ZH & N

[2005] FamCA 828

[2005] FamCA 828

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT SYDNEY  No. EA 11 of 2005           File No. SYD 6790 of 2004

IN THE MATTER OF:	ZH	Appellant Husband
AND	N	Respondent Wife

REASONS FOR JUDGMENT

EX TEMPORE

Before:  Bryant CJ, Coleman and May JJ

Date of Hearing:               4 May 2005

Date of Judgment:           4 May 2005

APPEARANCES:

Mr Ma of Ma & Company, Solicitors, Suites 301-313, Sussex Street, Sydney, NSW, 2000 appeared on behalf of the appellant husband.

Mr Paul of Paul & Paul, Lawyers, Level 15, Tattersalls Building, 179 Elizabeth Street, Sydney, NSW, 2000 appeared on behalf of the respondent wife. 

CORAM:	Bryant CJ, Coleman and May JJ
DATE OF HEARING:	4 May 2005
DATE OF JUDGMENT:	4 May 2005

Catchwords:FAMILY LAW – APPEALS – COSTS – where       appeal discontinued – whether appellant should be        ordered to pay respondent’s costs on an indemnity           basis – facts and circumstances of the case – appeal          instituted on a general basis – appellant ordered to        pay indemnity costs – JEL v DDF No 2 (2001)           FLC 93-013 applied

Bryant CJ

1This matter is an application brought by the respondent to an appeal instituted by the husband, which was subsequently discontinued.  The respondent's application is that the appellant pay her costs of and incidental to the appeal on an indemnity basis. 

2The genesis of the proceedings is property proceedings between the parties currently being pursued in the Sydney registry of this court. On 18 October 2004 Le Poer Trench J made an order for the appointment of a single expert pursuant to the Family Law Rules to value the interest of the parties in a number of corporate entities. The orders included a requirement that the husband pay the expert within seven days of being requested to do so all such other monies for the fees as the expert shall require and is to be responsible in the first place for the payment of costs of the expert.

3It was against that order that an appeal was filed by the husband on 4 November 2004 and an Amended Notice of Appeal filed on 25 November 2004.  It is convenient to refer to the appellant husband’s pre-argument summary filed with the Amended Notice to give a precis of the issues to be raised on the appeal.  These are:

a)firstly, whether findings of fact and determining the value of assets are judicial functions in a property settlement application in the Family Court. 

b)secondly, whether the judge erred in delegating judicial power conferred by Chapter III of the Constitution to a non-judicial body in making an order appointing a court expert, including:

·    whether the order appointed the expert to provide a report on the findings of fact and give opinion on the value of the property;

·    whether his Honour stated the expert's findings of fact would be unconditionally accepted or adopted at the hearing;

·    whether such unconditional acceptance or adoption of finding of facts had the effect of conferring judicial power on the court expert; and

·    whether his Honour would absolve himself from his judicial duty of finding of facts.

c)thirdly, whether the delegation of part of a judicial function on a non-judicial body contravenes Chapter III of the Constitution.

d)fourthly, whether the judge erred in conferring judicial power on a non-judicial body and in doing so offended the doctrine of separation of powers.

e)fifthly, whether the judge erred in prejudging the issues given that his Honour was prepared to accept unconditionally the finding of facts of the expert. 

f)sixthly, whether the operation of the Family Law Rules contravene Chapter III of the Constitution.

4It would thus be clear from the Amended Notice of Appeal and the pre-argument summary that these were matters raised generally in relation to the powers of the court and not matters particular to this case.  On 14 December 2004, less than a month after filing the Amended Notice of Appeal, a Notice of Discontinuance was filed.  In the meantime the respondent wife had engaged solicitors and had incurred costs.  A schedule of her costs is annexed to an affidavit filed by her on 4 February 2005 and we have been advised by Mr Paul, who appears for her, that including the costs of preparing for this appeal and his appearance today the total of those costs is $3491.30.  The quantum of the costs incurred arises as a result of a cost agreement entered into between Mr Paul's firm Paul and Paul, and the respondent wife.  It is accepted by her it is in excess of the family law scale of costs that would otherwise apply. 

5I should make some mention of the provisions in relation to the ability to order costs on the discontinuance of an appeal in particular as a result of some changes to the Family Law Rules. Prior to the current Family Law Rules taking effect in 2004, rule 19A of the then Rules provided that in relation to appeals an appellant may at any time file and serve a notice of withdrawal of an appeal. Rule 19A(4) provided that an appellant filing a notice must pay the costs of each other party occasioned by the appeal unless otherwise fixed or ordered by the court. That rule has not found its way into the current rules.

6The current rules in effect provide for costs to be payable if ordered by the court.  Part 22.8, which is part of Chapter 22 on Appeals, deals with concluding an appeal.  Rule 22.54 is headed Discontinuance of Appeal and says that Part 10.2 applies to an appeal as if it were a case.  Part 10.2, which is found in Chapter 10, relates to discontinuing a case and provides for a party to discontinue a case by filing a Notice of Discontinuance.  That now applies to appeals as well.  Rule 10.11(4) provides that if a party discontinues a case another party may apply for costs within 28 days after the Form 10, which is the Notice of Discontinuance, is filed.  It is on that basis that the respondent wife has now filed such an application.

7The rules in Chapter 19 in relation to costs also have some relevance.  Rule 19.08, which deals with costs orders, provides that a party may apply for an order that another party pay costs.  Subsection (2) provides that the application for costs may be made by filing an application which, as I have said, has occurred.  Subsection (3) provides that a party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a cost agreement in relation to those costs, and if so, the terms of the cost agreement.  That has been done in this case. 

8Rule 19.19, which is, in my view, the other relevant rule, relates to party-party costs and refers back to rule 19.18 which sets out the maximum amount chargeable. Rule 19.19(1) provides that the court may order that rule 19.18 does not apply and that a party is entitled to costs (a) of a specific amount, (b) as assessed on a lawyer-client basis or an indemnity basis, (c) to be calculated in accordance with the method stated in the order, or (d) for part of the case or part of an amount assessed in accordance with Schedule 3. That gives the court considerable discretion as to the amount of costs to be ordered in a particular case.

9The provisions relating to costs are set out in section 117 of the Family Law Act 1975 (Cth), which provides that unless the court otherwise orders, each party is to bear their own costs. The High Court in Penfold's case ((1980) 144 CLR 311; (1980) 28 ALR 213) have said that section does not create any onus and it is a matter in the individual case of the exercise of the Court's discretion as to whether or not costs should be ordered. 

10The applicant contends that she should be paid her costs as she has incurred costs as a result of the filing of the appeal and as a result of its discontinuance.  As to the quantum of costs and whether those costs should be paid on an indemnity basis, the wife contends that payment of costs on an indemnity basis is appropriate because the proceedings appear to have been instigated solely for the purpose of delaying the further progress of proceedings, and in furtherance of that submission contends that the husband has still not carried out the terms of the trial judge's order for the expert witness to commence the work required for the case.  The wife contends that the circumstances are of an exceptional kind so that it should appear that the appeal was commenced in circumstances where a party properly advised should have known he or she had no chance of success and that this court should draw an inference that the actions taken were for an ulterior motive, namely the delaying of the progress of the case. 

11Insofar as the matters in section 117(2A) of the Family Law Act are concerned, being matters to which the court must have regard in considering whether to make an order for costs, the wife contends that neither party is in receipt of legal aid, that the financial circumstances of the parties are such that it is appropriate for an order for costs to be made and that the conduct of the appellant in filing the appeal is also a relevant matter for the Court's discretion.

12The respondent's submissions were directed to the question of indemnity costs in the main.  The respondent contends that counsel advised that he should appeal and that he abandoned his appeal because of the cost involved.  Counsel contends that there would be financial hardship to the husband were such an order made, but concedes that the husband has a bank account with $44,000 but which he says must be allocated for payment of the expert.  There seems to be no dispute that the parties have a significant amount of money on deposit as part of the assets of the company in which they are both the shareholders and which is obviously integral to the proceedings before the court. 

13In Roth v Quinn [2005] FamCA 6, an unreported judgment of the Full Court delivered on 6 January 2005, the Court considered the question of indemnity costs. In that case their Honours referred to the decision of the Full Court in JEL v DDF No 2 (2001) FLC 93-013 at 88,441-2, where the Full Court said:

The category of cases in which it would be appropriate to make an order for indemnity costs does not appear to have been fully defined.  The Full Court has, however, set out some general principles.

14I do not intend to repeat the long quote from JEL v DDF that their Honours then referred to; suffice it to say that that case considers a number of authorities, including the well-known case of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248, a number of Federal Court authorities, Family Court authorities, including Yunghanns v Yunghanns (2000) FLC 93-029 where again the Full Court specifically acknowledged the category of cases that may give rise to an indemnity order not being closed. At page 87,471 the court in Yunghanns said as follows:

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.  All that is required is that the court asked to exercise the discretion be satisfied that some particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party-party basis (per Sheppard v Day and Colgate Palmolive Co v Cussons Pty Ltd).

15In this case the appellant instituted an appeal based, as I have said, not on the particular facts of this case or on some particular argument that an injustice had occurred as a result of his Honour's order as it applied to the husband, but rather on the much more general basis I have described.  The grounds relied upon included the single expert rule, which would apply not only to the Family Court but to other courts that have such a rule, and extended to whether the finding of facts in determining the value of assets is a judicial function. 

16The appellant husband contends that counsel advised that he should appeal and it seems to me inconceivable that if indeed it was on counsel's advice, it would not have been obvious and explained to him at the outset that such an appeal would be expensive, that he would require leave, that he would probably need to issue notices under the Judiciary Act and that embarking upon such a course of action was inevitably going to involve him in considerable expense.  In my view, it is inconceivable he would not have known what was involved when the appeal was instituted. 

17I would, for my part, be prepared to infer on that basis that the appeal was instituted as a delaying tactic.  But in any event, it is not necessary, as the Full Court in Yunghanns said, that some collateral purpose be established. I am satisfied, for my part, that there are particular facts and circumstances in this case in the nature of the appeal and its subsequent abandonment that warrant the making of an order for the payment of costs other than on a party-party basis. Having regard to the matters in section 117(2A) of the Act, I am satisfied from the concessions made by the appellant that the financial circumstances of the appellant are sufficient to warrant an order for costs, that neither party is in receipt of legal aid, that the conduct of the appellant in the filing and subsequent discontinuance of the appeal is a relevant matter. In particular, under subsection (g) the nature of the appeal itself is also a relevant matter.

18In my view, therefore, this is case which is appropriate for an order for the payment of indemnity costs as set out in the schedule provided by the respondent wife and added to this morning in the sum of $3491.30. 

Coleman J

19I agree with the orders proposed by the Chief Justice and the reasons advanced by Her Honour in support of those reasons.  I have nothing to add. 

May J

20I agree with the reasons of Her Honour the Chief Justice and would make the same order. 

Orders

1That the appellant husband pay the respondent's costs in relation to the appeal instituted on 4 November 2004 and discontinued on 14 December 2004.

2That order 19.18 of the Family Law Rules 2004 is not to apply.

3Pursuant to rule 19.19 of the Family Law Rules, the appellant husband pay the respondent wife's costs fixed in the sum of $3491.30.

I certify that the preceding 20 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.


 
Associate