Blatch & Blatch (No 4)
[2022] FedCFamC1F 578
•10 August 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Blatch & Blatch (No 4) [2022] FedCFamC1F 578
File number(s): SYC 1613 of 2021 Judgment of: SCHONELL J Date of judgment: 10 August 2022 Catchwords: FAMILY LAW – COSTS – Where the wife sought a costs order on an indemnity basis after orders were made for the issue of a recovery order – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where the wife’s application for a recovery order was only made following the husband’s unilateral act of retaining the children and breaching Court orders – Order for indemnity costs made. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Bant & Clayton (Costs) (2016) 56 FamLR 31; [2016] FamCAFC 35
Blatch & Blatch (No 3) [2022] FedCFamC1F 492
Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Dongahey & Dongahey (Costs) (2012) 47 FamLR 306; [2012] FamCA 231
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123; [2005] FamCA 158
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 36 Date of last submissions: 25 July 2022 Place: Sydney The Applicant: Did not participate Solicitor for the Respondent: Lander & Rogers ORDERS
SYC 1613 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR BLATCH
Applicant
AND: MS BLATCH
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
10 AUGUST 2022
THE COURT ORDERS THAT:
1.That within 28 days from the date of these orders, the applicant husband pay the respondent wife’s costs of and incidental to the Application in a Proceeding filed on 5 July 2022 and determined on 11 July 2022, on an indemnity basis, in the amount of $21,586.13.
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
SCHONELL J:
By Application in a Proceeding filed 25 July 2022, the respondent wife (“the wife”) seeks orders for payment of her costs on an indemnity basis and in the event the Court does not order costs on an indemnity basis then costs pursuant to the scale of costs set out in sch 3 to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). In both instances, the amount sought is in a specified sum.
The wife’s Application for Costs arises as a consequence of orders made by the Court on 11 July 2022, where the Court made orders for the issue of a Recovery Order save that the order lie in the Registry until 4.00 pm that day to enable the applicant husband (“the husband”) to return the children to the wife. Following the hearing, I made directions for the filing of documents and submissions in support of the wife’s then Application for Costs.
The wife relies upon the following documents:
(1)Application in a Proceeding (Recovery Order) filed 5 July 2022;
(2)Affidavit of wife filed 5 July 2022;
(3)Ex Tempore Reasons for Judgment delivered 11 July 2022;
(4)Application in a Proceeding filed 25 July 2022;
(5)Affidavit of wife filed 25 July 2022;
(6)Financial Statement of husband filed 11 November 2021;
(7)Financial Statement of wife filed 5 November 2021; and
(8)Written submissions as to costs filed 25 July 2022.
The husband did not comply with the directions for filing written submissions. I will presume the husband opposes the making of an order for costs.
The form of order that the wife seeks is as follows:
1. That within 28 days from the date of these Orders, the Applicant Father pay the Respondent Mother's costs of and incidental to the Application in a Proceeding filed on 5 July 2022 and determined by Justice Schonell on 11 July 2022, on an indemnity basis, in the amount of $21,586.13.
2. That in the alternative to Order 1, within 28 days from the date of these Orders, the Applicant Father pay the Respondent Mother's costs of and incidental to the Application in a Proceeding filed on 5 July 2022 and determined by Justice Schonell on 11 July 2022, pursuant to a scale of costs set out in Schedule 3 to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, in the amount of $9,736.05.
The background to the determination is contained in my judgment dated 11 July 2022 of Blatch & Blatch (No 3) [2022] FedCFamC1F 492.
I do not propose in these reasons to recite the various matters referenced in the judgment save to note that the application filed by the wife on 5 July 2022 arose as a consequence of a deliberate act by the husband not to return the children contrary to an order.
An Application for Costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth), which provides a general rule that each party to proceedings should bear their own costs.
Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).
In Penfold v Penfold (1980) 144 CLR 311 (“Penfold”), the plurality in the High Court determined that to make an order under s 117(2), the Court needs to make a finding of justifying circumstances as a preliminary prerequisite to the making of an order. Their Honours also observed that terms such as an exceptional case, special circumstances or a clear case are not necessary determiners of whether or not an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123, the Full Court observed:
41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs
Dealing now with the relative subsections in s 117(2A).
(a) the financial circumstances of each of the parties to the proceedings
It is clear that a disparity in the financial circumstances of the parties may justify an order for costs in favour of one party. Impecuniosity is not a basis of resistance to a costs order.
The wife submits that the husband’s Financial Statement identifies an income of $5,809 per week in contrast to her income of $2,956 per week. The wife also identifies that the husband is currently in arrears of child support of $31,114.
I further note the wife’s evidence that on 11 July 2022, the husband withdrew $100,000 from a loan secured against the former matrimonial home at Suburb K, and that the wife gives evidence that she thereafter withdrew a further $100,000 from the account at Suburb K.
I am satisfied that the husband’s financial circumstances are such as that he has the capacity to meet any order that I make by way of costs.
(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
It is not suggested that either party is in receipt of legal aid.
(c) the conduct of the parties to the proceedings in relation to the proceedings
The wife in her submission states the following:
1.3…
Furthermore, it is submitted that the Father took deliberate and calculated steps in failing to return the Children to Mother in accordance with the November Orders, by foreshadowing his intentions to do same if the Court did not make this matter a “priority”. This is evidenced by correspondence referred to by the Mother at paragraph 27(e) of her Affidavit filed on 5 July 2022 where the Father said in correspondence to the Court on 20 May 2022, inter alia: “if you don’t see urgency it only reinforces my view that I need to handle this matter myself. It is at a stage where I am being forced to hold the children and allow the mother to submit a recovery application.”
I accept the wife’s submission. The conduct of the husband by failing to return the children is conduct in my view that falls clearly within the circumstances contemplated by s 117(2A)(c).
In Dongahey & Dongahey (Costs) (2012) 47 FamLR 306, Murphy J in the context of a s 117 (2A)(c) in a costs application arising following a deliberate breach of court orders observed:
41.But, the integrity of this system depends on compliance with the Orders made by the Court. This is no more or less true for parenting proceedings than it is for property proceedings, or in general litigation. The rule of law central to the healthy functioning of a democracy has no less application in this Court or in family law more generally.
42.The mother’s flagrant disregard for the Orders made by this Court and the subsequent chronology of events is central to the father’s application for costs. …
His Honour’s observations are equally apposite to these proceedings.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
I am satisfied that the wife’s application arose entirely as a consequence of a deliberate and considered failure by the husband to comply with a court order.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 FamLR 31).
Thus, to the extent to which the wife contends that the husband has been wholly unsuccessful in resisting the wife’s application, while in and of itself it is correct, the subsection itself refers to being wholly unsuccessful in the proceedings. I note the wife contends that that is a strong factor that favours the granting of costs. In my view it is but one aspect of the consideration.
(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
Not relevant.
(g) any other matter the Court considers relevant
In my judgment of Blatch & Blatch (No 3) [2022] FedCFamC1F 492, I record the following which I regard as apposite to an order for costs:
43. The father has, by his conduct, not complied with orders and removed the children from their mother’s care. I am satisfied that without Court intervention and orders, the father will only return the children to their mother at a time of his choosing. That is not in their best interests.
44. Of considerable focus in interim proceedings is a consideration of the factors identified in s 60CC(3)(f) and s 60CC(3)(i), calling into focus the insight and capacity of the parents to place the child’s needs above their own, the attitudes of the parents to the children, and the responsibilities of parenthood. I have significant concerns about the insights of the father in having breached the Courts orders. I note that I have earlier referred to Campton J having had cause to reflect upon the attitude of the father in the past.
45. The father in his Case Outline says, “I have significant insight into the needs of the children and understand whether the effect of this week is necessary or damaging. The latter it is not” (at page 5). At a final hearing, the Court will no doubt reflect further upon the consequences of the father’s unilateral actions in not complying with orders and whether he has the insight, he professes.
46. In the event that the father wishes to vary the existing orders, then there is a clear and well-defined process by which that should be carried out, namely, the filing by him of an application to deal with what he contends are changed circumstances arising, he would contend, out of the recommendations of the single expert. I do not propose to express any view about the merits of such application but that is the procedure to be adopted should a party wish to vary orders.
47. It is not for any party to seek to take the law into their own hands and to fail to comply with court orders.
The wife’s application was the only way within the limits of the law that she had to return the children to her care. It arose solely in response to the unilateral conduct of the husband in not complying with a court order. In all the circumstances, having regard to the husband’s quite brazen conduct in failing to comply with court orders, I am satisfied that this is an appropriate case to depart from the general rule that each party to the proceedings should bear their own costs. I propose, therefore, to make an order for costs against the husband.
The wife sought an order that the husband pay her costs on an indemnity basis. The Rules and jurisprudence require production of the costs agreement which the wife is bound by and I note that copies of those agreements have been attached to the wife’s affidavit.
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
Justice Sheppard in Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248 observed as follows at 256–257:
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client 88as and when the justice of the case might so require’’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo:88the categories in which the discretion may be exercised are not closed’’. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724(Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for 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. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
The category of cases in which a court may make an indemnity costs order are not closed and are not limited to those identified by Shepard J. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471, the Full Court said:
… It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some ''particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis'': per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
In Penfold, Murphy J in the High Court held at 75,055:
Presentation of a false statement of financial circumstances, which puts the other party to the trouble and expense of disproving it, is a circumstance which justifies an order for costs. Courts should regard such circumstances which tend to undermine the integrity of proceedings with great concern, and should do everything in their power to determine who is responsible in order to maintain that integrity.
His Honour’s observations, albeit within the context of an allegation of non-disclosure are apposite to the particular and unique circumstances in this case and the wife’s application for indemnity costs. It is not for a party to take the law into their own hands and to breach a court order because they are not happy with the way or the speed with which the proceedings are being conducted. Doing so undermines the very processes of the law.
I recognise that an order for indemnity costs is both a departure from the position that each party should pay their own costs as well as a departure from an order for party/party costs. I am satisfied that the wife has placed before me the terms of the costs agreements and what the costs are in accordance with them and what the costs are at scale. I am satisfied that the husband’s financial position is such that he can meet an order for indemnity costs.
I am satisfied that the facts and circumstances of this case involving a deliberate, considered and continuing breach of orders at the time of the hearing warrants the making of an order for indemnity costs in the sum as sought by the wife.
Accordingly, I make Order 1 as sought by the wife in her Application in a Proceeding filed 25 July 2022.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 10 August 2022
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