Cole and Santos (No.2)
[2016] FCCA 2582
•17 October 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COLE & SANTOS (No.2) | [2016] FCCA 2582 |
| Catchwords: FAMILY LAW – Costs – Application for costs – indemnity costs – fixed costs – party and party costs – justification of departure of normal costs position – no justification – no costs awarded. |
| Legislation: Family Law Act 1975 (Cth), s.117 Federal Circuit Court Rules 2001 (Cth), Sch.1, Pt.1 |
| Cases cited: Cole & Santos [2016] FCCA 674 Penfold v Penfold (1980) 144 CLR 311 Treadwell v Hickey [2010] NSWSC 1119 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583 |
| Applicant: | MR COLE |
| Respondent: | MS SANTOS |
| File Number: | SYC 1232 of 2013 |
| Judgment of: | Chief Judge Pascoe |
| Final Hearing date: | 14 July 2016 |
| Date of Last Submission: | 14 July 2016 |
| Delivered at: | Sydney |
| Delivered on: | 17 October 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Matthew Wong |
| Solicitors for the Applicant: | Doolan Callaghan Family Lawyers |
| Counsel for the Respondent: | Mr David Dura |
| Solicitors for the Respondent: | Paltos Milevski Family Lawyers |
ORDERS
THE COURT ORDERS THAT:
No orders as to costs
IT IS NOTED that publication of this judgment under the pseudonym Cole & Santos (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 1232 of 2013
| MR COLE |
Applicant
And
| MS SANTOS |
Respondent
REASONS FOR JUDGMENT
Issue for Determination
This is an Application in a Case, filed 29 April 2016, by the Respondent Mother for costs in relation to a matter, commenced by way of Initiating Application, filed 8 March 2013, by the Applicant Father. I heard the matter on 16 and 17 December 2015, and delivered judgment in that matter on 1 April 2016 (Cole & Santos [2016] FCCA 674)
The Mother seeks costs of, and incidental to, the parenting aspect of that matter, fixed in the amount of $100,000, or as determined by the Court. The Mother also argued in the alternative for a costs award on an indemnity basis or on a party – party basis.
The Application in a Case in its entirety is opposed by the Father. The Father seeks that the Mother’s Application be dismissed and that the Mother should pay his costs of, and incidental to, her costs application.
Evidence and Submissions
Counsel for the Mother made clear that this costs Application relates only to the Parenting portion of the litigation, and not to costs relating to Child Support. This was due to the fact that my decision relating to Child Support is presently under appeal, and so total costs with regard to Child Support cannot be quantified.
The submissions by the Mother largely relate to a series of communications between the parties. This evidence was set out as Annexures in the Mother’s Affidavit, sworn and filed 29 April 2016, relevantly: “Annexure C” (correspondence from the Mother’s solicitors to the Father, dated 19 January 2015) (“Mother’s Annexure C”); “Annexure D” (correspondence from the Father to the Mother’s solicitor, dated 1 February 2015) (“Mother’s Annexure D”); “Annexure E” (correspondence from the Mother’s solicitors to the Father, dated 5 February 2015) (“Mother’s Annexure E”); “Annexure F” (correspondence from the Mother’s solicitors to the Father, dated 16 November 2015) (“Mother’s Annexure F”); and “Annexure G” (correspondence from the Mother’s solicitors to the Father, dated 9 December 2015).
As noted in my Orders of 1 April 2016, the Father consented to many of the Orders the Mother pursued. Consent was given on the day of final hearing.
Significantly, the Father consented that the Mother have sole parental responsibility for the three children of the marriage; namely X, Y, and Z. Further, the Father consented that there be no order made for X or Y to spent time with him.
The Mother argued that despite correspondences that contained offers of settlement, no offer was properly accepted, which kept the matter ongoing. However, ultimately, most of the offers contained within the Mother’s correspondences were accepted by the Father on the day of the final hearing and incorporated in Orders which I made by consent along with other Orders.
The Mother asserted that due to the Father’s unwillingness to accept the Mother’s offers made as early as January 2015, she unnecessarily incurred significant legal costs.
The Mother’s Affidavit deposes that her legal costs are in excess of $140,000.
Counsel pointed to the Father’s demonstrated attitude to the children and the responsibilities of parenthood as outlined in my Reasons for Judgment in Cole & Santos [2016] FCCA 674 at [182] – [184].
Finally, the Mother pointed to the financial position of each party. The Mother has, in most regards, contested the Father’s parenting application, taking out loans to fund the litigation, whilst supporting the three children.
Counsel for the Mother concluded that the near-wholly unsuccessful application brought by the Father, his parenting behaviour, and his behaviour in relation to the litigation were sufficient reasons for a costs award to be made against the Father.
The Father, who was represented by Counsel at the costs hearing, pointed to anomalies in the parenting ‘negotiations’; specifically that the Father had consented to the original offer made by the Mother (in Mother’s Annexure C) that she have sole parental responsibility for the three children in his reply (Mother’s Annexure D). This acceptance was noted by the Mother (Mother’s Annexure E), however negotiations proceeded as though the Father continued to press for shared parental responsibility (Mother’s Annexure F) and the Mother again asked the Father to consent to Sole Parental Responsibility to the Mother.
Moreover, the Father claimed, the negations were conducted with an understanding that he was acting with the support of the children; he was neither militant nor malicious.
The Father pointed to other areas where the Mother departed from her previous offers, such as when the Mother offered the Father time with the three children on alternate Sundays (Mother’s Annexure E), yet seemingly later withdrew the offer (Mother’s Annexure F).
The Father submits that analysis of this correspondence reveals no basis for the proposition that the Father was anything other reasonable during protracted negotiations.
The Father pointed to the fact that much affidavit material was put on prior to court dates that were subsequently vacated by the Court; this inconvenience, and the repetitive legal preparation caused, should not be ascribed to the Father.
The Father argued that his application was not wholly unsuccessful. Counsel pointed to an instance in my Reasons for Judgment in Cole & Santos [2016] FCCA 674 at [193] – [197], where the Father was indeed successful.
The Father drew the Courts attention to the fact that much of the litigation was spent arguing about Child Support. As such, the Father pointed out that the Mother has not adequately detailed how she arrives at her deposed $140,000 legal costs bill. Counsel referred to a lack of billing evidence which separates legal costs related to Child Support and costs related to Parenting.
Counsel submitted that such lack of clarity should prevent the Court from making a costs award on an indemnity basis or on a fixed basis.
Finally, the Father submitted that he has insufficient funds to meet a costs order, especially an amount as large as that sought by the Mother, and referred to the Financial Statement of the Father, filed 7 July 2016.
The Father noted that he had made, on or around 11 July 2016, an offer to settle the application for costs. The Mother had not responded.
The Father concluded by stating that this costs application was yet “another front in the war” between the parties.
In reply, counsel for the Mother pointed to the Father’s lack of response to Mother’s Annexure E. Mother’s Annexure E was a letter from the Mother’s solicitor to the Father noting the Father’s consent to the Mother’s sole parental responsibility for the three children and for certain time to be spent with the children, and had specifically asked “whether you accept our client’s proposal with respect to parenting.”
Counsel stated that as there had been silence on this offer until Mother’s Annexure F was sent (some nine months later) by the Mother all points referred to in Annexure E (and subsequently Mother’s Annexure F) remained to be resolved.
Further, counsel for the Mother pointed to an email sent by the Father to the Mother’s solicitor, dated 4 December 2015 (contained within Annexure F of the Father’s Affidavit, affirmed and filed 7 July 2016) (“the Father’s Email”), which replied to Mother’s Annexure F. This email stated that the Father consents to sole parental responsibility on the part of the Mother but did not agree to the Mother’s request to withdraw his application to spend time with Y. This position with regards to Y was, however, withdrawn at final hearing.
Counsel for the Mother concluded that the offers made by the Mother were more advantageous to the Father than what he received at final hearing.
Finally, Counsel stated that the Father’s offer to settle the Application for costs had not been received until a few days prior to final hearing. As such, it should not be taken into consideration.
Relevant Legislation
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides for costs in all relevant matters. Subsection 117(1) of the Act states the normal position in relation to costs in relation to Family Law matters as; “each party to proceedings under this Act shall bear his or her own costs” (“the Normal Costs Position”).
However, subs.117(2) provides for departure from the Normal Costs Position, as follows;
“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)… 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.”
Relevantly, subs.117(2A) of the Act provides as follows:
“(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.”
Having considered these indicia, if the Court is of the opinion that the circumstances justify a departure from the Normal Costs Position in making an order for costs, the Court must determine the quantum of the award.
In such circumstances, a costs award will normally be made for party – party costs. As such, an award in this jurisdiction is guided by Part 1 of Schedule 1 (“the Costs Schedule”) to the Federal Circuit Court Rules 2001 (Cth) (“the Rules”).
Discussion
The Court must first make a finding that there are circumstances to justify a departure from the Normal Costs Position, that is, there is some reason why each party should not bear their own costs (Penfold v Penfold (1980) 144 CLR 311 at 315 per Stephen, Mason, Aickin, and Wilson JJ).
The Normal Costs Position reflects public policy, that is, that a parent should not be constrained from seeking an order the parent genuinely believes is in the best interests of the child for fear of a costs award being made against them.
Subsection 117(2A) of the Act provides guidance for my consideration of when there is justification to depart from the Normal Costs Position, however, I note that my discretion remains broad and these indicia are not restrictive (Penfold v Penfold (1980) 144 CLR 311 at 315 per Stephen, Mason, Aickin, and Wilson JJ).
If the Court does find that the Father’s behaviour was sufficient to do away with the Normal Costs Position, it must determine an appropriate costs award. In this regard, the Mother seeks a costs quantum via four lines of argument; namely, fixed in the amount of $100,000; fixed in another amount that the Court finds appropriate; on an indemnity basis; or on a party – party basis.
Justification for not departing from the Normal Costs Position
In deciding whether the Father’s conduct was sufficient to displace the normal costs position I note that he was, for the substantive part of the matter, self-represented. A self-represented litigant cannot excuse him or herself from Court procedure, however some patience can be afforded when analysing his or her behaviour whilst acting in an unfamiliar setting, especially in circumstances where the other party is represented by Counsel.
The Father throughout the litigation agitated for time to be spent with his children. The Orders sought however changed. In his Initiating Application, filed 8 March 2013, the Father applied for time to be ordered with all the children. The Father agreed to withdraw his application for orders in relation to X and Y on 1 February 2015 (Mother’s Annexure D), however argument relating to Y remained on foot until final hearing in December 2015. The Father consistently maintained his position in seeking orders with regards to Z.
The crux of the Mother’s argument is that the change in Father’s application and the difference between orders sought by the Father in his Initiating Application and those awarded at Final Hearing was such to warrant a departure from the Normal Costs Position.
The Father clearly had every right to bring the matter before the Court, and to vigorously litigate his application provided that the application was made bona fides and for the best interests of the child(ren). Justice Einstein of the Supreme Court of NSW stated in Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583 at [28] that parties are “entitled to litigate issues believed on proper grounds to be genuine issues even if, with the benefit of hindsight, the course of the evidence ultimately shows that the litigation of some of those issues may have been an incorrect call. Prescience is a rare commodity…”
Further, Justice Barrett of the Supreme Court of NSW stated in Treadwell v Hickey [2010] NSWSC 1119 at [114] that “a party cannot be said to have commenced proceedings without reasonable cause simply because the party’s argument proved to be unsuccessful.”
In my deliberation, I have specific regard to subs.117(2A) of the Act, particularly subs.117(2A)(a) – the financial circumstances of each of the parties to the proceedings; (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.”
Regarding subs.117(2A)(a) of the Act, both parties evidently have some financial means, and are in well-paying jobs. The litigation has taken its toll on the Mother who has expended considerable financial resources on legal fees, together with supporting a family of three children and herself.
However, whilst the Mother has gone to significant expense to reply to the Father’s application, she did exercise her own discretion. Her evidence (contained within her affidavit, sworn and filed 29 April 2016 at [26] and [35]) that she has borrowed money to fund her legal costs is not unusual in litigation.
The Father pays child support and was self-represented throughout the proceedings, save for the most recent costs hearing. Whilst the Financial Statement of the Father, filed 7 July 2016, details the Father’s finances, I note that he, unlike the Mother, is not in debt. I also take into consideration the submissions of Counsel for the Father; that to make an award against the Father would have ironic consequences by affecting child support. However, I do not think the Father’s situation so dire as to prevent me from making an appropriate costs award.
Turning to subs.117(2A)(e) of the Act, whilst both parties led argument as to ‘winners and losers’, I find it difficult to apply such epithets in the circumstances of this case. Such a binary argument denies the dynamics in a Parenting matter and accompanying negotiations.
In any case, the Father has not been wholly unsuccessful in his pursuit of his Application, although by no means can he be described as successful.
The Father’s application with regards to Y was wholly unsuccessful, the Father having chosen to receive less at final hearing than what was previously offered by the Mother. However, argument relating to Y was not the whole of the matter and the Father’s application with regards to Z was not wholly unsuccessful.
For much of the litigation, the Mother regarded that it was in Y’s best interest for him to spend time with the Father. The dispute regarding Y was largely contained to how much time and when Y would spend with the Father, until final hearing when the Father abandoned all orders relating to Y.
Whilst the Court cannot condone a parent ‘picking and choosing’ which child with whom to have a relationship, it is difficult to hold the Father solely responsible for mutually sustained argument. I place considerable weight of this consideration in my deliberation.
I also note the several offers made to the Father in 2015, which regards subs.117(2A)(f) and (g) of the Act.
I consider as hollow, in this case, argument that the Father having received less than he was earlier offered by the Mother should attract the displacement of the Normal Costs Position. As stated above, children’s matters are dynamic and applying simple binary comparisons (such as ‘then and now’) seldom assists.
I regard the Mother’s offers as substantial negotiations. Her negotiations included offers of time for the Father with Y and Z. The Father had every right to respond and negotiate. I cannot conclude that the Father’s attitude and behaviour towards the litigation was without “the belief on proper grounds to be [a] genuine issue.”
The situation may be different had the Mother flatly refused any notion of Y spending time with the Father, but she did not. The negotiations, and thus the argument, was kept alive by both sides.
As the offers made by the Mother all contained an element of time for Y and Z with the Father, it is clear that the Mother, with the aid of legal support, maintained a belief that it was in their respective best interests for them each to spend time with the Father. She had this belief with full knowledge of the Father’s complex relationship with Y and his particular circumstances.
The fact that on the day of the hearing the Father withdrew his pursuit of orders with regards to Y and accepted an offer less than what was previously offered by the Mother appears to me acknowledgment of an “incorrect call”, one that may not have been made with “prescience.”
I do not accept that the Father acted in an obstinate or malicious manner towards the Mother. There is no evidence that the Father’s litigation was a tactic to cause distress and financial harm to the Mother.
The Father explained at final hearing that he did not press for orders relating to Y as any order “would not make any difference”, that to argue over a largely moot point would incite anger and conflict, and that to successfully receive orders would only serve to “significantly disrupt” Y’s life and risk a rift in the dynamics of the Mother’s family unit. These observations were included in my Reasons for Judgment in Cole & Santos [2016] FCCA 674 at [21], [22], [107], and [108].
The Mother has gone to great expense to arrive at a decision that could have been achieved via mediation or acceptance of certain offers during 2015 as readily as they were on the morning of 16 December 2015 moments before final hearing. Such an outcome would have been advantageous to all parties, but prescience is indeed a rare commodity in Family Law proceedings.
However, in the circumstances, the parties greatly narrowed the issues just prior to final hearing. I see no reason why the Father should be suffer a costs award for arguing issues of mutual discord simply because he capitulated on several points on the morning of the final hearing. Such occurrences are not rare in this Court.
Having considered the relevant factors found in subs.117(2A) of the Act, I find that there is no circumstance to justify departure from the Normal Costs Position.
Consideration of an Appropriate Award
Having found no justification to depart from the Normal Costs Position, the Court does not need to consider the Mother’s four lines of argument relating to the costs award quantum.
Costs for Application in a Case for Costs
There was little argument by either party on the issue of costs relating to the costs hearing.
However, I am content that there is nothing unusual about the application and conduct on the day by both parties, and so I find that each party should bear their own costs.
Conclusion
The Normal Costs Position is not displaced.
The Mother’s Application in a Case for costs fails.
For the above reasons, my Orders are appropriate and should be made.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Chief Judge Pascoe
Date: 17 October 2016
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