Zha & Wun (No 5)
[2023] FedCFamC1F 1101
•18 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zha & Wun (No 5) [2023] FedCFamC1F 1101
File number(s): SYC 4269 of 2020 Judgment of: SCHONELL J Date of judgment: 18 December 2023 Catchwords: FAMILY LAW – COSTS – Where the wife sought a costs order following an application in which the husband was unsuccessful – Where the husband conceded that a costs order should be made but contended that it should be on a party/party basis as agreed or assessed – Where the circumstances are not exceptional to warrant an indemnity costs order – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Colgate Palmolive Company and Another v Cussons Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
Pascoe & Larsen (No 2) [2022] FedCFamC1A 126
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Zha & Wun (No 2) [2022] FedCFamC1F 576
Zha & Wun (No 3) [2023] FedCFamC1F 670
Zha & Wun (No 4) [2023] FedCFamC1F 830
Division: Division 1 First Instance Number of paragraphs: 19 Date of last submission/s: 14 December 2023 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Pickering Pendleton Solicitor for the First Respondent: York Law Family Law Specialists The Second to Fourth Respondents: Did not participate ORDERS
SYC 4269 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ZHA
Applicant
AND: MR WUN
First Respondent
MR A WUN
Second Respondent
MS YANG (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
18 DECEMBER 2023
THE COURT ORDERS THAT:
1.The first respondent husband pay the applicant wife’s costs fixed in the sum of $25,000 in relation to the Application in a Proceeding filed 25 August 2023 by 4.00 pm on 2 February 2024.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Zha & Wun has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
The husband, wife and others are involved in highly contested financial proceedings which are listed for final hearing for three weeks commencing on 8 July 2024. There have been a number of applications brought by each of the parties and some context to the proceedings is set out in my judgments identified as:
·Zha & Wun (No 2) [2022] FedCFamC1F 576 delivered on 10 August 2022;
·Zha & Wun (No 3) [2023] FedCFamC1F 670 delivered on 11 August 2023; and
·Zha & Wun (No 4) [2023] FedCFamC1F 830 delivered on 28 September 2023.
The current application relates to the wife’s costs consequent upon an application filed by the husband on 25 August 2023, which was finally heard after a number of starts on 21 November 2023 and subsequently dismissed. Directions were made for the wife’s costs application to be determined on the papers, with each party to file written submissions limited to five pages by a certain date. The wife complied with the directions. The husband did not. The husband’s submissions were filed a day late and exceeded the page limit. Whilst the written submissions in the last paragraph sought leave to extend the page limit, no explanation was provided for why the submissions were filed late.
I have only read the first five pages of the husband’s submissions. To do otherwise would be to unfairly prejudice the wife who complied with directions and reward the husband for his failure to comply with directions.
The ambit of argument between the parties is encapsulated as follows:
(1)the wife sought an order that the husband pay her costs on an indemnity basis fixed at $52,820 or alternatively, on a scale basis fixed at $40,967 or part thereof.
(2)The husband conceded that an order should be made but contended that it should be made on a party/party basis as agreed or assessed. He opposed an order for indemnity costs. However, to avoid the incurring of further costs, he said that it would be appropriate to fix a sum of $17,500 as costs on a party/party basis.
Distilled further, the issue is either indemnity costs, scale costs or party/party costs and whether in a fixed amount or as agreed or assessed.
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant costs on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
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. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
Justice Sheppard in Colgate Palmolive Company and Another v Cussons Pty Ltd (1993) 118 ALR 248 observed as follows at 256–257:
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. 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 at 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.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
The category of cases in which a court may make an indemnity costs order are not closed and are not limited to those identified by Shepard J. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471, the Full Court said:
… 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 and party basis”: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
Whilst it is clear that the category of cases to which an indemnity costs order could be made is not closed, the defining characteristic that sets it apart is one of exceptionality.
The wife submitted that the husband’s allegation that she had breached an order was an assertion that should never have been made; that the husband served documents late, which led to an adjournment substantially increasing the wife’s costs; that requests for documents were not responded to in a timely fashion; and that at the interim hearing the number of documents the husband asserted the wife had used contrary to an order narrowed significantly. In addition, she submitted that the husband rejected an offer of settlement and was ultimately wholly unsuccessful.
The husband submitted that the wife’s costs are excessive and disproportionate. The husband does not, however, as a measure of proportionality inform the Court as to the quantum of costs incurred by him on the application. The husband submitted, given the wife’s limited English and where there is no evidence that the costs agreements have been translated, that the costs agreements may not be enforceable. In that respect, the husband submitted:
12.… Whilst this may not be required for the Court to consider the terms of the costs agreement, this is relevant in considering whether the wife has any basis to set aside the costs agreements under the Legal Profession Uniform Law (NSW).
(Husband’s written submissions filed 14 December 2023)
He also submitted that the wife has incurred significantly higher costs overall than the husband and that she has not placed before the Court evidence as to her financial circumstances other than reference to a Financial Statement sworn in November 2020. He submitted that the schedule of fees prepared by the wife does not significantly distinguish between costs of the unsuccessful application and costs in relation to that part which was compromised.
It is not in issue that an order for costs should be made. In those circumstances, many of the provisions of s 117 of the Family Law Act 1975 (Cth) are of no application. The first issue is whether there are exceptional circumstances to warrant an order for indemnity costs. I am not satisfied that there is anything exceptional about the circumstances in this case that would warrant an order on an indemnity basis. The mere fact that the husband was unsuccessful is not sufficient to warrant an order for indemnity costs. Nor am I satisfied that, just because it was an application that should never have been brought and because it made assertions that the wife breached an order, it is of such character as to amount to exceptional circumstances. It is not established that the application was improperly brought or for an ulterior purpose.
Nor am I satisfied that it is appropriate to order costs on anything other than on a party/party basis. I am not satisfied that what the wife contended to be scale costs are solely or limited to party/party costs. A case for all the wife’s costs even at scale is not made out.
The issue then becomes whether in the exercise of my discretion it is just to make an order for costs on a party/party basis in a fixed amount or leave the parties to an assessment process. The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and authorities make plain that I can fix an amount for costs. As McClelland DCJ observed in Pascoe & Larsen (No 2) [2022] FedCFamC1A 126:
27.Rule 12.17 of the Rules sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
28.In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
29.Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
The wife contended that her costs incurred at scale total $40,967.63. As I have observed earlier, I am not satisfied on a reading of the schedule attached to the wife’s written submissions that all of the costs identified in that schedule are on a party/party basis as opposed to incorporating what might be described as solicitor/client costs. The husband conceded a sum in the amount of $17,500 by way of party/party costs.
Having regard to the costs recorded in the schedule and the authorities to which I have referred to earlier, I am satisfied that it is appropriate to fix costs in a lump sum. Doing so avoids further delay, inconvenience, and costs to the parties. I accept that it involves a broad assessment on the basis of the information before the Court. Doing the best I can, I determine that an appropriate sum is $25,000 for the wife’s costs.
In circumstances where the husband conceded that the asset pool is something in the order of $40,000,000, I am satisfied he has the capacity to meet an order of that magnitude and will direct the husband to pay $25,000 to the wife’s solicitors by no later than 4.00 pm on 2 February 2024.
I will make an order accordingly.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 18 December 2023
SCHEDULE OF PARTIES
SYC 4269 of 2020 Respondents
Fourth Respondent:
AB PTY LTD
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