Costs Award in Family Law Appeal Proceedings - The Family Law Case of Goudarzi & Bagheri

The case of Goudarzi & Bagheri (Costs) [2017] FamCAFC 268 was a Full Court of the Family Court of Australia (“FCA”) appeal, heard by Judges, Ryan, Forrest and Thackray after the wife brought an appeal.  The husband made an offer to settle during the appeal proceedings which the wife did not accept.  The wife was ordered to contribute to the respondent husband’s costs associated with the appeal upon an application for costs.

Key Words

Family Law; Appeal; Costs; Application for costs in the appeal; Offer of settlement made; Amount of costs fixed; Appellant was partially successful; Application for costs on a party/party basis granted; The evidence could have formed part of the application for costs

Relevant Law

Family Law Act 1975 (Cth) section 117

Family Law Rules 2004 (Cth) rule 19.18(1)

Background

Following the breakdown of their marriage, Ms Goudarzi and Mr Bagheri became embroiled in property settlement proceedings in the Family Court. Cleary J, who presided over the matter, made final orders concerning the division of the family home, which was subject to the appeal initiated by the wife.

The appeal by the wife in the FCA convened on 8 August 2017. On 15 September 2017, orders were made allowing the appeal in part. As part of those orders, both parties were entitled to submit written applications in respect of costs within 14 days of the order. The husband, Mr Bagheri, filed his submissions on 29 September 2017. Ms Goudarzi was then given 14 days to respond with her written submissions. No such submissions were submitted, nor did the wife attend proceedings.

Furthermore, the court, by reference to the affidavit of service filed, and the Appeal Registrar’s correspondence with Ms Goudarzi the day before, was satisfied that she was aware of Mr Bagheri’s application on 8 August, to adduce evidence for costs.

Judges’ Consideration of Applicable Law

Their honours looked to section 117(1) of the Family Law Act 1975 (Cth) (“the Act”), which is the governing provision concerning costs. Section 117(1) of the Act, provides that subject to section 117(2), each party to proceedings under the Act shall bear his or her costs. Furthermore, section 117(2) requires a finding of justifying circumstances as a crucial preliminary to the making of an order for costs. Accordingly, if warranting conditions are found, the court may make an order for costs it considers just. To this end, the court, in considering what order, if any, should be made, is required to take into consideration the provisions within section 117(2A). It is not necessary that a court be satisfied with all the factors listed in s 117(2A).

The factors which must be taken into consideration referred to in section 117(2A) of the Act include:

a) The financial circumstances of each of the parties;

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;

c) The conduct of the parties in relation to the proceedings;

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) Any other matter the court considers relevant.

Judges’ Application of Applicable Law within the Appeal

The court, satisfied in the appeal that there was no explanation for Ms Goudarzi’s absence, continued with the matter. What follows is the FCA’s discussion of its application of the Act with the facts and applicable case law.

The court began by noting, that on 15 December 2016 and 8 February 2017, Mr Bagheri’s solicitors sent an offer of settlement to the wife, to which there was no response - relevant section 117(2A)(f).

The court then referred to the fact that both parties were of substantial means. The wife, like the husband, possessed significant amounts of property and monetary assets. Therefore, the court determined that there could be no doubt as to her capacity to meet an order for costs in the amount sought by the husband - relevant section 117(2A)(a).

The husband submitted that the success of the wife’s appeal eroded due to the concessions made concerning order 7.3 in his offer of settlement. Order 7.3 pertained to the payment of 55 percent of the proceeds generated from the sale of the family home, in favour of the wife. Thus, the husband argued, because she had failed to establish another ground of appeal, then, subject to section 117(2A)(a), she cannot be deemed partially successful in the proceedings. The court accepted the husband's submission and added further that the bid could also be considered under both sections 117(2A)(f) and (g).

The court then looked to, and relied upon, the principle stated in Lenova v Lenova (2011) FLC, in which among other things, the full court said. ‘Subject to subsection (2) of section 117(1), each party to proceedings under this Act shall bear his or her costs. A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid costs of litigation’.

Court’s Decision

After having weighed all of the facts in conjunction with the applicable law, the court held, that the husband had presented a strong case for an order for costs in his favour. The court noted the husband’s significant financial means, which made it plain that he did not require funds by way of costs to meet expenses. He nonetheless, had successfully established that due to his wife’s failure to respond to his multiple offers of settlement, combined with the outcome of the appeal, unnecessary legal expenses were incurred. Therefore, the court held, that an order for costs should be made in favour of the husband.

Determination for Quantum of Costs

Where an order for costs is made, the question of quantum (monetary compensation in this case) arises. Accordingly, the court looked to the Family Law Rules 2004, rule 19.18(1), which provides that the court may order a specific amount in an order for costs.

Their honours cited Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160, which states, the purpose of rules enabling an order for costs in a specific amount, without formal assessment or taxation, is to ‘avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation’.

Following that, their honours looked to Murphy J’s observation in Parke & the Estate of the Late A Parke (2016) FLC. In that case, the court observed, that, ‘If the court is to fix a sum it should be fixed broadly having regard to the information before the court’.

Finally, their honours gave credence to the stance taken in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23. In that case, it was said, that, in exercising power to award a lump sum, the court must act judicially, but that does not mean it must exercise power in any ‘scientific or formulaic manner’. After having considered the previous approaches taken in prior cases, their honours then looked to the costs that had been incurred by the husband. The court first assessed the husband’s solicitor costs that were sought, which amounted to $4,372.60. Calculated on a party/party basis, and adopting a broad brush approach, the court reduced and fixed those costs at $3,750.

Next, the court looked to the costs claimed for the husband’s two senior counsels. The first had prepared the summary argument. The court refused to make an order for costs, because senior counsel completed the work before the offer of settlement. The second claim for costs related to senior counsel, amounted to $19,040.34, which was granted. The rational for granting the second order for costs was due to the complexity, as the court said, ‘there were eight volumes of appeal books and the issues raised in the appeal were legally and factually complex.

Finally, the court assessed the husband’s claim for costs concerning the hearing for an application of costs, which included both counsel and solicitor fees. Counsel had prepared the written summary in support of the application that amounted to $2,000. Solicitor fees included matters appropriately in the domain of the solicitor/client bill of costs and set at $750. The court took the opinion, that, because the husband’s attendance was required to determine the quantum of costs, procedural fairness required the ordering of costs in his favour.

Decision

Having discussed and determined the quantum of costs, their honours all agreed that the appellant wife contribute to the costs incurred by the husband amounting to $25,540.34, for both the appeal and application for costs. A cost order was awarded against the wife.

BY LUKE MCLAUGHLIN

Luke is currently studying for a Bachelor of Business Communication degree, majoring in Public Relations & Bachelor of Law (LLB) specializing in Corporate and Commercial Law.

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