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Indemnity Costs

THE FULL COURT OF THE Family Court of Australia at SYDNEY

 

Appeal Numbers: EAA 64 of 2019; EAA 67 of 2019 & EAA 73 of 2019

 

Ms Cantrell

Appellant

 

And

 

Mr North

First Respondent

 

And

 

Mr Cantrell

Second Respondent

 

REASONS FOR JUDGMENT

 

1. On 23 July 2020, the Full Court dismissed three appeals in this matter and made an order for the issue of costs to be dealt with by way of written submissions. Written submissions were filed by Mr North (“the first respondent”) on 13 August 2020. Ms Cantrell (“the appellant”) filed written submissions in reply on 20 August 2020. Mr Cantrell (“the second respondent”) did not take part in the appeals nor did he file any written submissions in relation to costs.
2. The first respondent seeks an order that the appellant pay his costs in the sum of $75,928.50, or on a party and party basis, or in an amount fixed by the Court.
3. The parties agree that the issue of costs is to be determined by having regard to s 117 of the Family Law Act 1975 (Cth) (“the Act”). Although the primary proceedings were heard in the Supreme Court of New South Wales, one of the orders made was to set aside property settlement consent orders made in the Family Court of Australia. The proceedings therefore are “proceedings under [the] Act” and s 117 of the Act applies.
4. Under that section of the Act, each party is to bear his or her own costs (s 117(1)), unless the Court considers that there are circumstances which justify it making such order as it considers just (s 117(2)). In considering such an order, the Court must have regard to the matters set out in s 117(2A) of the Act.
5. The first respondent submitted that a costs order is justified essentially because:

  • the three appeals were wholly unsuccessful (s 117(2A)(e) of the Act);
  • the first respondent was a third party creditor where attempts to recover the debt owed to him had been thwarted by the property settlement consent orders made in the Family Court of Australia and the transfer of the property from the second respondent to the appellant (s 117(2A)(g) of the Act); and
  • Appeal No. EAA 73 of 2019 challenged the setting aside of settlements pursuant to s 37A of the Conveyancing Act 1919 (NSW) (“the Conveyancing Act”) and any appeal from that alone would have gone to the New South Wales Court of Appeal where costs normally follow the event.

6. There is considerable force in the first two points.
7. There is no substance in the third point, as it is expressed, because insofar as the proceedings concerned the Conveyancing Act, they were in relation to orders made pursuant to s 79 of the Act and, accordingly were proceedings arising under the latter Act for the purposes of s 7(5)(a) of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth) (s 7(4)(a) of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (NSW)). Accordingly, any appeal would have been to this Court (Eberstaller v Poulos (2014) 87 NSWLR 394).
8. However, insofar as the proceedings can be characterised as those taken by a third party creditor seeking to reverse dispositions of property designed to defeat the payment of a debt, they are proceedings that would normally be pursued in a court where costs ordinarily follow the event. As the Full Court explained in Yunghanns v Yunghanns (2000) FLC 93-029, where the proceedings in this Court are more akin to commercial proceedings, that fact may be taken into account under s 117(2A)(g) of the Act. This consideration supports a costs order being made in favour of the first respondent.
9. The first respondent submitted that the financial circumstances of the parties (s 117(2A)(a) of the Act) are not a relevant consideration in this matter because “policy wise, [it is] primarily intended to be a reference to persons who are parties to the marriage” (first respondent’s written submissions filed on 13 August 2020, paragraph 7(a)).
10. We do not agree that the clear terms of s 117(2A)(a) of the Act should be so limited but accept that this is a consideration which may have lesser weight in matters involving third parties such as the first respondent.
11. For her part, the appellant relied on her financial circumstances. The appellant is 72 years old and receives a pension. Her only significant asset is her remaining interest in the property which was the subject of the proceedings. We are aware that the appellant is subject to significant costs orders made against her by the primary judge. We are also conscious that the second respondent has paid her not inconsiderable costs of the proceedings.
12. Weight must be given to these matters but a poor financial position is not determinative. If it were otherwise, an impecunious person could litigate with impunity (Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12]; Mallory & Mallory [2020] FamCAFC 62 at [9]).
13. Taking these various matters into consideration, it is just that the appellant pay the first respondent’s costs.
14. The appellant submitted that as we did not determine the grounds of appeal concerning the Conveyancing Act and that these issues represented approximately one-third of the matters in issue, she should be ordered to pay only a percentage of the first respondent’s costs. Another way of looking at it, however, is that those matters were irrelevant to the main issues at hand and should not have been raised. There is merit also in the first respondent’s submission that “[t]his was a wide-ranging appeal in relation to which the appellant left no stone unexcavated, unprocessed and unpolished” (first respondent’s written submissions filed on 13 August 2020, paragraph 7(g)(vi)).
15. We are not persuaded that there should be a reduction in the first respondent’s costs as was suggested by the appellant.
16. At the hearing of the appeals, the first respondent provided a costs schedule titled “estimate of costs of appeal” filed on 24 February 2020, which identified his costs as being in the sum of $84,814.81. That sum included the costs of the stay application and the costs of preparing the costs schedule itself.
17. In his written submissions, the first respondent explained that the sum of $75,928.50 was “in proportion to the first respondent’s estimate of costs of $84,814 had the appeal run for two days” (first respondent’s written submissions filed on 13 August 2020, paragraph 8), for which it was initially listed.
18. The costs claimed by the first respondent appear not to be at scale and are said to be “the costs actually rendered to the [first respondent] and paid” (first respondent’s written submissions filed on 13 August 2020, paragraph 1). It is therefore a claim for indemnity costs but there are no exceptional circumstances which would justify them being calculated on that basis (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
19. The claimed costs, however, were not the subject of any criticism by the appellant and they compare favourably with her costs of $123,303.21 (appellant’s costs schedule filed on 21 February 2020). The parties have already been involved in far too much litigation in this matter in two courts, and a costs assessment would not be in anyone’s interest.
20. The bland form of the first respondent’s costs schedule filed on 24 February 2020 does not assist the Court with the fixing of a sum. Doing the best that we can in the circumstances, we consider that an appropriate sum is $60,000 (Graham & Squibb (2019) FLC 93-892 at [92]–[93]). There will be an order made that the appellant pay the first respondent’s costs fixed in the sum of $60,000.

 

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Austin JJ) delivered on 28 September 2020.

 

Associate:

 

Date:  28 September 2020

Posted in: Derek Legal Blog at 14 October 20

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