two people discussing a matter

Ignored directions to seek advice comes at a cost

Ignored directions to seek advice comes at a cost

Walker & Sully and Anor

  1. The important matter to found the current dispute is that in August 2014, at a point in time when all three parties to this dispute were represented by lawyers, by their consent, a declaration was made by the Court – the then Federal Circuit Court – under section 60H of the Family Law Act 1975 (Cth) (“the Act”) in relation to who were the parents of B.
  2. On 20 July 2016, the respondent to today’s application, but the applicant otherwise, sought a declaration that the male donor of the relevant reproduction material should be a parent for the purposes of the proceedings. There were extant property proceedings between the parents at that stage, and this brought in a new issue.
  3. The matter was listed before Johns J on 5 September 2016 and it seems common ground that her Honour advised Ms Walker to obtain legal advice about what she was doing. How explicit that was, and the extent to which reference was made to specialist advice, I am unable to say, but I do not think it matters because the reality is her Honour reserved the question of costs. The matter ultimately came back on a second occasion before Thornton J on 6 December 2016.
  4. There is significant angst on the part of Ms Walker about the fact that she got documents at the very last moment and certainly, as she sees it, not within the timeframes set out in the rules. The reality is that her Honour’s orders do not factor that in at all, and indeed the question of costs were reserved again.
  5. On 15 December 2016 Ms Walker says, as a result of receiving the documents that she got at the “eleventh hour” before the hearing before Thornton J, she filed a discontinuance of her proceedings. As a consequence, both of the parties otherwise before the Court today, seek their costs.
  6. In the case of Ms Sully, it is said that her costs calculated at an hourly rate of $275, comes to $6497.87. $275 per hour is marginally above the scale rate, but of course that calculation is made on the basis of the hours undertaken, whereas the scale indeed covers a whole raft of different items, including preparation of documents, reading them and so forth. It is difficult for me therefore to even extrapolate the figures used and alter them in some way, because I may be doing an injustice to Ms Sully.
  7. In the case of Mr Sully, he seeks indemnity costs and calculates that sum as around $21,000, which includes counsel’s fees of some note. It is conceded that the costs in that case are in excess of the scale and have been determined pursuant to a costs agreement. Presumably counsel has a cost agreement as well, because his fees are higher than the scale. Whichever way I go it is difficult for me to know, if I do make an order for costs, what the quantum should be and the suggestion by Ms Cantwell on behalf of Mr Sully is that in default of agreement, the costs will have to be taxed.
  8. The starting point in any costs application is s 117 of the Act. That provision says that in proceedings under the Act, each party shall bear their own costs unless the Court is satisfied, subject to some other requirements, that there are justifying circumstances to depart from that principle.
  9. If indeed the Court considers it should depart from the principle, then it must take into account the matters set out in s 117(2). In this case, the justifying fact is that the proceedings were commenced on 20 July 2016, in circumstances where the applicant in that proceeding, was very much aware of the declaration made on 8 August 2014. All of the threats relating to costs if she proceeded with that application were ignored, as she says, because she gets lots of threats about costs and sees it simply as a tactical issue for lawyers to demand costs.
  10. In response to her application, Mr Sully filed a response in which he not only sought a dismissal and costs, but he also filed a separate application indicating that he was going to be seeking a summary dismissal of the application.
  11. It is hard for me to imagine the circumstance in which one might not be more alert to the prospect of a costs order than this situation. It is hard to imagine what else the two respondents could have done to have alleviated their own costs positions. I am not entirely troubled about the fact that, even if I do not make an order for indemnity costs in the case of Mr Sully, he will be out of pocket because he has chosen to engage a lawyer, as is his right, who charges above the scale.
  12. The circumstances of Mr Sully, are not exceptional indeed even not unusual. There is no basis for me to make an order for indemnity costs here. There is a circumstance however to make an order for costs having regard to what I have just said about the way in which the applicant in that application began the proceedings. She was put on notice by Johns J by virtue of the order for reserved costs, but also that she should get advice. She was put on notice again by Thornton J by the reservation of costs, and it was only some seven or eight days later that she decided to withdraw the proceedings completely.
  13. I have little doubt what she says is correct, that she did withdraw the proceedings having seen the material, but it is hard to understand why she left it to that point.
  14. To reject an application for costs by the two respondents would effectively mean that Ms Walker just shrugs her shoulders and says, they can pay for her folly over the period of the months from July through to December of 2016. In my view, there is every reason to say in this case that the Court is justified in departing from the principles in s 117.
  15. There are no apparent Legal Aid considerations here, even though Ms Walker is unrepresented. The Court is obliged to take into the financial circumstances of the parties. In this case, there is a significant dispute between the parties as to what the value of the property is that they have to divide. Ms Walker seems to say that she cannot dispose of the properties, but that is not necessarily a problem the Court should delve into. On the view of Ms Sully, there is at least $2 million in assets and in the case of Ms Walker, she says there is $3 million. On any view in community standards in Australia, those positions indicate that at least Ms Walker is not impecunious.
  16. The relevant property is jointly owned at this stage, or at least owned by virtue of equitable interests, and again what I can find is that on the basis of the pleadings of the parties as to how they would divide that, Ms Walker is pursuing $2 million of what she sees as $3 million, and Ms Sully is seeking that Ms Walker end up with about $800,000 of the $2 million. Even on that basis one could hardly say that Ms Walker is impecunious or not able to pay costs. Ms Sully has a similar financial position. The other matters that the Court is entitled to take into account are the way in which the proceedings have been conducted. That is a reference to the compiling of documents as required by the Court, and the participation in the legal process.
  17. In this case, letters were ignored where, on any view, there was a risk and Ms Walker took it. The Court is also entitled to take into account any other circumstances it sees as just and fair, and in this case, with the amount of money involved, both of the applicants for costs are prepared to wait until the trial of the property proceedings, that is something that is quite fair.
  18. In my view, there ought to be orders for costs based on the scale failing agreement, and if there cannot be any agreement then those costs should be taxed and the question of a stay can be determined at the time of the determination of the costs.


Related articles

Your passionate team of family lawyers

Let’s work out your next steps together. Book your free consultation to start the process.