Charles & Charles
[2007] FamCA 276
•30 March 2007
FAMILY COURT OF AUSTRALIA
| CHARLES & CHARLES | [2007] FamCA 276 |
| FAMILY LAW – COSTS - s 117AB – Mandatory orders for costs – Meaning of “knowingly” - Offers of settlement where pool of assets difficult to quantify - Costs in parenting case where family consultant views strongly against a party - General exercise of discretion relating to costs |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
Briginshaw (1938) 60 CLR 336
Derry v Peek (1889) 14 App Cas 337 at 373
Magill v Magill [2006] HCA 51 (9 November 2006)
Norbis v Norbis (1986) 161 CLR 513 at 540
Penfold v Penfold (1980) 144 CLR 311; (1980) FLC 90-800
| APPLICANT: | MRS CHARLES |
| RESPONDENT: | MR CHARLES |
| FILE NUMBER: | BRF | 1193 | of | 2004 |
| DATE DELIVERED: | 30 MARCH 2007 |
| PLACE DELIVERED: | MELBOURNE |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | BY WAY OF WRITTEN SUBMISSIONS |
SUBMISSIONS RECEIVED FROM:
| SOLICITOR FOR THE APPLICANT: | BLAKE TOPPINGS |
| SOLICITOR FOR THE RESPONDENT: | RICHARD GRAY & ASSOC |
Orders
That the wife’s application be dismissed.
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRF 1193 of 2004
| MRS CHARLES |
Applicant Wife
And
| MR CHARLES |
Respondent Husband
REASONS FOR JUDGMENT
I delivered judgment on 23 February 2007 in relation to parenting orders and property division between the parties.
Paragraph 46 of my orders reads:
That any issue as to costs be determined upon written submission to the Honourable Justice Cronin and any such application for costs:
(a)be filed with the Associate to Justice Cronin by 4.00pm on 9 March 2007, and
(b)be served upon the other party by that date.
The solicitors for the wife sent by facsimile transmission an application for costs on 13 March 2007. Before 9 March 2007, they orally requested from my associate permission to extend the time for making the application by effectively a weekend. I saw no prejudice to the husband and permitted that extension of time.
The solicitors for the husband sent to my associate by facsimile transmission their client’s submissions responding to those of the wife and, perhaps sensibly, made no application for costs on behalf of the husband.
Each party attached to the application for costs, written submissions drawn by counsel who appeared at the hearing. I have taken into account all of the matters referred to by counsel some of which I shall set out below. The submissions were helpful.
The unusual feature of this matter is that the wife seeks to rely upon
s 117AB of the Family Law Act 1975 (Cth) (“the Act”) which came into operation on 1 July 2006.In my orders, in essence, I rejected the husband’s application that the children live with him on a week-about basis and ordered that the children live with the husband from the conclusion of school on Thursday until the commencement of school on the following Monday in each alternate week. In making those orders, I also rejected the wife’s proposed order that the children spend time and communicate with the husband as may be agreed (which although a common approach in many cases, was rather optimistic in the circumstances of this case) and failing agreement from after school on Friday until the commencement of school on the following Monday morning in each alternate week. For the purposes of my reasons, I propose to ignore the ancillary orders in relation to holidays and special days because they were not particularly controversial.
The wife also sought an order that she have sole parental responsibility for the children whilst the husband sought equal shared parental responsibility for all issues in relation to and including major long term issues. In my order at par 1-4, I provided for a sharing of that responsibility. At par 52 of my reasons I said of the husband:
I am therefore concerned to ensure that he continues to have a significant involvement in the planning of his children’s future jointly with the wife. I propose to ensure the continuation of that involvement by the orders that I make.
Insofar as the parenting issues were concerned, it could not be said that either party was wholly successful.
In my reasons for judgment I described the wife’s application for injunctions as something having occurred at the “eleventh hour”. I accepted the necessity for orders but insofar as the application was made on the first day of the hearing, notwithstanding that the wife was wholly successful, I do not see how that part of her application should affect my judgment in respect of costs because of the lateness with which the application was brought. That issue did not increase the longevity of the trial.
In respect of property matters, I ordered that the husband be able to retain the home subject to paying to the wife $137,000 and otherwise, a division of the various non-real property assets. Having determined the pool of assets, I divided it as to 60 per cent to the wife and 40 per cent to the husband, save that there was to be an equal division of superannuation. Neither of those positions was articulated by the parties that simply at the hearing. The husband’s position was one of general equality. The wife’s position was not simple because of arguments about the husband having occupied the home subsequent to separation whilst the wife was renting, but her real position appeared in the documents that were attached to the application for costs.
In essence, the wife through her written submission concerning costs and leaving aside for a moment s 117AB argued that:
(a)the father sought residence and was wholly unsuccessful in that regard and that his time with the children was curtailed when his main focus throughout the trial was to seek a week about arrangement;
(b)whilst the father’s position was perhaps on some level understandable, it was in the face of very strong and professional evidence of Ms T, the Independent Family Consultant;
(c)so far as conduct was concerned, the father was less than frank in disclosing his financial interests;
(d)the wife had made offers to settle in accordance with the rules of Court from 20 December 2004 until 17 November 2005 on five occasions and reiterated as late as 30 January 2007 and that the husband had not “bettered” the wife’s offer;
(e)the husband was not without the means of satisfying an order for costs.
In respect of those matters, and leaving aside s 117AB for a moment, the husband said:
(a)the wife withdrew offers of settlement in relation to parenting issues and that therefore the wife was not entitled in any event to the costs of the trial;
(b)it was scarcely appropriate in the circumstances to characterise the parenting orders made as the husband not “bettering” the wife’s offer;
(c)the property division was always going to depend on parenting orders and that the husband had obtained a more favourable order than the offer of the wife because he had the superannuation treated on an equal division basis;
(d)to order the husband to pay costs using the language of the wife would mean that the husband would have to sell the matrimonial home and that had always been contrary to his desire and in respect of his desire, he had been successful in retaining the home.
Before turning to the matter in detail, consideration needs to be given to
s 117AB of the Act.Section 117AB reads:
(1)This section applies if:
(a)proceedings under this Act are brought before a court; and
(b) the court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.
(2)The court must order that party to pay some or all of the costs of another party, or other parties, to the proceedings.
Counsel for the wife submitted that this particular section applied because the husband had made false allegations as regards the wife being domestically violent towards him. Counsel’s submission was that those allegations were not made out on the evidence and to the contrary, it was the husband who was the domestically violent party. It was submitted that the Court:
could not come to any conclusion other than that the husband knowingly made a false allegation or statement in the proceedings in relation to the issue of domestic violence.
At par 56 of my reasons for judgment, in respect of one particular incident of domestic violence I said:
Because of the corroboration of [Ms R] to which I have referred, I am inclined to think that the wife’s version was correct but I am not prepared to make any specific findings in relation to a number of matters of a general and unspecified nature.
…
There was nothing that objectively supported the husband’s view about violent behaviour of the wife during their relationship. Accordingly, in respect of general matters, I am not prepared to make any finding of fact.
At par 58 of my reasons for judgment I said in respect of an incident that occurred in a motor car on the way to an airport that:
I find the wife’s version more probable and I accept it.
At par 60 of my reasons, I referred to an incident in the matrimonial home that occurred on 20 September 2003 in which the husband denied having grabbed the wife about the shoulders and pulled her out of bed. I said that I accepted the wife’s version.
At par 65 of my reasons for judgment in respect of an incident that occurred in the motor car between the husband and the wife, outside of the matrimonial home, that I found the wife’s version was the correct one.
At par 69 of my reasons I said:
There were other incidents referred to by the wife that occurred prior to the DVD incident. Having regard to the conflict in the evidence between the parties, I make no finding about them. I am not prepared to say that because I have found other incidents occurred as I have, these occurred in the way either party alleged.
Section 117 of the Act says that subject to sub-s (2), sub-s 70NFB(1) and ss 117AA, 117AB and 118, each party to proceedings under this Act shall bear his or her own costs.
The provision in relation to each party therefore initially being expected to pay their own costs must be read subject to s 117AB. Section 117AB makes clear the mandatory nature of the order if the court is satisfied that the party knowingly made a false allegation or statement in the proceedings.
“Knowingly” imports a serious subjective element into the question. In respect of many findings of fact as in this case, a trial judge determines which of two versions, sometimes diametrically opposed to one another, he or she believes on the balance of probabilities. Such a finding is not necessarily a statement that one version is patently untrue or that a person is lying; it may simply be that one version is more probable than another. For a court to be satisfied that a person knowingly made a false allegation or statement in the proceedings must mean that a court can be comfortable in finding that the person lied. It would not simply then be a balancing act between two versions. To be satisfied that a lie has been told and to so find requires a careful analysis of two things. The first is that the proffered version of fact is untrue but the second is that it is put knowing it to be untrue. A court must then be cautious about such a finding because of the mandatory consequence. The finding must be elevated above the “probable” level set out in s 140(1) of the Evidence Act 1995 to consider the matters contemplated in s 140(2) of that Act. That is, the Briginshaw[1] test applies.
[1] (1938) 60 CLR 336
Use of the word “knowingly” in civil proceedings has long been a feature of the common law. It was recently examined in the arguments about the tort of deceit in Magill v Magill[2]. Gummow, Kirby and Crennan JJ looked at the very old decision of Derry v Peek[3] quoting Lord Herschell explaining:
First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.
[2] [2006] HCA 51 (9 November 2006)
[3] (1889) 14 App Cas 337 at 373
“Knowingly” is unequivocal. There can be no room for misunderstanding or doubt; objectively, the person making the statement cannot believe the statement to be true.
Gummow, Kirby and Crennan JJ looked at the modern tort of deceit and said that there had to be a number of elements proved. Their Honours distinguished representations made with the knowledge that they were false from those which were made recklessly or carelessly. In a situation where s 117AB has a mandatory cost sanction where a person knowingly makes a false statement or allegation, it is important to distinguish between one which is knowingly made as a false statement and one which is recklessly made. The test is therefore a stringent one.
The explanatory memoranda in relation to this provision says:
Item 41 inserts a new provision s 117AB after s 117 which is the section that deals with costs. The new provision provides that a court must order a party to pay some or all of the costs of another party, or other parties to the proceedings, where the court is satisfied that that party has knowingly made a false allegation in the proceedings. This provision implements recommendation 10 of the LACA report. It attempts to address concerns that have been expressed, in particular that allegations of family violence and abuse can easily be made and may be taken into account in family law proceedings. The provision is broader than family violence or abuse allegations and would apply to any false statement knowingly made.
In a second reading speech on 2 March 2006, the Commonwealth Attorney-General made the observation:
In cases where proceedings are the result of a party’s disregard of court orders or of false allegations of violence, the government thinks it only just that costs orders should be able to be made where appropriate against the party responsible.
Later, the Attorney-General said on the same day:
The Bill seeks to address concerns about false allegations and false denials by the inclusion of the new cost provision that applies where a person has knowingly made false allegations or a false statement and this clearly also covers false denials. This provision implements a committee recommendation. It is appropriate, given the high test that must be satisfied, a person must knowingly make the false statement. In such circumstances criminal penalties could also be applied.
Having regard to the comment that it is a “high” test that must be satisfied and the potential for criminal penalties to be applied, a court must be very careful in making a judgment in an application for costs subsequent to the determination of proceedings that the person who made the false statement did it knowingly. In my case, I do not think that I can go outside the findings that I made in my judgment and draw any other conclusion than that which I set out in my reasons for judgment. In each case, I have found on the balance of probabilities that I preferred the wife’s version of events. Those matters related to issues of domestic violence. I am conscious of the fact that s 117AB is far wider than the domestic violence question but in this case, I have not made any finding other than on the balance of probabilities about all those matters.
Accordingly, for the purposes of s 117AB, I am not prepared to find that the statements made by the husband were done so knowingly.
Section 117(1) of the Act is the basic provision which lays down the principle that each party shall bear his or her own costs but if there are circumstances which justify the court in so doing, an order can be made. In considering what order, if any, should be made, a court is obliged to have regard to the matters set out in sub-s 2(A). That particular provision is not an exclusive list because the court is entitled to take into account such matters as it considers relevant.
In Penfold v Penfold[4], Stephen, Mason, Aitken and Wilson JJ said at 315-316:
It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s 117(2). As sub-s (1) is expressed to be subject to sub-s (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117(2) in “clear case”.
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order…judges very frequently make orders for costs without giving reasons or making findings, even where costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in a position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised…
[4] (1980) 144 CLR 311; (1980) FLC 90-800
It is thus important to look at the matters raised by each party in the light of the statutory provisions which constrain my discretion.
My view is that there are two broad categories of factors in this case upon which each party relies. Each party has taken an approach opposite to the other. Each party has made an allegation about the way in which the proceedings were conducted by the other whilst at the same time taking a different view to the other party in respect of financial matters.
In this case, neither party has been wholly successful in relation to the parenting issues. In April 2006, the wife agreed to the arrangement relating to parenting which continued until trial. At par 14 of my reasons I set out that the agreement was that the husband was to spend time with the children during each alternate weekend from the conclusion of school on Thursday until the commencement of school on the following Monday and then in each alternate week from the conclusion of school on the Thursday until the commencement of school on the following Friday morning. It is the latter part of that arrangement that I removed by my final orders.
Counsel for the wife attached to his submission the various offers of compromise of the wife. Her position was consistent in her offer of settlement up until November 2005 in saying that the husband could have reasonable contact but not less than from after school on Friday until school commenced on the following Monday morning in each alternate week. In addition, she was prepared to agree to each Wednesday after school until the commencement of school on the Thursday morning in the following week. There were certainly explanations given for that during the hearing but looking at the position as the husband saw it, I find that he would have been perhaps puzzled as to why offers of settlement were being made in parenting matters on the one hand yet a different approach was being taken by the wife on another.
What was significant in this case was the very strongly held view of the family consultant. I set out the synopsis of her evidence in pars 117 to 137 of my reasons for judgment. Pursuant to an order of Barry J made in September 2006, an updated report was conducted by the family consultant but that was not released until the first week of January. I expressed serious concerns about how the suggestion of the family consultant would resolve the overall problem for the children. Those problems as I understood them were that the children had to conform to the thoughts and wishes of the husband which compromised their emotional development and that the husband would not facilitate a positive relationship between the children and their mother. I said at par 36:
Whilst acknowledging that a reduction of time will not solve those two issues, I am left with very strong and professional evidence that I accept which is supported by the findings I have made about the husband’s behaviour and in those circumstances, I feel compelled to accept the solution proffered by the family consultant.
Having regard to the position that the wife adopted in April 2006, notwithstanding an earlier report of the family consultant, I accept that the evidence was very strongly against the husband’s position from January 2007 onwards. In my view, having regard to the actions of the wife in agreeing to the changes in April 2006, it can hardly be said that the husband was adopting an unreasonable and entrenched position until about January 2007. I am quite satisfied that from that point onwards, the husband was faced with the challenge of changing the attitude of a witness who had significant experience and expertise. Faced with that material, the position the husband adopted seeking a week-about parenting arrangement, in my view, was unrealistic.
In respect of property matters, I have read each of the offers made by the wife in writing. Each is convoluted and in the circumstances of my finding about the pool of assets, difficult to assess. None of the offers in essence, directly predicted the outcome although interpolating as best I can, the offer in February 2005 must have gone very close to what I ultimately ordered.
Having regard to the arguments about the add-backs and the arguments about the value of the wife’s business and the husband’s remainderman interest, it is hard to say that as at February 2005, any objective analysis of the financial position at that time would have enabled an experienced practitioner to predict the outcome of the proceedings. To succeed on a written offer, the recipient must be in a position at that time or thereafter, to decide forensically that it should be accepted and the matter should be settled. Until such time as the first issue of the pool of assets had been determined, each party had an arguable case in relation to the matters requiring judicial determination. In Norbis v Norbis[5] Brennan J said:
The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community.
[5] (1986) 161 CLR 513 at 540
It seems to me that until the commencement of the trial, the parties did not seem to have a very clear picture about what was in the pool of assets notwithstanding that they had more or less common agreement about the percentage division. The views expressed by Brennan J referred to are therefore apt.
Accordingly in respect of property matters, as a general proposition, I think that each party acted responsibly in pursuit of their entitlements to a property settlement.
Are there therefore any circumstances that would justify a court departing from the provision that each party should bear his or her own costs?
I find in this case that the financial circumstances of each of the parties is at best modest. I have already canvassed the issue of the matrimonial home. Neither party has significant income and each needs what capital resources they have for the purposes of the care of the children.
I am obliged to take into account the conduct of the parties to the proceedings in the way in which the proceedings were conducted. I am not able to find anything in relation to the appearances, orders or documents that would tend to suggest that one party caused unnecessary expense to the other.
The provisions of s 117(2A)(d) do not apply in this case.
I am not prepared to find as I hope I have explained that either party has been wholly unsuccessful. Whilst I think that the husband should have seen the writing on the wall in respect of the children’s matters after January 2007, I equally do not find that the wife has been wholly successful in relation to the time to be spent by the husband with the children nor in relation to the responsibility for making long term decisions in relation to them. In those circumstances, I am not prepared to find that either party has been wholly unsuccessful.
I have examined the offers in writing put by the wife as I have set them out above but for the reasons I have articulated, until such time as the pool of assets was clarified and quantified, the percentage division concept was meaningless. In those circumstances, the offers of settlement would have made very little difference and I cannot say that the offers were so attractive to the husband that they should have been taken by him nor can I say that the wife has “bettered” from my orders, the offers that she made to the husband.
In all the circumstances, I am not prepared to depart from the principle that each party pay their own costs as I see no circumstances in this case that would otherwise justify an order that would be just as between the husband and the wife.
I certify that the preceding fifty one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin.
Associate:
Date:
IT IS NOTED that this judgment for all publication and reporting purposes be referred to as CHARLES & CHARLES
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