Cardus and Lavrick (No 2) - [2020] FamCA 1103

FAMILY COURT OF AUSTRALIA

CARDUS & LAVRICK (NO. 2)

[2020] FamCA 1103

FAMILY LAW – COSTS – Circumstances justifying order - Where mother seeks indemnity costs against father - Where father submits that he is impecunious and denies that his motives in the litigation were malicious or vexatious - Where father was wholly unsuccessful in the substantive proceeding and it was found by the Court that the institution and maintenance of the proceedings constituted an abuse of process – Where father fails to prove his claims of impecuniosity - Whether impecuniosity or incapacity to meet a costs order can, per se, be determinative – Where it is found that the father’s conduct throughout the proceedings and the fact that he was wholly unsuccessful justifies the making of a costs order against him - orders that the father pay the costs of the mother on an indemnity basis – Whether costs should be fixed in a specific amount – Orders made fixing costs in a specific amount.

Family Law Act 1975 (Cth) ss 64B(2)(g), 102QB(1)(a), 117(1), 117(2), 117(2A), 117(2A)(c), 117(2A)(e)

Family Law Rules 2004 (Cth) rr 19.18(1)(a), 19.34

Akhtar & Gaber (No. 2) [2018] FamCAFC 176

Baillieu v Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359

Baum & Lokare (No 2) [2019] FamCA 292

Colgate-Palmolive and Anor v Cussons Proprietary Limited (1993) 46 FCR 225

Cooper & Oakley (No. 2) [2012] FamCAFC 187

D & D (Costs) (No. 2) (2010) FLC 93-435

Danks & McCabe (2017) FLC 93-767

Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

Gerlach & Gerlach [2020] FamCA 841

Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23

Kohan and Kohan (1993) FLC 92-340

Limousin v Limousin (Costs) (2007) 38 Fam LR 478

Munday v Bowman (1997) FLC 92-784

Spencer and Spencer (No 3) [2020] FamCAFC 145

Stoian & Fiening [2014] FamCA 944

Stopford Malloy & Malloy and Anor (Costs) [2018] FamCAFC 6

Ugly Tribe Co. Pty Ltd v Sikola [2001] VSC 189

Yunghanns v Yunghanns (2000) FLC 93-029

Wilmer & Golding (No 2) (2017) 59 Fam LR 1

Wrenstead v Eades [2016] FLC 93-697

APPLICANT:

Mr Cardus

RESPONDENT:

Ms Lavrick

FILE NUMBER:

MLC

8313

2018

DATE DELIVERED:

21 December 2020

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

McEvoy J

HEARING DATE:

31 August 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Self-represented

SOLICITOR FOR THE APPLICANT:

Self-represented

COUNSEL FOR THE RESPONDENT:

Mr Carne

SOLICITOR FOR THE RESPONDENT:

Mills Oakley Lawyers

Orders

As soon as practicable an affidavit be filed on behalf of the mother deposing to the costs as itemised in the schedule which is Annexure A to the mother’s submissions filed 31 August 2020.
Subject to the mother’s compliance with order 1 hereof, pursuant to rule 19.18(1)(a) of the Family Law Rules 2004 the mother’s costs be fixed in the amount of $111,675.77.
The father is to pay to the wife the sum of $111,675.77 within ninety (90) days of the date on which an affidavit is filed in accordance with order 1 hereof.

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 Cardus & Lavrick 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).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8313 of 2018

MR CARDUS

Applicant

And

MS LAVRICK

Respondent

REASONS FOR JUDGMENT

The Respondent mother (“the mother”) seeks orders that the Applicant father (“the father”) pay her costs of and incidental to these proceedings on an indemnity basis following orders made by the Court on 17 August 2020.
The father’s application had sought shared parental responsibility, time with the child, that the mother be restrained from imposing any religious observance on the child, as well as certain other ancillary orders. The mother sought sole parental responsibility, and that the child have no contact with the father, as well as certain other orders, including the making of a vexatious proceedings order against the father.
The evidence was so strongly against the child having time with her father that orders were made for the mother to have sole parental responsibility, for the child to live with the mother, and for the child to have no contact with the father. There were findings that the institution and maintenance of these proceedings by the father was vexatious in the sense that it was an abuse of the process of the Federal Circuit Court of Australia and this Court because it was instituted and conducted primarily to harass and annoy the mother and to achieve a wrongful purpose. That wrongful or collateral purpose was to procure the cancellation of a Departure Prohibition Order (“DPO”) which the Child Support Agency (“CSA”) had imposed on the father by reason of his non-payment of a child support debt. Although the position was finely balanced, in the result a vexatious proceedings order was not made pursuant to s 102QB(1)(a) of the Family Law Act 1975 (“the Act”).
Nonetheless, having regard to the best interests of the child, and the finding that the institution and maintenance of the proceeding has been an abuse of process, it was ordered pursuant to s 64B(2)(g) of the Act and in the Court’s inherent jurisdiction that the father be restrained from making an application under Part VII of the Act in relation to the child without leave.
Although in her final submissions the mother had sought her costs of the proceedings on an indemnity basis, the father made no submissions on this matter in his final submissions. Accordingly, when judgment was delivered there were orders that the father file and serve written submissions within seven days on the question of costs, and the mother’s right to file a response to any submissions by the father was reserved.
On 24 August 2020 the father filed a set of submissions in the form of an affidavit. He requested that the Court not make any costs order against him. He denied that his motives in the litigation were malicious or vexatious. He sought to defend his conduct, and claimed that, in any event, his present financial circumstances were impecunious. The father also made various other claims, to which it is not presently necessary to descend.
The mother filed submissions in response on 31 August 2020 (“costs submissions”). She presses her application for an award of costs on an indemnity basis. The quantum of costs sought by the mother is said to be in the total sum of $111,675.77 (inclusive of GST and disbursements). It is to be noted that this figure is rather higher than the figure of $70,000 mentioned in the mother’s trial affidavit sworn 10 October 2019 and in her final submissions. This apparently reflects expenditure which has been incurred since the time of those earlier documents, noting that her affidavit was sworn prior to trial.
The mother annexed to her costs submissions an itemised schedule of those costs, the original costs letter from her solicitors to her dated 9 August 2018 enclosing the relevant costs agreement which she subsequently signed, and the costs update letter from her solicitors to her dated 9 December 2019. This material, and in particular the itemised schedule of costs, has not been the subject of an affidavit.
The mother submits that, primarily so as to avoid any further costs being incurred by her in having to liaise and deal with the father during the costs assessment process, the costs payable by the father should be ordered in a specific amount. She refers in this regard to the Court’s power to make such an order pursuant to rule 19.18(1)(a) of the Family Law Rules 2004.
The mother acknowledges that the starting point for any application for costs is s 117(1) of the Act, and the principle that each party should bear their own costs unless there are circumstances warranting an order for costs pursuant to s 117(2) and (2A) of the Act. She acknowledges also that costs orders are not about punishment. However in the present case she submits that there are clear and compelling circumstances to warrant an order for costs.
The mother’s submission is that it would be appropriate for the father to pay her costs of the proceeding on an indemnity basis because he has been wholly unsuccessful in the substantive proceeding (s 117(2A)(e) of the Act), and because by instituting and pursuing these proceedings he has engaged in conduct that was in all the circumstances vexatious, an abuse of process, and motivated by malice towards her rather than any genuine interest in obtaining substantive parenting orders with respect to the child (s 117(2A)(c) of the Act). It may be accepted that one factor alone in s 117(2A) may suffice to provide the foundation for a costs order: Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123, [41] (Kay, Warnick and Boland JJ).
The mother accepts that the circumstances justifying departure from costs on a scale basis should be of an exceptional kind: Kohan and Kohan (1993) FLC 92-340 at 79,614; Munday v Bowman (1997) FLC 92-784 (“Munday”); see also Yunghanns v Yunghanns (2000) FLC 93-029 at [30]; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435 at [26]-[28]. The mother submits, correctly, that the categories of circumstances warranting an order for costs on an indemnity basis are not closed. It may be observed, however, that one recognised category of case where it is appropriate to award indemnity costs is where the application or the proceedings have been an abuse of process: Akhtar & Gaber (No. 2) [2018] FamCAFC 176, [28] (Aldridge J, with whom Watts J and Ainslie-Wallace J agreed) (“Akhtar”); Baillieu v Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 (Powell J) (“Baillieu”); Ugly Tribe Co. Pty Ltd v Sikola [2001] VSC 189 at [12] (Harper J) (“Ugly Tribe”).
The mother submits in support of her application for costs on an indemnity basis that it would be appropriate for her to be indemnified for the entirety of these proceedings in circumstances where the Court has made the following clear findings:
a)“…that the institution and maintenance of these proceedings by the father has been vexatious in the sense that it has been an abuse of the process of the Federal Circuit Court and this Court because it was instituted and has been conducted primarily to harass and annoy the mother and to achieve a wrongful purpose…”;[1]
b)“[the father] impressed as being far more concerned to disparage and embarrass the mother and exaggerate his own parenting and other skills than as someone who was focused in any way on the best interests of his daughter.”; [2]
c)“[the Court] was left was the inescapable impression that the proceedings had become a game for the father, one which he was enjoying being able to play.”; [3]
d)“…[the father] has energetically pursued [court proceedings] since the DPO against him was put in place.”;[4]
e)“There is considerable evidence that the father’s institution of these proceedings is motivated not by a genuine desire to obtain orders that he have time with the child, but for the collateral and improper purpose of forcing the mother to accept a reduction in his CSA debt, and of subjecting her to ongoing litigation in relation to the child until she did so.”;[5]
f)“…the father has been motivated by malice in the commencement and conduct of these proceedings, and that his intention has been to punish the mother and retaliate against her, rather than any genuine concern for the child’s best interests.”;[6]
g)“…in all the circumstances the quality of the father’s vexatiousness is high.”;[7]
h)“The emotional toll which the proceedings have taken on the mother and the child, and the financial toll they have taken on the mother who is already burdened with the costs of the child’s care and upbringing, must be regarded as substantial.”[8]
[1] [2020] FamCA 579, [11].
[2] [2020] FamCA 579, [186].
[3] [2020] FamCA 579, [186].
[4] [2020] FamCA 579, [205].
[5] [2020] FamCA 579, [222].
[6] [2020] FamCA 579, [223].
[7] [2020] FamCA 579, [271].
[8] [2020] FamCA 579, [273].
Insofar as the father complains in his submissions that he is essentially impecunious, the mother submits that the father’s protestations about his financial position were not borne out by the evidence at trial and were ultimately expressly rejected by the Court: see especially at [303]. The mother contends that even if this were not the case, and the Court were to accept the father’s submissions as to his impecuniosity at their highest, it is well established that neither impecuniosity nor incapacity to meet a costs order can, per se, be determinative: Cooper & Oakley (No. 2) [2012] FamCAFC 187, [14] (May, Thackray & Murphy JJ).
The mother submits that given the vexatious and abusive manner in which the father has conducted these proceedings, any consideration of impecuniosity (even if it were to have been accepted at trial) ought to be afforded minimal weight. She points to the fact that she has incurred an enormous legal bill in defending these proceedings, funds which would have been far better applied to the child’s future. In this respect it is to be noted that the mother works as a primary school teacher and earns approximately $91,000 gross per annum. She receives no meaningful financial support from the father, and there has been a finding that the father has engaged in a wilful failure to meet his obligations with respect to the child.
Clearly, having regard to the terms of s 117(2A) of the Act, an applicant for costs must establish the circumstances in which a costs order would be justified. However, as McClelland DCJ observed in Baum & Lokare (No 2) [2019] FamCA 292 at [10], (citing Penfold v Penfold (1980) 144 CLR 311 at [315]), “it is not the case that a costs order can only be made in what has been described as a ‘clear case.’” See also, to similar effect, Wrenstead v Eades [2016] FLC 93-697 at [15] where the Full Court reiterated this position, noting that as long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the applicant needs to be establish in order to obtain an order for costs. As has been mentioned, the wife relies, in particular, on s 117(2A)(c) and (e) of the Act in support of her application for costs.
Insofar as an award of indemnity costs is concerned, it is well established that there are certain circumstances which might properly attract such an order. Some of these circumstances are essayed by Sheppard J in Colgate-Palmolive and Anor v Cussons Proprietary Limited (1993) 46 FCR 225 at 233 (“Colgate-Palmolive”). The approach adopted by his Honour in Colgate-Palmolive has been accepted and applied in many cases in this jurisdiction: Danks & McCabe (2017) FLC 93-767 at [8]; Munday at 84,660.
In the circumstances of this case, and having regard to the matters in s 117(2A)(c) and (e) of the Act, I consider that it would be appropriate for the husband to have an award of costs in his favour. As the mother has submitted, the father’s conduct in instituting and prosecuting the proceedings, and the fact that he has been wholly unsuccessful, compel this conclusion.
I also accept that, in the circumstances of this case, the abuse of process which the proceedings represent provide a proper basis for an award of indemnity costs: Akhtar; Baillieu; Ugly Tribe; see also the not unrelated principles relating to conduct in wilful disregard of known facts or clearly established law essayed by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
Insofar as the father contends that he should not have to pay costs because he is impecunious, even if this were to be a proper basis to refrain from making such an order, which it is not, I do not accept the father’s evidence in relation to these matters. The father’s evidence at trial on this subject was inconsistent and incomplete. The objective evidence, by contrast, is that he is a finance professional, that he owns a long-established company, and that in 2017 he started an online business. The father has been consistently employed, he has taken overseas holidays, and through a corporate entity he maintains and operates a hobby recreational vehicle. The father’s evidence in the affidavit that he has filed in opposition to the mother’s application for indemnity costs is similarly incomplete. It is no more than a serious of generalised assertions about his present situation, with no supporting material.
The question of whether, as the mother submits, her costs should be fixed rather than being assessed is a more complicated question to resolve. As has been mentioned, rule 19.18(1)(a) permits the Court to fix a specific amount for costs. Save to say that there should be no costs order against him, the husband does not engage with the question of whether, if costs were to be ordered, they should be fixed or assessed.
Rule 19.34 sets out the principles of assessment to be applied. It is plain that there would be an obvious benefit to both parties, in terms of achieving finality and avoiding further expense, delay, and inconvenience, if the costs ordered were in a fixed amount.
In Stoian & Fiening [2014] FamCA 944, [82]-[99] (“Stoian”) Kent J considered the question of whether costs should be fixed or assessed. He referred, in particular, to Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23 (Einstein J). Commencing at [9], Einstein J discussed the applicable principles as follows:
9.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) 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) 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…”

In Stoian, Kent J adopted Einstein J’s summary of the relevant principles, by reference to authority, as the principles that ought to be applied to rule 19.18(1)(a). In addressing the requirement to act judicially, Einstein J further observed, at [10]:
i.although the principles set forth above are helpful in providing guidance to the Court as to the manner in which the discretion to make a gross sum costs order is to be exercised, ultimately whether an approach is logical, fair and reasonable falls to be determined by reference to the particular case before the Court;
ii.as explained by Purchase LJ in Leary v Leary [1987] 1 WLR 72 at 76:
“The unlimited discretion given by Ord. 62, r. 9 must be exercised in a judicial manner. How the powers are to be used varies widely from case to case and each case must be considered on its own merits. It is easy to envisage cases where a judge could be said to have acted unjudicially, e.g. by clutching a figure out of the air without having any indication as to the estimated costs; receiving such an estimate without the details being made available to the other side; or refusing a request to hear submissions on such a schedule if the party against whom the order is to be made makes, on reasonable grounds, an application to be heard”;
iii.the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner; At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. …
Einstein J continued at [11]-[12]:
11.In the result it is not an arbitrary exercise of power for the Court to weigh up competing factors and make a determination, even if, as is often the case, the task cannot be undertaken in a mathematical or precise manner. As the Court of Appeal found in Norris v Blake (by his Tutor Porter) [No. 2] (1997) 41 NSWLR 49 mathematical weightings of potential outcomes in loss of chance cases might be unsustainable and reliance rather should be placed on more intuitive methods to determine a loss: at 71-73. Similarly, the courts are frequently required to estimate damages that are not capable of precise quantification and require a degree of approximation and even guess work [Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83, 138 and 153; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [37] – [38]].
12.The Court is no stranger to intuitive determinations, or determinations made without absolute precision, arrived at by acting judicially: cf Murray v Shillingsworth [2006] NSWCA 367 per Santow JA at [10]. It is misconceived to suggest that such determinations or approaches are arbitrary.
These principles have also been accepted in the Full Court of this Court: see Spencer and Spencer (No 3) [2020] FamCAFC 145, at [123] (Aldridge, Kent and Duncanson JJ); Stopford Malloy & Malloy and Anor (Costs) [2018] FamCAFC 6; Wilmer & Golding (No 2) (2017) 59 Fam LR 13. In light of the expression of the relevant principles in these cases it is necessary to consider whether the Court can arrive at an appropriate fixed sum on the materials available.
Whilst the mother’s detailed schedule of costs has not been the subject of an affidavit on the part of the mother’s solicitors, it may be assumed that this can easily be remedied.
The father has had the mother’s schedule of costs now for more than three months, and has not sought to dispute any aspect of it. I am, therefore, satisfied in all the circumstances that the father has had an adequate opportunity to make any submissions in opposition to the costs contained in this schedule, and that he has not done so. I observe, in any event, that it is not at all apparent what submissions the father might have made in opposition to the mother’s detailed and itemised schedule of costs. I have reviewed the schedule, and the costs the mother has incurred appear to me to be unremarkable in litigation of this kind which has extended for the length of time that it has. I am satisfied that the costs have been reasonably incurred, and indeed that they would not have been incurred at all if the father had not embarked upon the campaign of harassment that he has pursued against the mother in order to force her to accept a reduction in his CSA debt. In addition, I consider that if the father were to be given a further opportunity to make submissions in relation to the costs claimed by the mother he would use this opportunity to cause the mother to incur further costs. In the particular circumstances of this case I do not consider that the father should have the opportunity to vex and annoy the mother anymore. In short, the game the father has been playing must stop.
In these circumstances I am satisfied that the purpose of rule 19.18(1)(a) to avoid the expense, delay and aggravation involved in further litigation surrounding the assessment of costs in this case can and should be achieved by an order that the father pay the mother’s costs of and incidental to these proceedings on an indemnity basis fixed in a specific amount: see Stoian [95]-[99]; Gerlach & Gerlach [2020] FamCA 841, [136]-[139] (McClelland DCJ).
Subject to the requirement that an affidavit be filed deposing to the mother’s costs as itemised is the schedule which is Annexure A to her submissions, there will be orders that the father pay the mother’s costs in the sum of $111,675.77. Although the father has not sought that he be given an extended period to pay, given that he has been unrepresented it would be appropriate for him to be given some latitude in this respect. Accordingly the order of the Court will be that the father make the payment within 90 days of the filing of the affidavit deposing as to the mother’s costs.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McEvoy delivered on 21 December 2020.

Associate:

Date: 21 December 2020