Blatch & Blatch (No 2)
[2022] FedCFamC1F 41
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Blatch & Blatch (No 2) [2022] FedCFamC1F 41
File number(s): SYC 1613 of 2021 Judgment of: CAMPTON J Date of judgment: 8 February 2022 Catchwords: FAMILY LAW – COSTS – Where both parties seek costs of determined interim applications and opposes the costs claim of the other – Where the mother seeks orders that the father pay her costs of and incidental to the hearing of her interim financial and child support enforcement application on an indemnity basis – Where an order for indemnity costs in a fixed sum is made in favour of the mother – Where the father seeks orders that the mother pay his costs in the interim parenting proceedings including by way of review and in an amount representing the difference in costs of potential single experts – Where there is otherwise insufficient justification to depart from the usual rule that each party bears their own costs of the interim parenting proceedings including by way of review – Father’s application dismissed. Legislation: Child Support (Registration and Collection) Act 1988 (Cth), s 113A
Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia ( Family Law) Rules 2021 (Cth) r 1.04 10.13, 12.08, 12.17
Cases cited: Anison & Anison [2019] FLC 93-908; [2019] FamCAFC 108
Atkins & Hunt [2017] FamCAFC 131
Collins & Collins (1985) FLC 91-603
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Idoport Pty Limited v National Australia Bank Limited & Ors, Idoport Pty Limited v Donald Robert Argus [2007] NSWSC 23
Kohan & Kohan (1993) FLC 92-340
Luadaka v Luadaka (1998) FLC 92-830; [1998] FamCA 1520
Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920; [2019] FamCAFC 186
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Phillips & Hansford (2020) FLC 93-941; [2020] FamCAFC 28
Division: Division 1 First Instance Number of paragraphs: 67 Date of hearing: 28 January 2022 Place: Sydney Counsel for the Applicant: Mr O’Reilly Solicitor for the Applicant: Landers & Rogers Counsel for the Respondent: Litigant in person ORDERS
SYC 1613 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BLATCH
Applicant
AND: MR BLATCH
Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
8 FEBRUARY 2022
THE COURT ORDERS THAT:
1.Within 28 days of these orders the father pay the mother’s costs fixed in the sum of $20,000.
2.The Application in a Proceeding of the mother as to costs filed 20 December 2021 and the Response to an Application in a Proceeding of the father as to costs filed 26 January 2022 otherwise be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Blatch & Blatch has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
On 8 March 2021 the father initiated proceedings seeking orders regulating the parenting of the children, Y born in 2021 and X born in 2010 (“the children”). On 9 April 2021 the mother filed a Response to the father’s Initiating Application seeking different interim orders as to parenting and orders of an interim financial character including by way of periodic and non-periodic child support departure.
Interim parenting orders were made on a defended basis by a senior registrar on 21 April 2021 that in summary provided for the children to live with the mother and for a course of family therapy, and after its completion, for the children to spend reportable supervised time with the father for three hours each alternate Sunday. Other orders were made for the father to undergo random blood tests to identify the level of carbohydrate-deficient transferrin (“CDT testing”) in his blood. Consent orders were made restraining the father from consuming alcohol 12 hours prior to and during his time with the children and from him entering the boundaries of the maternal grandparent’s residence at changeover, such residence being occupied by the mother and the children.
The father filed an Application in a Case (as it was then) on 4 May 2021 to review the exercise of delegated power of the senior registrar in making the orders on 21 April 2021. The father did not apply for a stay of the senior registrar’s orders pending determination of the review.
The mother filed an Amended Response to an Initiating Application on 12 May 2021 seeking financial orders by way of interim property settlement and/or costs, interim periodic and non-periodic child support departure disclosure, to facilitate the obtaining of single expert valuation evidence and that she be appointed trustee of the sale of the parties’ Suburb K property to facilitate access to funds. She further sought relief pursuant to s 113A of the Child Support (Registration and Collection) Act 1988 (Cth) to enforce against the father payment of outstanding arrears of periodic child support and consequential orders in the event the father failed to pay the amount of child support arrears by way of sale of the Suburb K property he then occupied.
The father opposed all of the interim financial and child support enforcement relief as sought by the mother, seeking that it be dismissed in its entirety.
The father’s Application for Review of the parenting orders made by the senior registrar, the mother’s interim financial relief and her relief by way of enforcement of child support arrears were consolidated in a single hearing event listed before me on 12 November 2021.
In the shadow of the hearing on 12 November 2021 the father provided a further quantity of disclosure documents and belatedly facilitated the preparation of expert evidence ordered by a prior direction or as requested of him. The mother withdrew some of her articulated relief as sought on these subject matters.
At the start of the hearing the mother withdrew her interim relief for periodic and non-periodic child support departure and for the father to undertake a psychological assessment.
On 30 November 2021, orders were made in summary in the following terms:
(a)That all existing interim parenting orders in respect to the children be discharged;
(b)That the children live with the mother;
(c)That the children spend time with the father on a graduated increasing basis, starting with a period of four hours each alternate Sunday and increasing to a full day each alternate Sunday, subject to some further but limited supervision, dependant on the father’s CDT testing results, with a potential to progress to unsupervised time should his results record a return of less than 2.1 per cent CDT on three consecutive tests.
(d)Restraining the father from consuming alcohol 12 hours prior to, and during, the children spending time with him, and restraining him from entering the boundaries of the maternal grandparent’s home.
(e)Restraining the parents from exposing the children to family violence or threats, physically disciplining the children and denigrating one another in the presence or hearing of the children or permitting members of the family denigrating the other parent in the presence of the children, conveyancing messages through the children or discussing the proceedings with the children;
(f)Requiring the parents to complete a parenting after separation program;
(g)Appointing Dr J as the single parenting expert and for the parties to pay the cost of that expert report in equal shares;
(h)By consent, for the parties to attend a COMP mediation process facilitated by Legal Aid;
(i)Requiring the father to pay the mother the sum of $200,000 by way of interim property settlement enabling the facilitation of that payment by way of drawing $200,000 on the second mortgage secured on the Suburb K Property with the father meeting the costs in respect of the mortgage repayments and outgoings;
(j)Providing for the sale of the Suburb K Property in the event the interim property payment was not made;
(k)Declaring the father was in arrears of periodic child support in the sum of $36,743.54 as at 1 November 2021;
(l)Requiring the father to pay the outstanding sum of child support within 42 days and in the event he failed or neglected to do so, ordering a sale of the Suburb K Property;
(m)Requiring the father to disclose specific documents;
(n)Dismissing all outstanding interim applications and responses thereto save as to costs.
On 21 December 2021 the mother filed an Application in a Proceeding seeking orders that:
(a)Within 28 days the father pay the mother’s costs of and incidental to the interim financial application heard on 12 November 2021 on an indemnity basis, in the amount of $31,546.00.
(b)In the alternative to Order 1 above, within 28 days the father pay the mother's costs of and incidental to the interim financial application heard on 12 November 2021 pursuant to scale of costs pursuant to schedule 3 of the Federal Circuit and Family Court of Australia ( Family Law) Rules 2021 (Cth) (“the Rules”), in the amount of $19,528.00.
By way of the mother’s Case Outline document, she additionally sought an order that any costs order in her favour be funded by orders mandating that the father further draw down on the second mortgage secured upon the Suburb K Property be categorised as a partial property adjustment made in his favour. During the course of submissions she withdrew this additional relief.
On 26 January 2022 the father filed a Response to an Application in a Proceeding seeking orders that:
(a)Within 28 days the mother pay the father's costs of and incidental to the interim parenting application heard on 21 April 2021, 13 May 2021 and 12 November 2021;
(b)That the sum payable be in accordance with the costs disclosure submitted on the afternoon following the review hearing on the 12 November 2021;
(c)For costs to be payable by Landers Rogers and the mother, jointly and/or severally;
(d)That the difference in costs between Dr CC and Dr J for a single expert report be paid by the mother, with the balance paid equally between the parties.
By way of the father’s Case Outline document, the father identified that he sought his costs orders on an indemnity basis and the alternative on a scale basis. The father identified that the costs sought were quantified in the sum recorded in his cost notice filed for the purpose of the hearing 30 November 2021, being Exhibit 7, recording the total costs paid and unpaid as at
11 November 2021 of $103,560.15. This quantum included all of the father’s costs to that date, including his costs of the interim financial and child support enforcement portions of the proceedings. In the alternative the father sought costs on a “scale basis” but did not specify the quantum claimed.
The father additionally sought as identified in his Case Outline a discharge of the Order made on 30 November 2021 requiring him to undertake CDT testing. That additional relief was not pursued at the hearing. During the course of submissions the father amended with leave and withdrew his relief seeking orders as to any costs being payable by Landers & Rogers
Each of the mother and the father oppose and resist the relief as to costs sought by the other.
These reasons for judgment assume familiarity with the primary judgment Blatch & Blatch [2021] FedCFamC1F 219 delivered on 30 November 2021.
The mother relied on:
(a)Reasons for judgment delivered 30 November 2021;
(b)Application in a Proceeding filed 20 December 2021;
(c)Affidavit of the mother filed 20 December 2021;
(d)Financial Statement of the mother filed 5 November 2021;
(e)Financial statement of the father filed 11 November 2021;
(f)Written submissions and Case Outline document filed 20 December 2021, and marked as Exhibit W1 for the purpose of the costs hearing.
The father relied on:
(a)Reasons for judgment delivered 30 November 2021;
(b)Notes from family therapy filed with the Court registry;
(c)Response to an Application in a Proceeding filed 26 January 2022;
(d)Affidavit of the father filed 26 January 2022;
(e)Summary of Argument and Case Outline filed 28 January 2022, and marked as Exhibit H1 for the purpose of the costs hearing.
The notes of the family therapist Ms R had been produced on subpoena. Neither party had a copy of the notes. The father did not tender them in the costs hearing, nor make any material submission as to their relevance or content.
THE LAW – CONCEPTS AND PRINCIPLES
The relevant principles with respect to costs are well settled, and are set out in detail in the Full Court decision of Atkins & Hunt [2017] FamCAFC 131.
Whilst the default position established by s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) is that each party should bear their own costs, s 117(2) allows a court to make such costs order as it considers just if there are circumstances which justify doing so.
It is not necessary to establish extraordinary or exceptional circumstances, however, there must be circumstances which at the absolute discretion of the Court justify a costs order. The High Court made it clear in Penfold v Penfold (1980) 144 CLR 311 that s 117(2) of the Act requires a finding of justifying circumstances before any costs order can be made.
In considering what costs order (if any) should be made and in what form the Court is required to have regard to the matters set out in s 117(2A) of the Act, so far as they are relevant. Those matters are as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(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 to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(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)such other matters as the Court considers relevant.
It is well settled that no one factor has priority under s 117(2A), nor must more than one factor be satisfied; any one factor maybe sufficient. There may be a dominant or outstanding feature that makes an order for costs appropriate; thus although any one factor may be sufficient, no one factor is essential.
In Collins & Collins (1985) FLC 91-603 the Full Court described the discretion conferred by s 117 of the Act as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way. In Luadaka v Luadaka (1998) FLC 92-830 the Full Court made it clear that it is unnecessary to spell out detailed reasons for the decisions in cost matters.
Rule 12.08 of the Rules provides that legal costs incurred in proceedings must be fairly, reasonably and proportionally incurred and must be fair, reasonable and proportionate in amount in the circumstances of the proceedings. It includes considerations as to parties complying with relevant rules and orders of the Court and acting reasonably in raising pursuing or contesting particular allegations or issues in the proceedings. It requires litigants to make reasonable efforts to resolve disputes by way of negotiation or other methods.
As to the method of the calculation of costs r 12.17(1) provides:
(1) The court may order that a party is entitled to costs:
(a)of a specific amount; or
(b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
In determining the calculation of costs, r 12.17(3) permits the Court to take into account some of the matters identified in r 12.08.
Rule 1.04 is also relevant to determinations as to costs. It mandates that the overarching purpose of the Rules is to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible, and that parties to family law proceedings must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
The mother’s case
The mother submitted that the justifying circumstances for an award of costs of the interim financial application are:
(a)The disparity in the financial circumstances of each of the parties in that the father’s income, property and resources are substantially superior to that of the mother; and
(b)The conduct of the father in failing to comply with his disclosure obligations pursuant to the Rules, or being tardy in compliance with those obligations; and
(c)The father failing to comply with or to facilitate the Court’s directions for the obtaining of single expert valuation evidence; and
(d)The father being wholly unsuccessful in opposing her interim financial relief as sought in her Amended Response filed on 12 May 2021; and
(e)Additional relevant considerations being:
(i)The father’s failure to continue to pay periodic child support subsequent to the determination made 30 November 2021; and
(ii)That the father knew or ought to have known that he had no chance of success in seeking a blanket dismissal of her application for interim financial relief and enforcement of child support arrears.
As to her resisting the father’s application for costs, the mother submitted that the parenting orders made on the review had “striking similarities to the senior judicial registrar’s orders”. She further submitted that the father was “wholly unsuccessful” on his Application for Review and that the father would not accept responsibility for his own conduct, preferring to blame others for the consequences of his actions. It was submitted that his overt criticism of the mother’s solicitors was absent foundation.
The father’s case
The father submitted that the justifying circumstances for costs of the interim parenting proceedings heard on 21 April 2021, 13 May 2021 and the review on 12 November 2021 are grounded from the mother’s conduct in the parenting proceedings and other matters considered to be relevant, including;
(a)That the mother and/or her solicitors made allegations knowing them to be false and deliberately attempted to cause loss of time for the Court and the father; and
(b)That her financial application commenced with disregard of prior offers made by the father and her affidavits mislead the Court by ignoring the father’s disclosure provided on 12 May 2021;
(c)That proceedings had been maintained for an ulterior motive, being to deny the children their right to a meaningful relationship with both parents and for that purpose the mother used the children as pawns to increase child support payments and enhance property settlement.
The thrust of the father’s submissions was that the mother ought to be dissuaded from using the children as a weapon in a litigious war of attrition and wasting the Court’s time. He said that the mother was disingenuous in seeking any restrictions or conditions on the terms of him spending time with the children.
As to the father resisting the mother’s application for costs, he submitted that:
(a)The financial circumstances of the mother had greatly improved in that she now had the benefit of the partial property distribution of $200,000, and would soon have additional funds upon his payment of the outstanding child support arrears, which were in the sum of $36,743.54 that was due as at 1 November 2021. It was agreed between the parties the father could source those funds to pay the arrears by drawing down the mortgage secured on the Suburb K Property, and that such drawdown would be characterised as a partial property order in his favour; and
(b)His income in the 2021 financial year would be less than in the 2020 financial year due to the impact of the COVID-19 pandemic. His 2021 financial year tax returns had not yet been completed; and
(c)The dynamic nature of his corporate financial reporting of his interests by way of auditors in conjunction with a joint business partner had impacted upon his capacity to provide documents and information; and
(d)The mother could have received the child support arrears if she agreed to accept an income distribution from a trust he controlled; and
(e)The mother wasted resources by way of costs in refusing to meaningfully negotiate with him since May 2018; and
(f)He made several written offers to the mother by way of final property adjustment. The mother’s failure to accept his offers had prejudiced the parties when cast against the recent significant shifts in the “Sydney property landscape”; and
(g)He did not see any utility in paying significant fees for real property or his corporate enterprises to be valued “today, only to have both again when all current information is audited”; and
(h)The mother’s position in requiring CDT testing, family therapy and supervision was grounded from her intent to seek a financial forensic advantage.
The father gave some other explanations for his delays in facilitating the instructions to obtain single expert valuation opinions and meeting their costs. He was critical of disclosure being sought by the mother on what he described as “a drip-feed” basis.
THE RELEVANT S 117(2A) CONSIDERATIONS AS IDENTIFIED BY THE PARTIES
(a) The financial circumstance of each of the parties
The assets and liabilities of the parents are identified in paragraph 111 of the primary reasons for judgment delivered on 30 November 2021 as adjusted by the orders made therein. The mother now has the $200,000 interim property adjustment. $307,000 remains available under the drawdown on the home mortgage. After implementation of the consent arrangement to fund the child support arrears, $270,256 will be available under the drawdown. The father’s income as recorded in his Financial Statement is not less than $350,000 per annum. The mother’s income as recorded in her Financial Statement is in the range of $137,709 per annum.
The father’s income, property and resources are superior to those of the mother. This factor supports a costs order in favour of the mother and detracts from an order in favour of the father.
(c) The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters
As recorded in the reasons of 30 November 2021, the scope of evidence heard in the parenting review had significantly enlarged from that before the senior registrar on 21 April 2021. This included:
(a)The parties had undertaken four sessions of family therapy with Ms R that were completed by 24 June 2021;
(b)Some CDT testing as ordered had been undertaken and results disclosed. Others had not;
(c)An Independent Children's Lawyer ("the Independent Children's Lawyer") had been engaged in the proceedings;
(d)The father had commenced spending supervised time with the children from 4 July 2021, with 11 periods of supervised time occurring up to 7 November 2021. Up to the date of the hearing on 21 April 2021, the father had spent only sporadic and restricted time with the children over the prior two years; and
(e)Significantly each party and the Independent Children’s Lawyer on the hearing of the review sought to discharge all of the current interim parenting orders. Each agreed that an interim order should be made that the children live with the mother. Each party sought differing regimes regulating the terms of time spent by the father with the children and the conditions of that time.
Each of the above mitigates against the making of a costs order as to the parenting proceedings and review as sought by the father. The evidence does not support a finding as prosecuted by the father to the effect that the mother has made allegations in the parenting proceedings knowing them to be false. I am unable to safely find that she has misled the Court by ignoring a number of disclosures provided by the father in May of 2021. The reasons for the primary judgment record the orders made to ensure the continuation of a meaningful relationship between the children and the father in terms that best promote their interests.
The reasons record the father’s continuing and longstanding disclosure failures throughout these proceedings. They include his failure to disclose, or significantly delayed disclosure of, the management accounts and published financial statements for the company in which he has an interest, his delayed provision of his CDT testing results, and his non-disclosure of the source and quantum of his legal fees paid in defending the criminal proceedings brought against him. The father’s conduct in respect of his obligations necessitated multiple requests by the mother and the making of further orders by the Court compelling disclosure.
As to the dispute of the identity of the single parenting expert, the father’s application to appoint Ms R was misconceived as recorded in paragraphs 24 to 29 of the judgment delivered on 30 November 2021. The mother was successful and the father unsuccessful on this topic.
During the course of the costs hearing on 12 November 2021, it emerged that the father’s agitation for Dr CC to be appointed as the single parenting expert occurred at or about the listing on 12 May 2021. The father did not propose Dr CC during the course of the hearing on 12 November 2021. His prayer for costs grounded from this circumstance fails at this point. Additionally, there was no evidence before the Court as to the costs of Dr CC, being the alternate expert to Dr J, nor as to the costs differential between Dr CC and Dr J.
These factors on balance slightly weigh in favour of the costs order as to the interim financial application sought by the mother.
(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
The father’s explanations for failing to comply with the orders of the Court to facilitate the appointment of single valuation experts, providing instructions to those experts and meeting those costs, were both absent merit and contrary to the overarching purpose identified in r 1.04 of the Rules. The position he took was unreasonable and compounded the costs and delay in the litigation. It ought not to be endorsed.
This factor gives weight to an order for costs in the mother’s favour.
Section 1172A(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The mother initially submitted that she was wholly successful in defending the parenting review agitated by the father. She later conceded that this submission could not be maintained, especially in circumstances where the review was allowed, albeit by consent. I reject the mother’s contention. The orders made in the primary judgment were significantly different to those made by the senior judicial registrar.
The reality was that the parenting review was a further interim hearing, with the Court considering a raft of additional evidence from circumstances that had occurred over the six months that had elapsed since the orders of 12 April 2021. Neither parent was wholly successful or unsuccessful in the further interim parenting determination. This factor is neutral.
The mother submitted that she was wholly successful in the interim financial relief she prosecuted. The strength of this submission was eroded during the course of the hearing. She did not prosecute her relief for interim periodic child support departure, nor was she successful in orders that she be appointed trustee for sale of the Suburb K Property in default.
There is some attraction to her contention that she was wholly successful in her application for interim property relief and enforcement of child support arrears, and that the father was wholly unsuccessful in relation to each prayer. That said, in Anison & Anison [2019] FLC 93-908 the Full Court said as to s 117(2A)(e):
37.It is well settled that paragraph (e) refers to a situation where proceedings as a whole have been unsuccessful. For example, where an application without merit has been dismissed. In the oft-cited authority in this area of Robinson and Higginbotham earlier referred to, Nygh J (with whom Simpson & Smithers JJ agreed) said:
Her Honour then makes a reference to the question of which party was wholly successful but, of course, as counsel for the mother rightly submitted, paragraph (e) deals with a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed.
It is not the case that the father was not wholly unsuccessful in relation to the proceedings. He was unsuccessful in opposing the mother’s primary relief sought for an interim property distribution in her favour, and for the enforcement of child support arrears. He was successful in achieving the mother’s withdrawal of her application for interim periodic child support departure, and successfully resisted the mother being appointed trustee for the sale of the Suburb K Property. I will take these matters into account by way of s 117(2A)(g).
Section 1172A(g) such other matters as the court considers relevant
When counsel for the mother submitted that the father’s case in opposing her claims for interim property and child support enforcement of arrears was “doomed to fail”, he was alluding to the principle that “the [party], properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at [401]).
The father was represented by experienced counsel and solicitors. He knew or ought to have known that the mother had very significant prospects of success in obtaining the interim property adjustment she sought.
It was imprudent of the father not to concede the mother’s claim for interim property adjustment when he received her Amended Response. It was necessary for her to obtain the orders she sought by way of a defended hearing event. The father at all material times had the capacity to fund an interim property distribution to the mother from the mortgage drawdown. This is a weighty consideration grounding an order for costs in favour of the mother on this subject matter. The flavour of the father’s conduct was that he adopted a blinkered and uncompromising position in the litigation subsequent to the judgment and orders of 12 April 2021.
Additionally he knew or ought to have known that he had no defence to the mother’s child support arrears enforcement claim. He did not proffer any material foundation to resist this enforcement. Such enforcement would not have been necessary if the father complied with his statutory obligation to periodically support his children. These extra enforcement costs ought not to have been incurred, nor should the mother be “out of pocket” in enforcing this obligation of the father.
The father’s approach to the controversies of the mother’s interim property and child support enforcement applications was an affront to his responsibilities as a litigant to comply with r 1.04 and r 12.08 of the Rules. In my view, the position he took echoed a cavalier disregard for a position of being reasonable and proportionate, and justifies an order for costs in favour of the mother. The superior financial position of the father, coupled with his approach to the litigation, has emboldened him to proceed without regard to the legal expenses he would incur or the risk that he might be ordered to pay the mother’s legal expenses of the interim property and child support enforcement relief.
CONCLUSION AND QUALIFICATION
The reality was that the parenting matter subject to review required revisiting by the Court for the reasons identified herein. It was beyond the capacity of the parents to settle the parenting issues without the Court’s intervention. I am not satisfied that there are circumstances justifying an order for costs as sought by the father, and accordingly, his Response to an Application in a Proceeding for costs is to be dismissed and each party will bear their own costs of the interim parenting proceedings, including those of the review.
The father has put the mother to significant legal expense in the context of the case as to interim property settlement and enforcement of child support arrears. Those issues ought to never have been the subject of a defended hearing. His failures to facilitate the parties obtaining single property expert evidence generated further unnecessary costs. An order for costs in favour of the mother in respect of a portion of the interim financial proceedings, being as to interim property settlement and enforcement of child support arrears, is just in the circumstances so as to depart from the usual rule that each party bears their own costs.
The mother sought that costs be paid on an indemnity basis and in the alternative on a scale basis.
It is well-settled that when costs are ordered by this Court, such costs are payable on a party and party basis. It has been held that the Court should not lightly depart from the ordinary rule (Kohan & Kohan (1993) FLC 92-340). It has also been accepted that in proceedings under the Act, where the usual rule is that each party shall bear his or her own costs, an order for indemnity costs is even more exceptional than in jurisdictions where the usual rule is that costs follow the event (See Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920 at [7]).
In relation to an award of indemnity costs, the recent Full Court decision of Phillips & Hansford [2020] FamCAFC 28, helpfully summarises the position as follows:
35.Indemnity cost orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
36.Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).
37.In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at [5].
As recorded earlier in these reasons, the dicta recorded in paragraph [37] of the Full Court’s judgment has direct application to the circumstances of this case as to interim property and recovery of child support arrears. On these prayers, the exceptional nature of the case identified in the authorities, make it just to make an order for indemnity costs in relation to the determination of those issues.
The difference between the mother’s scale costs and indemnity costs is $12,018.
The costs agreements entered into by the mother with her solicitors are exhibited to her affidavit with a schedule particularising each item of costs identified on an indemnity basis and a scale basis, claimed in the interim financial claim. Counsel for the mother conceded that the costs agreements with her Senior Counsel for the hearing on 12 November 2021 did not form part of her evidence. The costs of her Senior Counsel included in part for the parenting dispute on review as did the costs of her solicitor instructing on that day. These matters have the import of reducing the quantum of costs payable on an indemnity basis.
FIXING COSTS
The mother’s primary position is that, in the event she is successful in obtaining an order for costs, the Court ought to fix the amount of those costs. The rules as set out above permit the Court to adopt such course, although it is accepted that it is entirely a matter of discretion. The father opposed this course, submitting that if a costs order is made against him, costs ought to be the subject of assessment.
Some guidance as to the appropriate matters to be considered can be found in the judgment of Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors, Idoport Pty Limited v Donald Robert Argus [2007] NSWSC 23 at [9] where his Honour considered that:
1.For present purposes it seems convenient to commence with the recitation of the principles which inform the exercise of the discretion:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119, Von Doussa J page 265: [following Purchase J in Leary v Leary [1987] 1 All ER 261 who described the purpose of the rule allowing the fixing of a gross sum as “the avoidance of expense, delay and aggravation involved in protracted litigation arising out of taxation” (All ER page 265)];
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16];
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738, per Giles JA at [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith [2005] FCA 228; (2005) 215 ALR 788];
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrison v Schipp at [22];
v.the gross sum “can only be fixed broadly having regard to the information before the Court,”: Beach Petroleum at 124;
[in Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] it was said that the evidence enables fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that….is what the rule contemplates.”]
vi. nevertheless, the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 at 120;
vii. in terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL & Anor v Johnson & Ors (No. 2) (1995) 57 FCR 119, put the matter as follows, at [16]:
“On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimates submitted to the Court: Leary v Leary at 265….”
I have considered the amounts claimed by way of the mother’s costs and the basis for their calculation subject to the qualifications identified earlier in these reasons. I am satisfied taking into account the factors identified in Idoport that it is appropriate to fix costs as there is sufficient evidence to do so grounded from the basis of their calculation so as to make an assessment and order. The parties have been in litigation since only early 2021, but in that short time quickly blown out the scope of their proceedings and associated costs, having been involved in various procedural and interim hearings. I am mindful that the parties are continuing to engage in the litigation pathway. It is inevitable that the process of assessment of costs will in itself involve considerable further costs and delay. I am satisfied that this is the case in which it is appropriate to fix an amount of indemnity costs ordered to be paid and that all things considered an amount of $20,000 is an appropriate sum for costs.
On that basis I make the orders as set out in these reasons.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 8 February 2022
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