Poor litigant does not prevent an indemnity costs order

Poor litigant does not prevent an indemnity costs order

In the recent case of Kappel & Carlsson (No.2) [2018] FCCA 2973 (24 October 2018), the court made it abundantly clear that a “poor” litigant will not avoid a costs order, including an indemnity costs order, if they are unsuccessful:

  1. Ms Agresta brought to my attention a decision of the Family Court of Australia to the effect that an order for the payment of costs is a rarity and should only be made when exceptional circumstances are found to exist. I disagree. The family law jurisdiction does not stand outside of mainstream jurisprudence administered in the Commonwealth courts throughout Australia. Cases under the Act attract cost considerations by reason of the elements of s 117(2A). Nowhere in s 117(2) or s 117(2A) is there expression of the concept that indemnity costs orders should only be made in exceptional circumstances.
  2. To the contrary.
  3. Section 117(2) proceeds on the basis that the court may make such costs orders as the court considers just where the court is of the opinion that there are circumstances that justify the making of such an order. The making of a costs order is subject to the considerations in, among other sections, subss 117(2) and 117(2A). But the threshold point is that, in the absence of legislation forbidding the making of a costs order, the court is entitled to make a costs order, the only issue being the basis on which those costs are to be paid.
  4. The usual position is that costs are ordered to be paid on a party and party basis. In Colgate-Palmolive, Sheppard J traced the evolution of the learning on point. There, his Honour distilled the collection of propositions of fact and law that enable a court, acting properly in the exercise of its unfettered jurisdiction, to make a costs order, to order their payment on an indemnity basis. While it was true that Sheppard J’s distillation was unique to that time, it catalogued a very large number of authorities on point. By no means was the point undecided by 1993 that indemnity costs could be ordered. For that matter, Shepherd J referred to the settled practice for centuries in England, it being an entrenched practice in Australia, that costs were ordinarily ordered on a party and party basis but even as long ago as 1887, in the Chancery case of Andrews v Barnes,[6] the Court of Appeal spoke of the discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Importantly, over a century ago there was nothing to suggest that indemnity costs orders were rare or should be made only when exceptional circumstances existed. Expressed in such extremist terms, that has never been the law.
  5. The circumstances in which indemnity costs may be ordered were catalogued by Sheppard J. Yet his Honour said as follows –
    It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for the 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…
  6. A [poor litigant] is not a reason for refusing to make a costs order on a particular basis. The basis for the making of the order and the factual matrix surrounding a person’s ability to meet such an order are two different things. Whether or not the applicant is impecunious, whether he can meet in order for the payment of $26,233.90 or whether he could be assisted in paying that sum (if so, by whom and by when) all fell beyond the factual arena of this litigation.
  7. Litigants in the family law arena should be treated no differently to other litigants before this court where legislation empowers a judge to make a costs order and established authorities make statements of principle about the basis on which such a costs order can be properly made.

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