Yamikani & Ain (No 3)
[2024] FedCFamC1F 388
•6 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Yamikani & Ain (No 3) [2024] FedCFamC1F 388
File number: SYC 1342 of 2020 Judgment of: CHRISTIE J Date of judgment: 6 June 2024 Catchwords: FAMILY LAW – COSTS – Undefended – Offers of settlement – Imprudent refusal of offers to compromise – Where the respondent would have been better off had the offers of settlement been accepted – Where the litigation has been ongoing for over four years – Indemnity costs ordered. 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 v CussonsPty Ltd (1993) 46 FCR 225
Graham & Squibb (2019) FLC 93-892
Hogan and Hogan (1986) FLC 91-704
Prantage & Prantage (2013) FLC 93-544
Division: Division 1 First Instance Number of paragraphs: 27 Date of last submission: 5 June 2024 Date of hearing: Determined on the papers in chambers Place: Sydney Solicitor for the Applicant: Gordon & Barry Lawyers Pty Ltd For the Respondent: Did not participate ORDERS
SYC 1342 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR YAMIKANI
Applicant
AND: MR AIN
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
6 JUNE 2024
THE COURT ORDERS THAT:
1.Within 60 days the respondent pay the applicant’s costs of the final hearing on an indemnity basis in the sum of $267,655.
2.Within 60 days the respondent pay the applicant’s costs of this application in the sum of $3,050.
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 Yamikani & Ain has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
On 26 February 2024 I made final orders for property adjustment as between Mr Yamikani (“the applicant”) and Mr Ain (“the respondent”). The applicant seeks an order that the respondent pay legal costs of the proceedings on an indemnity basis or in the alternative on a solicitor/client basis or further at scale or on such a basis as the Court may determine.
On 14 May 2024 I made procedural directions in respect of the application for costs which provided for the filing of a Response and affidavit, written submission and (absent objection) for the matter to be reserved to chambers for determination.
The solicitors who were on record for the respondent emailed my chambers on 22 May 2024 to indicate that no submissions would be filed by the respondent.
I have consequently proceeded to determine the application undefended as against the respondent.
I have read and considered my reasons for judgment, the application and affidavit filed 26 March 2024, the trial affidavit of the applicant paragraphs [99]–[107], the email referred to above and the submissions and tender bundle filed by the applicant on 4 June 2024.
This application is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) provides that each party should ordinarily meet his or her own costs. The applicant seeks that I depart from that position. I am permitted to depart from that position by operation of s 117(2), which refers to making such order as the court considers just and departing from the position established by s 117(1) where “there are circumstances that justify” that approach. In approaching the task I am required to have regard to the matters in s 117(2A). The establishment of one of the matters in s 117(2A) does not require me to depart from the usual rule since the discretion to order or refuse to order costs remains. Costs may be ordered if “just in all the circumstances”: Hogan and Hogan (1986) FLC 91-704.
The applicant seeks, in the first instance, that any order be on an indemnity basis, explicitly recognising that this is a significant departure from the usual course.
In Colgate-Palmolive Co v CussonsPty Ltd (1993) 46 FCR 225 at 233 (“Colgate-Palmolive”), Sheppard J stated:
4.…The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: “the categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5.Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 ay 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
(Emphasis added)
In Prantage & Prantage (2013) FLC 93-544 the majority (Thackray and Ryan JJ) held that the principles set out by Sheppard J in Colgate-Palmolive were applicable to costs applications in this Court.
These proceedings commenced on 27 February 2020.
The applicant sought at the final hearing orders the effect of which would have been to provide the respondent with assets with a net value of approximately $922,913.50, less payment of agent’s commissions, expenses and sale costs of the sale of the parties’ jointly owned real estate.
The final orders which I made provided the respondent with net assets of $1,049,261.
I cannot see that there is any basis for the respondent to pay the applicants costs referrable to the period 27 February 2020 to the date of the first offer on 17 December 2020.
The most significant matter in this case is the respondent’s imprudent refusal of offers of settlement.
Had the respondent accepted the applicant’s first offer of settlement on 17 December 2020, the respondent would have received approximately $1,483,364. The offer expired on 31 December 2020 without having been accepted.
On 8 November 2021 a further offer was made by the applicant. By this time there had been an updated valuation of the parties’ joint real property by the single expert (inflating the valuation of the property by $350,000) and the applicant increased the principal sum payable to the respondent from $325,000 to $750,000. The offer expired on 22 November 2021, and had it been accepted, the respondent would have received approximately $2,260,274.
On 31 January 2022, the November 2021 offer was effectively renewed by the applicant, being that the respondent retain the parties’ joint real property and receive a $750,000 cash payment. The offer was not accepted.
The orders which I ultimately made provided the respondent with about $125,000 more than the proposed orders in the applicant’s orders sought. When regard is had to the costs of litigation, the respondent would have been in a better position had he consented to the orders sought by the applicant.
The respondent has filed no material so there is no challenge to the evidence of the applicant and in particular to quantum. That does not mean that I am obliged to make orders in accordance with applicant’s primary claim.
However, I accept that the respondent’s refusal of each offer made by the applicant was initially imprudent and ultimately highly imprudent such that it is appropriate in the circumstances of this case to make an order for indemnity costs for the period from the date of the offer made 17 December 2020 until the date of final hearing in the sum of $267,655.
I accept that the applicant’s financial circumstances are stronger than those of the respondent but having regard to my determination at trial I am satisfied that the respondent will have an asset (or if sold capital) with which to meet any order.
The applicant raises further matters which may be relevant to the exercise of discretion under s 117(2A) of the Act, in particular conduct under s 117(2A)(c). I accept that conduct up to the conclusion of the proceedings may be taken into account when considering an application for costs. I am not satisfied that the conduct of a party after the conclusion of primary proceedings to which the application relates (or in respect of separate proceedings, such as an appeal) is appropriately considered.
In the circumstances of this case however, while I accept that various matters outlined in the applicant’s affidavit (such as subpoena being struck out and failures to comply with orders and directions) are relevant and may in an appropriate case constitute sufficient basis to consider the making of a costs order, it is not this aspect particularly that persuades me that costs (and indeed indemnity costs) are appropriate.
As outlined above, indemnity costs will be ordered because litigation was on foot for more than four years. I am comfortably satisfied that the first offer made by the applicant in December 2020, 10 months into the litigation, if accepted would have placed the respondent in a substantially better financial position both in regard to the adjustment received and the costs of litigation.
Costs of this application
The applicant seeks his costs of this costs application. I accept that it is appropriate to order costs at scale and intend to do so in a fixed sum.
I have in mind the purpose of r 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), which enables the Court to order costs in a specific amount, to avoid the expense, delay and aggravation involved in protracted litigation arising out of an assessment of costs (Graham & Squibb (2019) FLC 93-892 at [92]).
I am aware of the documents filed in the case (application, affidavit and tender bundle and submissions) which allow me in broad terms to fix the scale costs as approximately $3,050.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 6 June 2024
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