counsel for the Applicant: Mr Lawrence Solicitor for the Applicant: Longton Legal Counsel for the First Respondent: Dr Smith Solicitor for the First Respondent: Dobinson Davey Clifford Simpson Counsel for the Second and Third Respondents: Mr Mellos Solicitor for the Second and Third Respondents: Lander & Rogers ORDERS
CAC 1782 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR XIN
Applicant
AND: MS QINLANG
First Respondent
MS WANG
Second Respondent
MR B XIN (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
29 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to Section 117(2) of the Family Law Act 1975 (Cth) the husband and the second respondent and the third respondent are jointly and severally liable to pay the costs incurred by the wife in the substantive property proceedings, on an indemnity basis and in the fixed sum of $483,444.70 and are to cause such payment to be made within 90 days of these orders, in accordance with a written direction given to them by the wife.
2.The husband and the second respondent and the third respondent are jointly and severally liable pay the cost incurred by the wife of and incidental to this Application in a Proceeding as agreed or as assessed.
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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J:
This judgment concerns a costs application by Ms Qinlang (the wife) against Mr Xin (the husband), Ms Wang (the second respondent and mother of the husband), and Mr B Xin (the third respondent and father of the husband) following the delivery of judgment in their substantive proceedings involving property matters.
Those proceedings involved multiple parcels of real property, the control of corporate entities, contested loans and a contest as to the equitable ownership of a property at Suburb K.
While no party could be considered to have been wholly unsuccessful in their case, the wife met with significant success in the proceedings, which were tainted by an unsuccessful claim, supported by fraudulently produced and manufactured documents, pursued by the husband and second and third respondents as to the equitable claim in respect of the Suburb K property.
ORDERS SOUGHT
The wife seeks that the husband and second and third respondents are jointly and severally liable to pay her costs incurred in the substantive property proceedings, from the point at which the second and third respondents applied to join the proceedings on 1 May 2020, on an indemnity basis, in the fixed sum of $487,918.88.[1] This figure includes the $4,474.18 already owing to the wife resulting from a previous costs order made against the husband on 26 August 2020 by Judicial Registrar Walker-Munro. The sum the wife is seeking less this amount is $483,444.70.[2] In her outline of case document, the wife advised that in the alternative she seeks costs on a party/party basis. If successful, the wife also seeks the husband and second and third respondents pay her costs in relation to this application.
[1] Wife’s outline of case filed 25 October 2024, paragraph 2.
[2] Wife’s affidavit filed 16 July 2024, paragraph 19.
The husband seeks that the application for costs of the substantive proceedings be dismissed, and that no costs be ordered in relation to this application.
The second and third respondents also seek that the application for costs be dismissed. In the alternative, they seek that the husband pay the costs of the wife in the substantive proceedings, as assessed at scale. In the further alternative, they seek that alongside the husband, they pay the costs of the wife in the substantive proceedings, as assessed at scale.
DOCUMENTS RELIED UPON
The wife relied upon the following documents:
(1)Application in a Proceeding filed 22 February 2024;
(2)Affidavit of Ms AM filed 22 February 2024;
(3)Affidavit of Ms Qinlang filed 16 July 2024;
(4)Financial Statement filed 9 October 2024;
(5)Case Outline filed 25 October 2024; and
(6)Tender bundle.
The husband relied upon the following documents:
(1)Response to an Application in a Proceeding filed 12 November 2024;
(2)Affidavit of Mr Xin filed 12 November 2024;
(3)Financial Statement filed 12 November; and
(4)Written submissions filed 12 November 2024.
The second respondent relied upon the following documents:
(1)Written submissions filed jointly with the third respondent on 11 November 2024;
(2)Response to an Application in a Proceeding filed 15 November 2024; and
(3)Financial Statement filed 15 November 2024.
The third respondent relied upon:
(1)Written submissions filed jointly with the second respondent on 11 November 2024;
(2)Response to an Application in a Proceeding filed 15 November 2024; and
(3)Financial Statement filed 15 November 2024.
GENERAL PRINCIPLES IN RELATION TO COSTS
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the default position being a general rule that each party bears their own costs, subject to circumstances justifying otherwise. In Kohan & Kohan (1993) FLC 92-340 (“Kohan”), the Full Court observed that:
The intent of s117(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.
In Penfold v Penfold (1980) 144 CLR 311 the High Court considered that whilst justifying circumstances, as identified in s 117, must be determined to enable a costs order to be made, no “additional or special onus” is placed upon applicants in their pursuit of costs.
The precondition to making an order for costs is the finding that there are circumstances justifying the making of an order for costs. Once these are found, the default position yields to the Court’s discretion to award costs as it considers just.
The relevant considerations to assess the circumstances are set out at s 117(2A) of the Act as follows:
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.
In Hawkins & Roe [2012] FamCAFC 77 May and Ainslie-Wallace JJ observed that:
The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative.
Of these considerations, those emphasised by the parties were the financial circumstances, the manner of conduct of the proceedings, and whether an offer in writing has been made to settle the proceedings that bears upon the costs issue. While the wife asserted that she had significant success at trial, no party contended that another was wholly unsuccessful.
Principles in respect of indemnity costs
The principles to be applied in relation to indemnity costs are neatly set out by the Full Court in Quickley & Pelissier [2016] FamCAFC 124 at [119]:
We then turn to consider whether costs should be awarded on a party/party or indemnity basis.
In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the “settled practice” that where a court orders one party to pay another party’s costs, the order is for costs to be paid on a party/party basis. His Honour also said “there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice” at 257.
In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:
Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.
In Kohan, the Full Court, in observing that indemnity costs are the exception, said that:
… 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.
The principles in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 are also usefully discussed in In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321. In that judgment, Holden CJ extracted a series of circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis, being:
(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.
It should be noted that in citing such examples, Holden CJ was dealing with extremes. For example, in relation to the “no chance of success” example Holden CJ indicated that the conduct was to be such as to allow a finding of “ulterior motive” or “wilful disregard of known facts”. That is, it is not sufficient to reflect that the application had a low chance of success, but rather that the prospective lack of success was so stark as to require the inference that the application was occasioned by an ulterior motive or was pursued in wilful disregard of known facts.
Further, in relation to the final example of ‘imprudent refusal[s]’, Holden CJ noted, as did the Full Court in Kohan, that the authorities giving rise to such a category are predominately NSW authorities, and are in part “attributable to the amendment of the Supreme Court Rules of that State which provide for indemnity costs where a plaintiff obtains judgment in terms no less favourable than those of an offer to compromise made by him and not accepted by the defendant.” In Kohan, the distinction was then drawn between the practice in NSW in accordance with the Rules of the Supreme Court, and in this jurisdiction:
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 as in Penfold v Penfold (1980) 5 Fam LR 579; [1980] FLC 90-800 and Oriolo v Oriolo (1985) 10 Fam LR 665; [1985] FLC 91-653, no more than party and party costs have been awarded.
As was observed by Reithmuller J in Roydon & Roydon [2024] FedCFamC1A 105:
The matters identified by Sheppard J in Colgate Palmolive as justifying indemnity costs orders all involve significant misconduct in litigation, not simply a party litigating a marginal or speculative case.
The remarks of Sheppard J with respect to offers must be seen in context. The proceedings before Sheppard J concerned commercial litigation where, unlike family law proceedings, costs ordinarily follow the event. In family law cases, ordinarily there are no orders for costs. This practical difference between costs rules for commercial litigation compared to family litigation is particularly important when considering whether a failure to accept an offer is “imprudent”, and thereby justifying an indemnity costs order, rather than a situation where it was not reasonable to have rejected an offer (leading to a party and party costs order): Badawi & Badawi (Costs) [2017] FamCAFC 196 at [27]–[29]. As was said by Murphy J in Prantage & Prantage (2013) FLC 93-544 at [152]:
Indemnity costs are confined to “an exceedingly rare situation” … in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “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)).
PROCEDURAL HISTORY
Proceedings were commenced on 3 September 2018, with the husband seeking orders in relation to parenting and property matters. On 1 May 2020 the husband’s mother and father made a joinder application and on 12 May 2020 they were joined to the proceedings as the second and third respondents. At that point they asserted that they had an equitable interest in real property located in Suburb K, the legal title of which was in the wife and the husband’s names, and that they were owed money by the wife and the husband.
The final hearing of the property matter took place between 4 to 12 December 2023. The substantive judgment was delivered on 25 January 2024. Orders were made dismissing the second and third respondents’ claim of an equitable interest in the Suburb K property, finding that a loan agreement with the second and third respondents existed and the husband was to be responsible for the entirety of it (in the sum of $229,916) and directing that the husband pay the wife 60 per cent of the net value in the parties’ property pool.
On 19 February 2024, the husband filed a Notice of Appeal seeking, among other things, that the final orders made on 25 January 2024 be stayed.
On 22 February 2024, the wife filed an Application in a Proceeding seeking costs, which is the subject of this judgment. It was decided that the costs element of the matter would be determined following the resolution of the husband’s appeal.
On 10 September 2024, judgment was delivered in relation to the husband’s appeal by the Full Court of this Court; Alstergren CJ, Tree and Riethmuller JJ made orders wholly dismissing the appeal and granting costs in favour of the wife on a party-party basis for the sum of $18,703.
THE FACTORS IDENTIFIED IN THIS CASE
Financial circumstances of the parties
In a Financial Statement filed on 9 October 2024, the wife asserted that she has a total weekly average income of $1,552 and a total personal expenditure of $1,187. The applicant’s income thereby exceeds her expenses. She concedes that following the substantive judgment she holds significant net property.
The husband claimed to be unemployed. He however, as identified at trial, holds experience and qualifications to enable him to secure well remunerated work. He claims that following the substantive judgment he now has debts significantly outweighing his current assets, and expenses significantly outweighing his income. Little confidence should be placed in the husband’s assertions as to his financial circumstances. For example, he claimed to be paying $214 per week for the mortgage for the Suburb K property. However, he is not, having paid the mortgage about $125,000 in advance and then ceasing to make payments. By way of further example, he claims to own Motor Vehicle 4 valued at $68,000, yet subject to finance of $130,881. The discrepancy is unexplained, as is the fact that the vehicle purchase and its financing took place prior to the completion of the trial, without disclosure of such. It was neither disclosed as an asset, nor was the basis upon which commercial finance was able to be obtained disclosed. When this is coupled with the difficulties in the husband’s credibility as identified at trial, no firm reliance can be placed upon his claims as to difficult financial circumstances. If the husband’s claim was as to impecuniosity, it is inadequately supported, and ultimately impecuniosity was not pressed by him as a factor.
The husband observed that the wife is in a superior position, but accepted that the relative financial circumstances are best understood by reference to the substantive judgment, which he described as providing for him net assets of $1.43 million (inclusive of $180,000 superannuation) to the applicant’s $1.7 million (inclusive of modest superannuation) with the change in circumstances post judgment delivery being the lack of employment for the husband.
The second respondent revealed she holds multiple real properties. This state of affairs is at odds with her assertions in support of her equitable claim during the trial that the Suburb K property was her only available home, and that she had no capacity to acquire further real estate. As it turns out, by the time of the trial she had acquired multiple properties, contrary to her assertions maintained at trial.
Although the second respondent described a position of her debts outweighing her assets, like the husband, she labours under a significant credibility deficit by virtue of the manner of conduct of the trial, and further by the now evident lack of disclosure of her true position at trial in respect of the acquisition of real property.
It may also be observed that the net debt position is reliant both on the shaving of value of the real properties acquired by her to an amount less than their purchase value, and the inclusion of a debt related in part to costs incurred by her corporate entity P2 Pty Ltd , without attributing any value to that corporate entity.
To the extent that the second respondent’s case was of impecuniosity, or of hardship in meeting a costs order, it should not be accepted as adequately supported.
She also holds an asset in the form of the loan to the husband.
The third respondent holds property in Country LL to the value of about half a million dollars, and also an asset in the form of the loan to the husband.
Neither the favourable financial circumstances disclosed by the applicant, nor the circumstances of the husband and second and third respondents militate significantly against the making of a costs order.
Conduct of the parties during trial
The conduct of the husband and second and third respondents was an important feature of the trial.
A cursory examination of the trial judgment reveals the prominence of the dispute between the parties as to whether the second and third respondents held an equitable interest in the property held in the husband and wife’s names at Suburb K. Whilst all parties accepted that monies had been advanced, the husband and second and third respondents, from the point of joinder of the second and third respondents, pursued a case that the Suburb K property was wholly held on trust for the second and third respondents by the husband and wife.
Central to this dispute was exhibit W3, which was a purported agreement in relation to the use of and interests in the Suburb K property, alleged to have been signed in 2008. Exhibit W3 set out that the wife and husband would be able to occupy and use the Suburb K property prior to the second and third respondent immigrating to Australia. The title of the property would then be transferred to the second and third respondent. This document, if genuine, supported the second and third respondents’ claim of an equitable interest in the Suburb K property arising under a constructive trust.
Various matters, which need not be recited here, led to the conclusion that the documents (there being two iterations) were fraudulent.
The claim in equity was ultimately rejected.
Offers made
The wife relied upon two offers made by her as relevant to the issue of whether a costs order ought to be made.
In 2021 the wife made her first offer to the husband and second and third respondents. The offer included, among other things, that the wife retain the Suburb FF property, the Suburb E sale proceeds, the active businesses and her superannuation entitlements; that she be responsible for the Suburb FF mortgage, the balance of the ANZ Equity Loan; her credit card liabilities, and loans to her parents; that the husband and second and third respondents retain the Suburb K property; that the husband retain the Suburb ZZ land, his property development business, his interest in real property in Country LL, and his superannuation entitlements; that the husband be responsible for the Suburb K mortgage, the Suburb ZZ loan, the ANZ secured loan, the machinery loan, his credit card liabilities, and any loans owing to his parents; and that the costs orders made on 26 August 2020 be discharged.
The wife contends that this offer is, although not directly comparable to the final outcome due to the reference to the Suburb E property, betters the final outcome achieved by her, providing for a higher dollar figure to the wife. It should be accepted that the offer was similar to the outcome achieved by the wife.
Although it was contended for the husband and second and third respondents that this did not take into account the second and third respondents, the proposed outcome did in fact do so, providing for a loan to be repaid to them, and excluding their claim on the Suburb K property.
The second offer was made by the wife in 2023. It contained mainly the same terms as the first offer, with the most prominent difference being that the husband retain the active businesses.
Noting that the wife retained a share of the proceeds of one corporate entity, and the entirety of another by virtue of the judgment, the wife can be considered to have done better than this offer.
Whilst not on its own determinative, this is a matter that points toward the making of a costs order.
QUANTUM OF COSTS INCURRED
The applicant’s affidavit provided details of key moments during the proceedings, and the costs incurred by the wife between those key moments and the final judgment delivery.
The first is 1 May 2020, being the date the second and third respondents applied to join the proceedings. The wife reported that between 1 May 2020 and the completion of the substantive proceedings, she paid a total of $487,918.88 in legal fees and disbursements. Removing the sum the wife contends is referable to a previous costs order made 26 August 2020, the wife claimed the total costs relating to the substantive property proceedings since 1 May 2020 is $483,444.70.
The other two dates provided relate to when offers of settlement were made by the wife.
In 2021 the wife made her first offer to the husband and second and third respondents as described above.
The wife deposed that between this offer being sent in 2021 and final judgment delivery she paid $412,901.61 for legal fees and disbursements in the substantive property proceedings.
The second offer, again described above, was made by the wife in 2023.
Between 2023 and the end of the substantive proceedings, the wife asserts she paid $222,668.12 for legal fees and disbursements in the substantive property proceedings.
The calculation of the costs was supported by the provision of the invoices rendered by DDCS Lawyers, the firm representing the wife, and the ledger entries recording payments by the wife.
From these the costs order, not yet assessed or paid, of 26 August 2020, contended to be in the sum of $4,474.18 has been deducted.
At exhibit W3 the various costs agreements were annexed, which were conceded by husband to reflect, in terms of rule 12.17(3)(c) of the Federal Circuit and Family Court of Australia (Family Law) Rules, rates ordinarily payable to lawyers in comparable proceedings. The wife accepted that the charge rates reflected an amount approximately double that provided by the relevant scale.
In further support of the quantum asserted, the wife relied upon the affidavit of Ms AM, a clerk in the employment of DDCS Lawyers, who produced totals of the invoices rendered (without specifying the amount of each individual line item charge), along with a list of disbursements including payments to counsel (exhibit W4). The document did not itemise the actual work undertaken, but rather the periodic totals invoiced.
Although the material from the clerk had been available since February of this year, the husband asserted that there had been no opportunity to assess the costs. However, the husband did soften this submission, describing the costs notices as on par with the husband’s notices, and the amounts charged to the wife as not being obviously unreasonable due to this parity.
Similarly, the second and third respondents observed that there was nothing unusual in the costs rendered against the wife.
DISCUSSION
Of the factors identified, it is the manner of the conduct of the proceedings that should be given prominence in the circumstances of this case.
When the second and third respondents applied to join the proceedings on 1 May 2020 they asserted an equitable interest in the Suburb K property. They were supported in this claim by the husband. This was a claim, that if successful, fundamentally altered the pool of property by which the determination of whether it was just and equitable to adjust property interests, and which manner to adjust them in, was to be judged.
Importantly that claim was reliant, to a substantial degree, upon the repeated use of fraudulently produced documents.
The husband and second and third respondents identified, correctly, that costs are not imposed on a punitive basis, but rather are for the purpose of compensation of the costs of another litigant. The husband submitted that, in the event that costs are awarded based in particular upon the conduct of the case, that to accede to the application for indemnity costs for the whole of the proceedings would be to act punitively rather than compensatory.
It should, however, be noted that the wife only seeks costs from the commencement of the fraudulently supported claim, rather than for the full period of litigation.
It was argued that to ensure that a punitive order was not made, costs in relation to the conduct of the case should be restricted to those causally related to the fraudulent conduct. In making such a submission counsel eschewed the notion that an actual causal link would be required, but submitted, rather, that causation should be considered in the sense of the proportion of the costs justified by or related to the conduct.
By way of illustration counsel posed the example of a litigant bearing a costs burden where an adjournment was obtained, observing that even if the conduct leading to the adjournment was sufficiently egregious to warrant indemnity costs, such costs would relate to the adjournment rather than to the whole of the proceedings from the point of filing.
In this case, it may be observed that the egregious conduct, being the pursuit of a false case, supported by fraudulent evidence, fundamentally impacted the proceedings from the Application for joinder made by the second and third respondents on 1 May 2020.
That also marks a point prior to the first of the settlement offers made by the wife that she contends also justify a costs award in her favour.
The husband argued that, even if costs flowed from this point, proportionality would require that the whole of the wife’s costs from this point should not be met, predominantly on the basis that the conduct was only a part of the circumstances of the proceedings that would have occurred in any event.
Whilst a conclusion as to whether proceeding to trial would have been inevitable in any event is reliant on speculation, the place the claim in relation to the Suburb K property occupied in the proceedings is not. Although it is true that a significant number of other matters required resolution during the trial, the pursuit of the Suburb K claim at all points tainted and distorted the litigation. While the fraudulent claim remained on foot, it changed the shape of the pool to which the other contested claims related. It formed an integral part of the whole of each parties’ case, permeating not only the substantive issues of the constitution of the pool, but also of issues relating to credibility that impacted on the resolution of other factual matters. It was a matter that impacted the whole of the dispute.
Given the impact of the fraudulent claim upon the whole of the proceedings, the nature of the fraudulent conduct upon which it was based, and thereby the egregious manner of conduct of the proceedings by the respondents, this case falls within the exceptional class of cases for which the appropriate compensation of the wife for her legal costs is that they be met on an indemnity basis, rather than on the party-party basis that is more usually warranted.
An issue remains as to the manner in which the quantum should be established. Rule 12.17 sets out a number of different approaches. The primary position of the wife was that the order meet all costs incurred by her in the substantive proceedings since 1 May 2020, whilst the husband and second and third respondents sought that an assessment be engaged in.
A number of factors point toward a global assessment rather than an assessment process.
The first is that assessment has already been ordered for costs in respect of an interlocutory aspect of the proceedings in August 2020 and yet, despite their age, no such resolution has occurred. The reasons for such were not explored, but such is an illustration of the risk that an assessment process will be another long term impost upon the parties.
More importantly, there is an adequate and reasonable basis to assess the costs of the wife from 1 May 2024, based upon a combination of the costs incurred, the fee agreements with counsel and solicitors, and the record of the work undertaken.
Firstly, the parties accepted that the rates charged pursuant to the fee agreements accorded with the rates ordinarily payable to lawyers in comparable proceedings (r 12.17(3)(c)).
Secondly, despite the husband and second and third respondents being in possession of the affidavit of Ms Lawler since February 2024, being an affidavit to which was annexed an itemised list of the charges incurred, no aspect of the list was suggested to constitute unwarranted costs.
Thirdly, it was not contended that the overall quantum of costs was unreasonable, the husband conceding that the overall sum was in keeping with the fees incurred by the other parties.
These matters point to the appropriateness of an order in a sum certain as claimed by the wife in the sum of $483,444.70.
Further, given the involvement, cooperation and mutual support of the husband and second and third respondents in this aspect of conduct of the litigation, it is appropriate that they share the liability on a joint and several basis.
While the wife also sought a quantification of another costs award made in August 2020, absent a basis to assess those on a party-party basis, I am not prepared to do so.
COSTS OF THE COSTS APPLICATION
The wife seeks her costs of this application.
In addition to the factors above, whilst the husband and second and third respondent have been highly unsuccessful, they have not been wholly unsuccessful, there being no quantification of the costs of 26 August 2020.
However, the overall circumstances of the parties and the litigation warrant that the husband and second and third respondent meet the wife’s costs of the costs proceedings. The necessity to meet the costs of the wife given the manner of conduct of the primary proceedings was obvious, even if the extent was not. The costs of the costs application are closely connected to the manner of conduct of the substantive litigation.
The conduct of the costs proceedings are not in themselves tainted in the same manner as the substantive proceedings as to warrant indemnity costs. Rather they should be met on a party-party basis. Despite the burden of such, the best mechanism for establishing that quantum is by agreement or assessment.
CONCLUSION
Orders will be made for the husband and second and third respondent to hold joint and several liability for the costs of the wife in the substantive proceedings in the sum of $483,444.70.
Given the magnitude, a reasonable time for payment will be permitted of 90 days.
Orders will also be made for the husband and second and third respondent to jointly and severally meet the costs of this costs application as agreed or as assessed.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 29 November 2024
SCHEDULE OF PARTIES
CAC 1782 of 2018 Respondents
Fourth Respondent:
MR P, P GROUP PTY LTD AND P HOLDINGS PTY LTD
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