Barry and Dalrymple (Costs) - [2011] FamCA 365

FAMILY COURT OF AUSTRALIA

BARRY & DALRYMPLE (COSTS)

[2011] FamCA 365

FAMILY LAW - COSTS – In circumstances where the evidence on either side was less than entirely satisfactory and where extensive cross-examination of witnesses was not unreasonable in the circumstances of the case, not established that the applicant’s conduct of the trial justifies an order for costs – Not established that the applicant’s claim was necessarily entirely unmeritorious or that the fact that it was wholly unsuccessful has significance given the nature of the claim under s 90RD and the limited jurisprudence in respect of such claims – No order for costs.

Family Law Act 1975 (Cth) s 90RD, s 117(1), s 117(2A)

Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others [1999] 160 ALR 588

APPLICANT:

Mr Barry

RESPONDENT:

Mr Dalrymple

FILE NUMBER:

PAC

2365

2010

DATE DELIVERED:

23 May 2011

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Coleman J

HEARING DATE:

By written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Michael Brown

SOLICITOR FOR THE APPLICANT:

Browns The Family Lawyers

COUNSEL FOR THE RESPONDENT:

Mr David Brown SC

SOLICITOR FOR THE RESPONDENT:

Taussig Cherrie Fildes

Orders

That there be no order for costs.

IT IS NOTED that publication of this judgment under the pseudonym Barry & Dalrymple (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 2365 of 2010

Mr Barry

Applicant

And

Mr Dalrymple

Respondent

REASONS FOR JUDGMENT

Costs

Introduction

For reasons which it then provided, on 15 December 2010 the Court dismissed the application of Mr Barry (“the applicant”) seeking a declaration against Mr Dalrymple (“the respondent”) pursuant to s 90RD(1) of the Family Law Act 1975 (Cth) (“the Act”).
The respondent, in reliance upon submissions dated 22 December 2010 sought an order for costs of and incidental to the proceedings. The applicant opposed any order for costs being made against him.
The principles which govern the application for costs are not in doubt, as the submissions of Senior Counsel for the respondent and those of the applicant’s attorney of 23 December 2010 confirm.
The general rule expressed in s 117(1) of the Act is that each party to proceedings bear his or her own costs unless the Court is of the opinion that the circumstances justify the making of a costs order. That issue is informed by reference to the factors referred to in s 117(2A) of the Act.
Senior Counsel for the respondent submitted, correctly in the Court’s view, that s 117(2A)(a) “compels the Court to have regard to the financial circumstances of each of the parties to the proceedings”. The respondent relied upon the sum of $36,500 being owed to him by the applicant in relation to the attempted purchase by the applicant of a motorcycle. However, those monies are able to be pursued by the respondent at law. This Court having dismissed the applicant’s claim for relief under the Act, either party can probably pursue asserted rights in state or territory civil courts. This factor does not assist the respondent’s claim for costs.
Moreover, albeit in a broad sense, the evidence in relation to those transactions assumed some significance in the Court’s determination of the applicant’s claim for a declaration pursuant to s 90RD of the Act. Similar observations apply to other pecuniary benefits obtained by the applicant during the course of his association with the respondent. The Court does not consider that financial circumstances should enhance the respondent’s costs claim.
Conversely, notwithstanding the submissions on his behalf, the Court would not decline to exercise its discretion with respect to costs in favour of the respondent in reliance upon the disparity of financial resources between the applicant and the respondent in the event of the respondent successfully agitating other factors by reference to which the requisite “opinion” could be formed.
The conduct of the parties was a matter significantly relied upon by Senior Counsel for the respondent pursuant to s 117(2A)(c) of the Act. The crux of the submission on behalf of the respondent in this context was that “it was readily apparent to all parties involved in this proceeding from the conclusion of the applicant’s evidence on the second day of the hearing that the applicant’s claim was devoid of merit and had no prospect of success” (at par 17). Having chosen “to pursue his claim to the bitter end as he was entitled to do”, it was submitted that the applicant “ought to be held accountable” for such decision and be ordered to pay the respondent’s costs.
With respect to Senior Counsel for the respondent, the Court cannot accept the proposition which is fundamental to this contention. There is no doubt, as both the Court’s Reasons for Judgment of 15 December 2010 and Senior Counsel for the respondent’s submissions in that regard make clear, that the evidence of the applicant was unsatisfactory, and that the witnesses called by him were essentially either honest and unhelpful to his cause, or unsatisfactory and unreliable where their evidence may have been helpful to his cause. Even accepting the deficiencies in the case for the applicant, the fact remained that the Court could not properly and judicially determine the applicant’s claim until it had heard all of the evidence, and most significantly heard and considered the evidence of the respondent. The applicant was entitled, at the end of his case, to hope that cross-examination of the respondent and his witnesses by his attorney would prove as bountiful as cross-examination of the applicant and his witnesses had proved for the respondent’s Senior Counsel.
The Court ultimately preferred the evidence of the respondent, and his witnesses generally, to the evidence of the applicant and his witnesses, where there was conflict in such evidence. That was by no means inevitable, having regard to the circumstances surrounding the association between the applicant and the respondent and the manner in which it commenced and developed, on anyone’s version of events.
Objectively, notwithstanding the serious obstacles to success arising from the evidence adduced by and on behalf of the applicant, if the respondent and some of his key witnesses had been thoroughly discredited in cross-examination the case may have been determined differently.
The Court does not criticise the applicant for not having “surrendered” at the conclusion of his evidence on the second day of the hearing. Although, for reasons which it provided in December, the Court was comfortably satisfied that the evidence of the respondent and his witnesses was entitled to be preferred to that of the applicant and his witnesses where there was conflict, there were, as the applicant’s attorney pointed out in his submissions, curious anomalies in the evidence of the respondent. Those anomalies provided potentially fertile ground for the applicant’s attorney to plough in cross-examination. The reality that so doing did not produce a harvest does not change that.
With respect to Senior Counsel for the respondent, his submissions involve a finding which this Court did not make in its primary judgment, and cannot now make. Although, clearly, on any view of his own evidence, the applicant’s case was problematic at the conclusion of his cross-examination, and probably became more problematic as his witnesses were cross-examined, at no time prior to the conclusion of the trial did the applicant ever cease to have an arguable case, in the Court’s view. The Court’s findings in its primary judgment are supportive of so concluding.
To the extent that the applicant’s conduct of the trial was relied upon in support of the respondent’s case, the Court cannot accept the thrust of the submissions made in that regard. Whatever the inadequacies of the evidence with which he was obliged to work in agitating his client’s claim, the attorney for the applicant could not in the Court’s view be fairly criticised for any aspect of his conduct of the trial. On the contrary, conducted less skilfully, the trial could have taken far longer than it did, or its outcome been less finely balanced than it ultimately was.
To the extent that witnesses were required to attend in person, the Court is not persuaded that so doing was unreasonable in the circumstances of this case. It is also to be remembered that what appeared initially in the affidavits of a number of witnesses in the respondent’s case, and what was ultimately allowed in evidence, were materially different in a number of instances. Where, objectively, only two people know the true nature of the association between the applicant and the respondent, it was legitimate for Counsel for both parties to demand to see “the whites of the eyes” of witnesses relied upon by the opposing party. This was a case where “the trial Judge’s advantage” assumed great significance (see eg Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others [1999] 160 ALR 588). Not seeing the witnesses whose testimony was challenged would have significantly reduced that advantage.
As the Court endeavoured in its primary judgment to explain, where only two people know the truth, a court charged with finding the truth on the balance of probabilities must avail itself of every forensic advantage available in order to discharge its statutory obligation. Circumstantial evidence is relevant in that regard. So too is assessment of credibility of witnesses. The Court does not accept that much of the cross-examination of the respondent and his accountant “had no bearing on the issues in dispute”. Although ultimately unsuccessful, that cross-examination had the potential to materially advance the applicant’s claim. Although unsuccessful, the course adopted by the applicant’s attorney with respect to that evidence, and to the case generally, cannot be said to have totally lacked a reasonable basis.
It is clear that the applicant’s attorney endeavoured to demonstrate anomalies, inconsistencies and curiosities in relation to the “employment contract” asserted on behalf of the respondent by eliciting details of facts and circumstances which, as he ultimately submitted, were inconsistent with there having been such a contract. The Court’s primary judgment addressed those matters and, whilst not making a declaration as sought by the applicant, acknowledged that there were aspects of the financial relationship between the applicant and the respondent upon which the applicant’s attorney could, and did, properly rely in seeking to persuade the Court that the association was of the nature asserted by his client, rather than of the nature asserted by the respondent.
The submissions of Senior Counsel for the respondent in relation to the shortcomings in the evidence of the applicant, as recorded by the Court in its primary judgment, do not in the circumstances of this case assume significance. As is not in doubt, those shortcomings contributed materially to the applicant’s failure in the primary proceedings.
Were the Court persuaded that the evidence of the applicant was demonstrably and knowingly false, different conclusions may be reached. The Court is not persuaded and, quite properly, Senior Counsel for the respondent did not submit to the contrary, that the applicant’s evidence was knowingly false or fabricated.
So far as the submissions as to the expense incurred by the respondent are concerned, with respect to him, had the respondent chosen to regularise the employment relationship which he asserted that he had with the applicant in ways which are well known, and must have been well known to the respondent in this case, he may well not have been obliged to resist a claim by the applicant pursuant to s 90RD of the Act.
Whatever the true nature of the association between the applicant and the respondent, for whatever reason, the respondent’s failure to at all times maintain and be seen to maintain an employer/employee relationship in the traditional sense exposed him to the risk that the applicant would make a claim of some kind against him, as in fact occurred. The Court is not persuaded that the conduct of the applicant enhances the respondent’s claim.
The absence of success does not assume significance in this case pursuant to s 117(2A)(e) of the Act. Realistically, the applicant was either going to be wholly successful, and obtain a declaration pursuant to s 90RD of the Act, or, as transpired, wholly unsuccessful, and fail to obtain such a declaration.
To the extent that the respondent’s claim was submitted to have been doomed to fail by reference to the evidence, the Court has earlier recorded that, notwithstanding the difficulties confronting the applicant at the conclusion of his case, in the light of his own evidence and that of his witnesses, the evidence of the respondent, though ultimately preferred, revealed a number of matters which created obstacles to acceptance of the respondent’s case. Skilful cross-examination of him revealed inconsistency in the evidence given by the respondent himself, which was itself inconsistent in some respects with that given by other witnesses in the respondent’s case. As the Court’s primary judgment explained, the standard of proof, and obligation of the applicant to establish his claim, assumed considerable significance in the Court’s decision. Rejecting the applicant’s claim did not entail acceptance of the respondent’s claim in its entirety.
To the extent that it was submitted by Senior Counsel for the respondent that the applicant’s claim was unmeritorious, and always going to be so, the Court does not accept that such was the case. There is force in the submissions of the applicant’s attorney (at page 6) in relation to this issue.
The Court accepts that, although ultimately unsuccessful, the claim of the applicant was not “plainly or obviously unmeritorious”. The submission of the applicant’s attorney that there was “a dearth of precedent in the area” resonates with the Court. Not surprisingly, the jurisprudence with respect to s 90RD of the Act in a same-sex context is embryonic. The contribution, if any, of the Court’s primary judgment to that jurisprudence is for others to determine.
As a balanced reading of the Court’s primary judgment would hopefully confirm, notwithstanding, as was sensibly conceded by the applicant’s attorney, that the Court comfortably preferred the evidence of the respondent and his witnesses to the evidence of the applicant and his witnesses where the evidence was in conflict, that did not necessarily or easily lead the Court to conclude that the applicant’s claim should fail.
Indeed, as was submitted on behalf of the applicant, in its primary judgment, the Court “explored uncharted waters”. In the circumstances, although ultimately unsuccessful, and significantly so by virtue of the Court’s findings with respect to credit and its view of the circumstantial evidence, the Court is persuaded that to rely significantly upon the applicant having been wholly unsuccessful would in the circumstances of this case be inappropriate. So doing would, for reasons which the Court has endeavoured to explain, be somewhat simplistic.
As is not in doubt, the purpose of a costs order is essentially compensatory, although it may have an unintended punitive effect. In the circumstances of this case, the Court is not of the opinion that costs should be awarded, either by reference to the factors upon which the respondent relied, or the broader justice of the case.
As noted earlier, only two people know the true nature of the association between the applicant and the respondent. Each has a quite different, and genuinely held belief about that. Although he was unsuccessful, and the quality of the evidence given by him and a number of his witnesses was always likely to render success problematic, the applicant was entitled to bring his claim, and to maintain it to judgment. Having done so, the applicant needed, particularly after the basis of the respondent’s resistance was made apparent, to seek to adduce all the evidence which he could in support of his claim. Unlike many causes of action, determining the evidence which was relevant to the applicant’s claim was not simple or clear cut. The state of the jurisprudence in this area rendered so.
The respondent was not in a dissimilar position in resisting the claim. Both parties in a sense had “grabbed a tiger by the tail”. Within that dynamic, and due to the competence of their respective advocates, the case was fiercely but fairly contested to its conclusion. It was at no time a “one horse race”, as the discussion in the Court’s primary judgment hopefully confirms.
Although, having not been of the opinion that the circumstances justify the making of a costs order, it is strictly unnecessary to do so, had the Court been persuaded that a costs order was appropriate, such order would have been on a party and party basis, and not on an indemnity basis as sought by the respondent.
The authorities relied upon by Senior Counsel for the respondent would not in the Court’s view result in the discretion to award indemnity costs being enlivened. As the Court has endeavoured to explain, notwithstanding the shortcomings in the evidence of the applicant and a number of his witnesses as they emerged during the trial, the applicant and those advising him were justified in pursuing the applicant’s claim to judgment.
Cross-examination of the respondent may well have resulted in a different outcome. It cannot successfully be asserted that, as is clearly the case, the applicant’s attorney’s expectation that cross-examination of the respondent would cure any defects apparent in the applicant’s case was fanciful or entirely without foundation. The respondent’s own version of events contained some enduringly curious elements. The fact that the Court was ultimately comfortably satisfied that the respondent’s evidence, and that of his witnesses, was entitled to be preferred to that of the applicant and his witnesses where there was conflict does not alter that fact.
The Court perceives the focus of the authorities in relation to indemnity costs to be that it was apparent before the case commenced that failure would result, rather than failure resulting after evidence has been tested. That is particularly so in a case such as this where, although at all times denying the existence of a de facto relationship, the respondent’s own evidence revealed matters which were not readily reconcilable with the employer/employee association asserted by him.

I certify that the preceding thirty four (34) paragraphs are a true copy of the Reasons for Judgment (Costs) of the Honourable Justice Coleman delivered on 23 May 2011.

Associate:

Date: 23.05.11