CARTER & GREENHILL

[2019] FamCA 373

FAMILY COURT OF AUSTRALIA

CARTER & GREENHILL [2019] FamCA 373

FAMILY LAW – COSTS – Where the father appealed parenting orders and brought an Application in a case seeking a stay of those orders – Appeal was withdrawn by father – S 117(2A) considerations – Where the mother brought an Application for Costs in the principal proceedings – Order application be dismissed – Where the mother brought an Application for Costs of the father’s stay on an indemnity basis – Order for party/party costs – Where the Independent Children’s Lawyer brought an Application for Costs of the father’s stay and in the principal proceedings – Order that the father pay the Independent Children’s Lawyer’s costs in relation to his application for a stay – Order that the parties each pay 50 per cent of the Independent Children’s Lawyer’s costs of the trial.

Family Law Act 1975 (Cth) ss 117, 118
Family Law Rules 2004 (Cth) r 19.08, 19.18

Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225
Kohan & Kohan (1993) FLC 92-340
Muldoon & Carlyle (2012) FLC 93-513
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra).
Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433
De Roma & De Roma [2013] FamCA 566
Gahen & Gahen (No 2) [2013] FamCA 936
Reeves & Grinter [2016] FamCA 63
Pallas & Pallas (No 2) [2014] FamCA 1109
Firentes & Teung [2014] FamCA 1046
Gahen & Gahen (No 2) [2013] FamCA 936
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158

APPLICANT: Mr Carter

RESPONDENT: Ms Greenhill

FILE NUMBER: SYC 8235 of 2015

DATE DELIVERED: 7 June 2019

PLACE DELIVERED: Cairns

PLACE HEARD: By way of written submissions

JUDGMENT OF: Tree J

HEARING DATE: Last submission filed 27 November 2018

REPRESENTATION

SOLICITORS FOR THE APPLICANT: Brendon Dunstan Solicitor

SOLICITORS FOR THE RESPONDENT: Blackwell Short Lawyers

Orders

1. The mother’s Application in a Case filed 11 January 2018 is dismissed with no order as to costs.

2. That:

   (a)The father is to pay the mother’s costs of and incidental to his Application in a Case filed 5 February 2018, such costs to be as agreed or assessed on a party/party basis;

   (b)Otherwise the mother’s Application in a Case filed 25 July 2018 is dismissed.

3. That the parties are to each pay 50% of the Independent Children's Lawyer’s costs of the trial, in the sum of $16,419.50.

4. The father is to pay the Independent Children's Lawyer’s costs of and incidental to his Application in a Case filed 5 February 2018.

5. Otherwise all extant costs application are dismissed.      

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 Carter & Greenhill 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 CAIRNS

FILE NUMBER: SYC8235/2015

Mr Carter

Applicant

And

Ms Greenhill

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. On 14 December 2017, for reasons published on that day, I made parenting orders in relation to the parties’ three children, substantially in accordance with those sought by Ms Greenhill (“the mother”). 

2. On 11 January 2018 Mr Carter (“the father”) appealed my orders.  On 5 February 2018, he filed an Application in a Case seeking a stay of the operation of my 14 December 2017 orders.  By then, consistent with my orders, the primary care of the children had changed from the father to the mother, and their residence had changed from V Town to M Town.  On 15 May 2018 I heard the father’s application for a stay and reserved my judgment.  The father’s appeal was due to be heard on 27 June, but it was withdrawn by him on 26 June.  Coincidentally, I had also advised the parties that I intended to publish my decision in relation to the stay application on 27 June.  Since on that day, the appeal was no longer on foot, the stay was otiose, and in fact no decision was delivered in relation to it. 

3. Since then four Applications in a Case have been made.  The first was filed on 11 January 2018, when the mother filed an Application in a Case seeking that the father pay her costs “of the parenting proceedings.”  By Response filed 10 October 2018, the father sought that application be dismissed. 

4. The second application brought by the mother was filed on 25 July 2018.  It seeks orders that the father pay her costs of his application for a stay.  Since then, the relief which is sought pursuant to that application has been expanded to seek that the costs of the stay application be paid on an indemnity basis.

5. The third application was filed by the Independent Children's Lawyer on 12 January 2018, and seeks that the father and mother equally contribute to her costs.  By her Response filed 5 April 2018, the mother sought orders that in fact she only be responsible for 25% of costs of the Independent Children's Lawyer, and the father should be responsible for 75%.  For his part, by Response filed 10 October 2018, the father sought that the Independent Children's Lawyer’s application be dismissed.

6. The final application was filed on 25 July 2018 by the Independent Children's Lawyer, seeking that the father pay her costs of $4,565.00.  It is clear from the affidavit filed in support of that application that this relates to the father’s stay application.  I assume that the costs sought to be recovered are on a party/party basis.  By his Response filed 10 October 2018, the father sought that application be dismissed.

7. A relatively complicated set of directions was made for the filing of material in respect of the applications, and affording the parties an opportunity to make written submissions.  No party has applied to make oral submissions.  Although other judicial officers or registrars have undertaken the housekeeping work of setting those timetables, there does not appear to have been any formal direction reserving the decision in relation to the applications, but I infer that the decision has in fact been reserved, and reserved to me.  It appears that the last document filed was the mother’s written submissions on 27 November 2018. 

8. This is my decision and the reasons for it in relation to the four outstanding costs applications.

RELEVANT STATUTORY PROVISIONS AND LEGAL PRINCIPLES

Cost orders generally

1. The starting point for a consideration of these applications is s117 of the Family Law Act which relevantly provides as follows:

   “117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.

   117(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (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.

   …”

2. It is also relevant to note s118 which provides as follows:

   “118 The court may, at any stage of proceedings under this Act, if it is satisfied that the proceedings are frivolous or vexatious:

   (a)dismiss the proceedings; and

   (b)make such order as to costs as the court considers just.”

3. Rule 19.08(3) imposes a mandatory obligation in the following terms:

   “A party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a Costs Agreement in relation to those costs and, if so, the terms of the Costs Agreement.”

4. Rule 19.18 deals with the method of calculation of costs in the following terms:

   “19.18(1) The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount assessed in accordance with Schedule 3.

   Example

   For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.

   19.18(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.

   19.18(3) In making an order under subrule (1), the court may consider:

   (a)      the importance, complexity or difficulty of the issues;

   (b)      the reasonableness of each party’s behaviour in the case;

   (c)      the rates ordinarily payable to lawyers in comparable cases;

   (d)      whether a lawyer’s conduct has been improper or unreasonable;

   (e)the time properly spent on the  case, or in complying with pre-action procedures; and

   (f)expenses properly paid or payable.”

Principles relating to indemnity costs

1. In order to justify the making of an order for costs on other than a party/party basis, all that is required are particular facts and circumstances of the case in question warranting the making of such an order.[1]  That said, such an order is a very great departure from the normal standard, and hence it is imperative that the court be aware of what the nature of the indemnity is, in the sense of what the costs agreement between the parties seeking the order and their solicitors is.[2]  Further, such an order remains wholly compensatory and not punitive.[3]

   [1]Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225.

   [2]See Kohan & Kohan (1993) FLC 92-340 and FLR 19.08(3).

   [3]See Muldoon & Carlyle (2012) FLC 93-513 at [115].

2. It is well established that proceedings brought in wilful disregard of known facts or clearly established law are one of the established categories which justify indemnity costs.[4]  An instance of that in this court is the decision of Limousin[5] where the Full Court did not disturb a costs order against a solicitor who had failed to have any proper regard to the prospects of success of a claim.

   [4]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra).

   [5]Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433.

Independent Children's Lawyer’s costs

1. In her helpful submissions filed 26 November 2018, the Independent Children's Lawyer at paragraphs 6 to 13 helpfully set out the relevant legal position in relation to the costs of Independent Children's Lawyers, as follows:

   6. The court must not make an order for the costs of the Independent Children's Lawyer against a party who is in receipt of legal aid: s 117(4)(a);

   7. The court must not make an order for the costs of the Independent Children's Lawyer against a party if the court is satisfied that a party to the proceedings would suffer financial hardship if required to bear a portion of the cost of the Independent Children's Lawyer: s117(4)(b);

   8. The general rule that each party shall bear his or her own costs of the proceedings does not apply to applications for costs made by the Independent Children's Lawyer: De Roma & De Roma [2013] FamCA 566 at [12, Gahen & Gahen (No 2) [2013] FamCA 936 at [5];

   9. The court must disregard the fact that the Independent Children's Lawyer is funded by Legal Aid: s 117(5). It has been held that s 117(5) is a provision designed to protect the public purse: De Roma & De Roma [2013] FamCA 566;

   10. The decision in De Roma has been followed in a number of subsequent decision.  See, for example, Reeves & Grinter [2016] FamCA 63, Pallas & Pallas (No 2) [2014] FamCA 1109. Firentes & Teung [2014] FamCA 1046, Gahen & Gahen (No 2) [2013] FamCA 936;

   11. In De Roma, at paragraph [44], Watts J held that:

   Having regard to extrinsic material and reading s 117(3), (4) and (5) together, it is clear that Parliament’s intention when introducing s 117(5) FLA was that (absent any other s 117(2A) FLA factors that pointed in the opposite direction) parties (usually parents) who could help pay for the Independent Children's Lawyer, should. The result is that, whilst not determinative in a particular case, across all cases, the subsection is likely to lead to a general increase in the protection of the public purse.

   12. It follows from De Roma that costs orders should be made against a party who is able to contribute to the costs of the Independent Children's Lawyer (and who is not exempted due to the operation of s 117(4)) unless it is not just to make such an order having regard to the s 117 (2A) factors.

   13. There is no requirement that more than one s 117 (2A) factor be identified in support of an application for costs by the Independent Children's Lawyer. Even in circumstances where the conduct of a party to the litigation is beyond reproach, the financial capacity of the party to contribute to the costs of the Independent Children's Lawyer is a sufficient basis for costs order to be made: PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158 per Kay, Warnick and Boland JJ at [41].

2. I accept that reflects an accurate statement of the present law.

SECTION 117(2A) CONSIDERATIONS

1. It is convenient if I deal with some general observations in relation to the s 117(2A) considerations, before advancing observations more specifically in the context of the individual applications.

2. Neither the father nor the mother are in particularly good financial circumstances.  Although the mother does have regular income from employment, she has the care of the parties’ children (or at least, pursuant to my orders she was to, although perhaps that may have now changed).  Further, according to her affidavit filed 11 January 2018 (accepting that it is now of some vintage) she has been invoiced accounts in these proceedings in the sum of $114,596.26 from her present solicitors (to whom she still then owed $7,920.00) and to her previous solicitors she incurred costs of at least $8,958.10.  In part these funds have been apparently paid by some loans from her parents, but perhaps only to the extent of $20,000.00.

3. For his part the father contends by his Financial Statement filed 10 October 2018, that he has net liabilities of a little over $200,000.00, and his weekly income only exceeds his expenditure by about $44.00.  He says that his legal fees for the proceedings, which are a little over $160,000.00, have been funded by his parents, I infer to the tune of at least $150,000.00, although there was as at 10 October 2018, still about $43,000.00 outstanding.  Further, he says he does not have the ability to raise significant funds, and that his ability to earn income (from carting cattle and from trading in them) has significantly reduced due to the current drought conditions.

4. Ultimately the conclusion I draw is that the mother is in a somewhat better financial state than the father, but neither’s position is sound.

5. Neither party was in receipt of legal aid.

6. The mother contends that the father’s conduct in the proceedings is a significant matter.  Particularly she says:

   ·The father falsely denied continuing drug use, which caused the proceedings to take longer than had been expected, once the father conceded his error;

   ·That had the father admitted to his continuing drug use, then he ought to have conceded that, in accordance with the Family Report writer’s then recommendations, the children should live with the mother;

   ·During the course of the hearing, the father said that he did not have his trial affidavits read to him, which caused delay in then having them read to him;

   ·The father has frequently failed either to comply at all, or to comply in a timely way, with requests for drug tests, which therefore unnecessarily complicated the proceedings;

   ·That I concluded in my reasons for judgment that there remained the live prospect that the father was still being dishonest in relation to his use of drugs.

7. For his part, in his affidavit filed 10 October 2018, the father contended that the mother’s conduct was also relevant, in that she had “arbitrarily sought to relocate from V Town New South Wales to M Town New South Wales with the children.”  He says that, as a result of failed negotiations in December 2015, he was “forced to commence proceedings in the Federal Circuit Court … to restrain [the mother] relocating with the children.”  However in fact he commenced proceedings in the Local Court because he could not get a sufficiently early listing in the Federal Circuit Court.

8. Further, he says that at separation, the mother, without his knowledge, leased out the jointly owned former matrimonial home in V Town, which meant that he and the children were unable to reside there.

9. Even accepting that most of what the father relies upon is not conduct of the parties in relation to the proceedings, I must say I have considerable difficulty in understanding his arguments in these respects.

10. The mother contends that the father has failed to comply with previous orders.  In her written submissions she relies upon:

    ·The father’s concession that he had failed to comply with extant orders for equal shared parental responsibility;

    ·His failure to comply with urinalysis testing requests pursuant to court orders;

    ·His late filing of material from time to time;

    ·His failure to live only in the former matrimonial home in V Town, in accordance with orders previously made.

11. However those matters do not seem to squarely align with s 117(2A)(d), which specifically provides that the relevant consideration is that the proceedings were necessitated by the failure to comply with previous orders. Nonetheless they may be, if relevant, matters that can be considered under s 117(2A)(g).

12. The mother also contends that the father was wholly unsuccessful in the proceedings.  She seems to particularly rely upon the failure of the father to articulate any alternative proposal, in the event that relocation was permitted and the children moved into the mother’s care.  However not only is that not my recollection of the case, but even if it be correct, it is idle to suggest that the father was “wholly” unsuccessful.  Parenting proceedings are poorly suited to the notion of a party being “wholly unsuccessful” unless the parental relationship is entirely severed.  The outcome in this case did not wholly sever, or indeed substantially sever, the connection which the children would have with the father.

1. For his part, the father particularly placed weight upon my findings that the proceedings were “finally balanced,” and indeed they were.

2. Regrettably, it appears as though neither party made an offer to settle the proceedings.

THE MOTHER’S APPLICATION FOR COSTS IN RELATION TO THE PRINCIPAL PROCEEDINGS

1. I have traversed the relevant s 117(2A) considerations above. I give particular weight to the fact that:

   ·The father is in a worse financial position than the mother;

   ·That the father’s conduct in the proceedings has been, on occasion, non-compliant and may have led to some slight increase in time of the trial, although the proceedings were not necessitated by any such failures, or failures more generally;

   ·That the father was not wholly unsuccessful in the proceedings. 

2. Weighing all the considerations, I am not satisfied that there are circumstances which justify a departure from the general rule that the parties pay their own costs of proceedings.  The mother’s Application in a Case filed 11 January 2018 will be dismissed. 

3. Further, I am not persuaded that there should be any order for costs made against her in relation to that application, notwithstanding the fact that she has been wholly unsuccessful in it.  The application was not wholly without merit.

THE MOTHER’S APPLICATION FOR COSTS OF THE FATHER’S STAY

1. As I have noted, the mother by Application in a Case filed 25 July 2018 seeks an order that the father pay her costs in relation to his application for a stay, and as ultimately contended for, on an indemnity basis.

2. In my general traverse of the s 117(2A) considerations, I have already observed that the father is in a poorer financial position than the mother, although he does have his parents’ financial assistance.

3. The father’s conduct in relation to the stay proceeding is relevant.  The first peculiarity is that it was not made simultaneously with the filing of the appeal, and more particularly, was not made prior to the children going into the mother’s care.  The next relevant matter is that the father did not press his appeal, in consequence of which the stay became otiose.  I can only infer that the father changed his mind about the prospects of success of the appeal.

4. The father was wholly unsuccessful in relation to application for a stay, in the sense that he did not ultimately press it.

5. There is no evidence of any offer in writing to settle the appeal or the stay proceedings.

6. Also relevant is the fact that the appeal was settled on the basis that the father would pay costs to the mother of $15,000.00, albeit that $5,000.00 of that would be by way of forgiveness of a previous costs order in favour of the father.

7. Weighing those matters in the balance, persuades me that there are circumstances in relation to the father’s stay application which justify an order for costs.

8. The mother contends that the orders for costs should be made on an indemnity basis.  I am not persuaded that there are circumstances in this case warranting the making of such an order.  The order for costs will be on the usual party/party basis.

THE INDEPENDENT CHILDREN'S LAWYER’S APPLICATION FOR COSTS IN THE PRIMARY PROCEEDINGS

1. The Independent Children's Lawyer seeks her costs of the primary parenting proceedings.  As I have indicated, the father denies that there should be any order at all, whereas the mother concedes orders that she should pay 25% of those costs, but the father pay 75%.

2. I have already made observations in relation to the parties’ financial circumstances. Likewise I have earlier in these reasons made findings in relation to the conduct of the parties to the proceedings, and made findings in relation to the balance of the considerations under s 117(2A).

3. I am satisfied that the parties should be required to contribute to the Independent Children's Lawyer’s costs.  I am not satisfied that father will suffer financial hardship if required to bear 50%, or even 75%, of the very modest fees which the Independent Children's Lawyer seeks to recover, totalling only $16,419.50;  considering that the father’s own legal costs have exceeding $160,000.00,  his contention that it would cause him hardship is unpersuasive.

4. The only issue then is whether the father should bear a disproportionate burden in relation to those costs.

5. The mother’s argument in support of her disproportionate skew of costs is advanced at paragraph 27 of her outline as follows:

   27. It is the mother’s position that she be responsible for 25% of the Independent Children's Lawyer’s costs in the substantive proceedings on the basis that such costs were incurred prior to and including the interim hearing.  It is noted that the father deposes that the mother was unsuccessful at the interim hearing and her case “had little prospect of success.”  It is submitted that the mother’s case had merit on the basis that she was ultimately successful in her case that the children relocate to M Town.  The mother recognises that she should be responsible for a portion of the costs of the Independent Children's Lawyer but not an equal share of it. 

6. I do not understand that the Independent Children's Lawyer’s costs are only “prior to and including the interim hearing.”  In fact, I confess to some difficulty in understanding the submissions advanced at paragraph 27.

7. I am not satisfied that there should be some disproportionate skew between the mother and father in relation to the Independent Children's Lawyer’s costs, and will order that they be equally paid.

INDEPENDENT CHILDREN'S LAWYER’S APPLICATION FOR COSTS ON STAY

1. By her Application in a Case filed 25 July 2018 the Independent Children's Lawyer seeks that the father pay her costs of his stay application, seemingly on a party/party basis.

2. I have already traversed the relevant s 117(2A) considerations.

3. The father was the moving party in the stay, and hence there is no basis to contend that the mother should bear any proportion of those fees.  I am not satisfied that the father would suffer financial hardship by being required to pay the Independent Children's Lawyer’s costs of his application.

4. Further, the observations which I have made in relation to the father being liable to pay the mother’s costs of the stay application apply with equal force in relation to the Independent Children's Lawyer’s application.  There will therefore be an order that the father pay the Independent Children's Lawyer’s costs in relation to his application for a stay.

CONCLUSION

1. For these reasons there will be orders as set out at the commencement of this judgment.             

I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 7 June 2019.

Associate:

Date: 7 June 2019