Acland & Grohl - [2019] FamCAFC 69

FAMILY COURT OF AUSTRALIA

ACLAND & GROHL

[2019] FamCAFC 69

FAMILY LAW – APPEAL – COSTS – Appeal discontinued – Where the respondent seeks an order for the payment of her costs on an indemnity basis – Where the appellant asserts that the costs should be assessed on a party and party basis – Where the appeal was doomed to fail – Where the appeal was based on a fundamentally flawed premise – Where the appellant imprudently refused an offer of settlement – Order made for the appellant to pay the respondent’s costs on an indemnity basis – Fixed costs.

Family Law Act 1975 (Cth) ss 90SM, 117, 117(2A), 117(2A)(f), 117(2A)(g)
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) s 2 (Schedule 1)

Colgate-Palmolive Company v CussonsPty Ltd (1993) 46 FCR 225; [1993] FCA 536
D & D (Costs) (No.2) (2010) FLC 93-435; [2010] FamCAFC 64
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364
Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304
Jonah & White (2012) FLC 93-552; [2012] FamCAFC 200
Kohan & Kohan (1993) FLC 92-340
Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54

APPELLANT:

Mr Acland

RESPONDENT:

Ms Grohl

FILE NUMBER:

WOC

692

2016

APPEAL NUMBER:

130

2018

DATE DELIVERED:

12 April 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ryan, Aldridge & Watts JJ

HEARING DATE:

12 April 2019

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

14 September 2018

LOWER COURT MNC:

[2018] FamCA 732

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Messner

SOLICITOR FOR THE APPELLANT:

Apex Legal

COUNSEL FOR THE RESPONDENT:

Mr Coleman SC

SOLICITOR FOR THE RESPONDENT:

Sydney Family Law Specialists Pty Ltd

Orders

The appellant is to pay the respondent’s costs of and incidental to the appeal fixed in the sum of $32,000 within twenty-eight (28) days.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Acland & Grohl has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 130 of 2018
File Number: WOC 692 of 2016

Mr Acland

Appellant

And

Ms Grohl

Respondent

EX TEMPORE REASONS FOR JUDGMENT

ALDRIDGE J

This appeal was discontinued when a notice of discontinuance was filed on 12 April 2019. The respondent now seeks an order for the payment of her costs by the appellant and that those costs be assessed and paid on an indemnity basis. Quite properly, the appellant conceded that a costs order should be made in the circumstances, but asserted that the costs should be assessed on a party and party basis and opposed any order for indemnity costs.
The Court is to deal with applications for costs under s 117 of the Family Law Act1975 (Cth) (“the Act”). Given the concession made by the appellant, the question now becomes whether the Court considers that, in all the circumstances, the making of an indemnity costs order is just.
In considering that question, the Court must take into account the matters set out in s 117(2A) of the Act.
The respondent submitted that an indemnity costs order should be made because the appeal was doomed to fail and because the appellant imprudently refused an offer of settlement. These considerations fall within s 117(2A)(g) and s 117(2A)(f) of the Act respectively. These two considerations also fall comfortably within the recognised circumstances which justify an order for costs as conveniently collected in Colgate-Palmolive Company v CussonsPty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive”). It is, however, necessary to recognise that indemnity cost orders are made only in exceptional circumstances (see Kohan & Kohan (1993) FLC 92-340, D & D (Costs) (No.2) (2010) FLC 93-435 and Limousin & Limousin (Costs) (2007) 38 Fam LR 478).
In order to deal with the first submission, it is necessary to consider the nature of the appeal and its prospects of success. This course may be taken in appropriate circumstances. In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, McHugh J said at 624-625:
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.
(Footnotes omitted)
In this appeal, we have had the benefit of written summaries of arguments from both parties on the merits of the appeal and the Court is therefore in a reasonable position to consider them.
The issue between the parties at first instance was whether or not they had been in a de facto relationship which had not broken down on a final basis before 1 March 2009 (see s 2 (Schedule 1) of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) and s 90SM of the Act).
It was common ground that the parties had been in a de facto relationship up until January 2004 when they separated. The respondent and the parties’ two children remained in the jointly owned family home.
In November 2005, the appellant returned to the family home where he remained until 11 August 2017. The respondent contended that his return led to a resumption of the de facto relationship which then lasted until March 2016. The appellant’s case was that he merely lived in the home and was, in fact, in a de facto relationship with another person. That, of course, does not preclude a finding that the appellant was also in a de facto relationship with the respondent at the same time (see Jonah & White (2012) FLC 93-552).
The primary judge accepted the respondent’s contentions and on 14 September 2018 made the following declaration:
(1)Pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”) it is declared that:
(a)a de facto relationship existed between the applicant and respondent;
(b)the periods of the de facto relationship for the purposes of s 90SB(a) were:
(i)commencing on a date between 1991 and 1995 until 26 January 2004; and
(ii)from November 2005 until 6 March 2016.
(c)The de facto relationship between the applicant and respondent ended on 6 March 2016.
A further order was also made listing the matter before a Registrar for the purpose of making trial directions for subsequent property proceedings.
The primary judge stated the relevant background to the dispute as follows:
20.Up until 1997, [Ms Grohl] worked with [Mr Acland] in a business operated from his parents’ farm known as [‘Property E’]. [Ms Grohl] ceased her involvement in the business shortly prior to the birth of their first child. Since then, the business has expanded and been corporatised.
21.In October 2003 [Mr Acland] met [Ms F] and commenced a relationship with her.
22.In December 2003 [Ms F] left her husband and in January 2004 [Mr Acland] left [Ms Grohl]. [Ms F] commenced to work in [Mr Acland’s] business. [Mr Acland] and [Ms F] commenced to live together in January 2004 at either [Ms F’s] sister’s home where [Ms F] resided after separating from her husband or at a granny flat at [Property E] where [Mr Acland] resided after separating from [Ms Grohl]. In mid-2004 [Ms F] moved to a property at [Suburb G] and she and [Mr Acland] continued to live between that property, her sister’s residence and [Property E]. In March 2014 [Ms F] moved permanently to the [Property E] granny flat.
23.[Ms Grohl] and [Ms F] met on a few occasions in 2004 and [Ms Grohl] was aware, at least at that time, that [Mr Acland] was in a relationship with [Ms F].
24.[Ms C] and [Mr D] met and spent some time with [Ms F] and their father (jointly) in 2004 and 2005. [Ms C] and [Mr D] may have met [Ms F’s] daughter [Ms H] during this time.
25.Upon [Mr Acland’s] separation from [Ms Grohl] in January 2004 [Mr Acland] commenced to pay child support to [Ms Grohl] by depositing $200 per week into [Ms Grohl’s] bank account. [Mr Acland] spent time with [Ms C] and [Mr D] each alternate weekend and [Mr Acland] sought a continuation of that arrangement in a letter dated 15 June 2004 (see exhibit 1 at page 27).
26.In November 2005 [Mr Acland] moved back into the home he jointly owns with [Ms Grohl] at [Suburb B] where he remained until 11 August 2017. [Ms Grohl] continues to reside in [Suburb B] with [Ms C] and [Mr D]. [Mr Acland] lives at [Property E] with [Ms F].
The nature of the relationship between the parties subsequent to the appellant’s return was controversial with starkly different versions given by each party. Ultimately, the primary judge did not accept the appellant’s evidence and preferred that of the respondent. Central to the grounds of appeal was that finding and, in particular, the following emphasised words:
28.It is rare for me to make a generalised comment about a witness’ credibility but I must say that [Mr Acland] was a most unconvincing witness. Without wishing to be unnecessarily disrespectful, [Mr Acland] is a man of limited intellect. He says he is illiterate and hard of hearing but those limitations are not a sufficient explanation for his behaviour in the witness box. Almost every question in cross-examination had to be repeated, sometimes two or three times and I am not persuaded that this was entirely due to his alleged hearing impairment. [Mr Acland] was at times deliberately evasive. He avoided answering questions that he thought may be unfavourable to his case. He embellished his evidence if he thought it might assist his case. He was deliberately obtuse at times. I have come to the conclusion that I can place very little, if any, weight on [Mr Acland’s] evidence. [Mr Acland’s] version of events stretches credulity in so many respects. There are many reasons for coming to that conclusion and I will highlight some of the more significant ones.
(Emphasis added)
The next 13 paragraphs of the reasons set out in detail the chosen examples (at [29] – [41]).
Importantly, it was not suggested that these examples did not support the findings as set out in the quoted paragraph other than the emphasised words. The appeal, thus, focused on two words (“limited intellect”) which, in my opinion, it is necessary to put in the appropriate context. It is wrong to take part of the formulation and ignore the whole. Although there was no evidence as to the appellant’s intellect, it was not disputed that the appellant was illiterate and had hearing difficulties. During the course of his oral evidence, documents had to be read to him, rather than given to him to read. On, at least, one occasion, his hearing caused him some difficulty (Transcript, 5 July 2018, p.41).
The primary judge took these matters into account in assessing the credibility of the appellant’s evidence, but concluded that they did not satisfactorily explain the difficulty she saw with the particular way in which the appellant answered questions. In my opinion, it is strongly arguable that the primary judge similarly took into account, in assessing the reliability of the appellant’s evidence, her view that he was of limited intellect. This observation occurs immediately before the reference to the appellant’s difficulties with literacy and hearing.
Of course, intellect and literacy are not coterminous. It was, therefore, one of “those limitations” taken into account by the primary judge which her Honour then considered was not a sufficient explanation for the problems that she saw in the appellant’s evidence, leading to the findings that he was “deliberately evasive”, “embellished” and was “deliberately obtuse” (at [28]), as opposed to having difficulty hearing and understanding the questions put to him. When placed in that context, the finding of “limited intellect” was, in fact, in the appellant’s favour as a possible explanation for the difficulties posed by his evidence. Nonetheless, that fact taken with the other two difficulties, was not a sufficient explanation for his behaviour in the witness box.
The adverse credit findings were not made because the appellant was, in the primary judge’s view, of limited intellect, but despite it. So understood, I consider that the only view that could be arrived at is that the appeal was based on a fundamentally flawed premise.
Two other observations might be made. First, a trial judge is not obliged to forewarn the parties of every possible observation, arguments or piece of evidence that is to be made, considered or take into account, contrary to the submission of the appellant. As Kirby P said in Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304, the requirements of procedural fairness do not mean “that a decision-maker is obliged to call attention to every single observation that was made” (at 310).
His Honour went on to say at 313:
By conventional theory, the observations made by a trial judge of the appearance and demeanour of a witness giving evidence are not only available to be used in the determination of a dispute but amount to important ingredients of the decision-making process. They normally provide the primary decision-maker a distinct advance which controls, and even limits, the exercise by the appellate court of its statutory functions in an appeal by way of re-hearing: see Owners of Steamship Hontestroom v Ownersof Steamship Sagaporack [1927] AC 37 at 47; Jones v Hyde (1989) 63 ALJR 349 at 351; 85 ALR 23 at 27; Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178ff.
Justice is not truly blind. A decision-maker (whether judge or magistrate), sitting in a courtroom is not blinkered. The decision-maker observes the drama which is played out in the well of the courtroom. As Jacobs J remarked in Jobst parties and witnesses frequently sit in court and grimace, frown, laugh and otherwise display facial and body language which it is virtually impossible for the decision-maker to fail to see. Burt CJ said, on his retirement, that he had whiled away the boring parts of cases by counting the panels at the back of his courtroom. Judges without panels are usually confined, when attention strays from parties, witnesses or their representatives, to observing those seated before them. It is impossible, in the geographical layout of a courtroom to do much else. The appearance of a witness as he or she approaches the witness-box may properly be taken into account where agility and ease of movement are in contest. To require otherwise would be to require a division of the mind quite unrealistic in the case of a jury and equally artificial for judicial officers. In this modern age, the suggestion that a form of transmogrification of the witness occurs by administration of the oath (or taking the affirmation) so that body language and facial features or other elements of the demeanour can be taken into account thereafter but not a moment before, would involve a rigidity and artificiality which the law should reject. So long as the conventional theory reigns that observations of a party or other witness are an important and legitimate element in curial decision-making, it is appropriate to permit at least the observations to be taken into account which occur inside the courtroom. However this conclusion leaves the question of notification to the parties and their representatives where the observations have occurred, as here, outside the actual period of the trial and when the person being observed is at the back of the court behind the representatives of the parties who thus have no opportunity to observe the features in question and by interrogation, evidence or advocacy, to persuade the decision-maker to a different view about them than has been formed;
Secondly, not every want of procedural fairness is an appealable error (see Stead v the State Government Insurance Commission (1986) 161 CLR 141). Here, the observation that was made was in the appellant’s favour and taken into account by the primary judge in assessing his evidence, and the error was, therefore, to his benefit, and had the finding not be made, the same result would have followed. As the reasons make clear, her Honour was comfortably satisfied for a number of reasons which were set out, as she well could be on the evidence before her, that the appellant’s evidence should not be accepted.
I, therefore, consider that the appeal was, to use the words of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401:
… an action… commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.
It also falls within the well-recognised category in Colgate–Palmolive of a case where proceedings were needlessly prolonged by the making of groundless contentions. In this case, the final hearing has been delayed by this appeal.
Turning then to the second circumstance relied upon, on 3 April 2019, the solicitors for the respondent wrote to the solicitors for the appellant in the following terms:
We have been instructed that if your client discontinues the Appeal on or before 4:00pm on Friday, 5 April 2019 our client will accept payment of her costs associated with the Appeal in the amount of $16,000.
If, however, your client does not discontinue the Appeal on or before 4:00pm on Friday, 5 April 2019, we have been instructed to seek costs on an indemnity basis, with such costs to be estimated to be $32,000.
Please note that if your client’s Notice of Appeal is dismissed, we will seek to rely on this letter as to costs.
No response to that letter was received. The evident purpose of the letter was to avoid the respondent having to incur the cost of senior counsel for appearing today or, at least, the whole of those costs. It was a most generous offer providing a genuine discount for its acceptance. In my opinion, having regard to the action now taken by the appellant in relation to his appeal, it was imprudently refused.

In my opinion, these two considerations amply justify an order for indemnity costs. The respondent sought a payment of her costs in the sum of $32,000. The appellant did not accept that to be reasonable and submitted that the costs should be assessed.
This Court has, for some time now, adopted the practice of fixing costs wherever possible so as to save the parties and the Court the time, trouble and expense of assessment. The appellant’s own costs for preparing this appeal are estimated to be $50,000. That, of course, includes preparation of the appeal books said to be $3,500 and the cost of obtaining the transcript. Even so, by comparison, it can be seen that the costs claimed by the respondent are reasonable. Certainly, they do not appear unreasonable to me. In my opinion, the appellant should be ordered to pay the respondent’s costs of the appeal fixed in the sum of $32,000.

WATTS J

I agree with the reasons given by Aldridge J. The appeal was doomed to fail and the offer to compromise was imprudently refused. I agree with the orders proposed by Aldridge J.

RYAN J

I agree with the reasons given by Aldridge and Watts JJ and the orders will be as proposed by Aldridge J.

I certify that the preceding twenty nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Watts JJ) delivered on 12 April 2019.

Associate:

Date: 26 April 2019