Conrad and Killen (No. 2)

[2017] FamCA 906

FAMILY COURT OF AUSTRALIA

CONRAD & KILLEN (NO. 2) [2017] FamCA 906

FAMILY LAW – COSTS – Magellan matter – where the mother altered her position during the trial and apologised to the father for making the allegations but the issue remaining was still whether or not she was an unacceptable risk of harm to the child having regard to the child’s lack of attachment to her.  Portion of the costs ordered to be paid by the mother.

Family Law Act 1975 (Cth)

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Danks and McCabe (2017) FLC 93,767
Medlon and Medlon (2015) FLC 93,664
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (2013) FLC 93-544

APPLICANT: Mr Conrad

RESPONDENT: Ms Killen

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: MLC 1582 of 2015

DATE DELIVERED: 10 November 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 8 November 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Ambrose

SOLICITOR FOR THE APPLICANT: Carew Counsel Pty Ltd

COUNSEL FOR THE RESPONDENT: Ms Carter

SOLICITOR FOR THE RESPONDENT: Westminster Lawyers Pty Ltd

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Victoria Legal Aid

Orders

1. That the mother pay the costs of the father of and incidental to:

   (a)      the proceedings brought by the father in April 2016; and

   (b)50 per cent of the costs of and incidental to the final hearing from the day after the matter was set down for trial until its conclusion, such costs to be calculated according to the Schedule set out in the Family Law Rules 2004. Such costs to be by agreement and failing agreement, as assessed.

2. That the application in a case otherwise filed on 24 October 2017 is 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 Conrad & Killen (No. 2) 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 1582  of 2015

Mr Conrad

Applicant

And

Ms Killen

Respondent

REASONS FOR JUDGMENT

1. Mr Conrad (the father) seeks a costs order against Ms Killen (the mother) on what he describes as an indemnity basis. That is, he seeks that the mother pay all of the costs he incurred arising from the proceedings in this court which culminated in final parenting orders on 22 September 2017.

2. The application for costs was filed out of time, the explanation for which was not canvassed, but it is apparent that at least part of the problem arose because of industrial action within the court by its staff and the inability of the court to process filed documents. As counsel for the respondent did not make a significant issue of the problem other than mentioning it, I consider that an extension of time is appropriate.

3. The father relies on an affidavit by his solicitor to show that he has paid $237,172.47 to date by way of legal costs. The calculation of those costs arises from a costs agreement which he executed on 23 September 2013. The costs agreement was exhibited to the affidavit of the solicitor in compliance with the rules of court to establish just what the father was committed to pay. Although I have not done the precise calculations, counsel for the father said that this commercial arrangement was about 1.7 times the costs’ scale in the Family Law Rules 2004.

4. The mother resists any application for costs and submitted that she should not have to pay any costs at all.

5. As counsel for the mother correctly submitted, orders for costs are not intended as a form of punitive action against a litigant but rather, to compensate a person who has had little or no choice other than to be involved. Here, I accept that the father had little choice but to proceed to seek an alteration of the extant parenting orders based on the evidence. As it transpired, his argument was correct and removing the parties’ child B (the child) from the mother was in his best interests.

6. It was also common ground that s 117 of the Act provides that each party must bear their own costs unless there the court finds there are justifying circumstances to depart from that principle. Unlike many civil dispute jurisdictions, costs do not automatically follow the cause.

7. In an appropriately put submission, counsel for the mother said that the court had to be cautious about ordering costs in a “Magellan” matter because otherwise, parents with legitimate concerns about the protection of their children would not bring matters before the court. I agree with the general sentiment but one has to look at what happened here to determine whether that applies and is justified.

8. The parties also correctly identified that if justifying circumstances are found, the court must consider the provisions in s 117(2A) of the Act before any costs order can be made.

9. If all of those matters are considered and it is justifiable to make a costs order, only then can costs be considered on some form of indemnification basis.

10. On 22 September 2017, I discharged all previous parenting orders and changed the residence responsibility for the child. That determination was not on the basis of the allegations of the mother but rather, as the judgment indicates:

    [1]      …The two fundamental issues for determination are:

    (a)which of the parents is best able to meet the child’s needs?; and

    (b)of the parties’ proposals, which will best enable the child to enjoy the benefits of a meaningful relationship with both parents?

    …

    [3]Of the two issues, in respect of (a) above, the experts say that the child is attached to the father but his attachment to his mother is insecure; consequently, the father is better able to meet the child’s needs.  In respect of (b), the answer depends on whether or not the court accepts that the mother has significantly changed her view about the father.

    [4](The) second controversy focussed on serious allegations of sexual impropriety made by the child’s mother… against the child’s paternal grandfather.  No impropriety was raised about the father other than an assertion that he was supportive of the grandfather…(T)he father was unilaterally excluded from the child’s life by the mother…

11. The father’s counsel observed that in April 2016, his client received a letter from the mother’s solicitor indicating that time with the child was being stopped pending an “open investigation”. In the reasons for judgment at [21], I found that letter was misleading. At the time of its receipt, the father did not know, and could not have known, that the allegation under investigation did not relate to him at all but rather to his father. Further, as he was to discover, that investigation ended quickly and the relevant authorities closed their files.

12. Counsel’s focus in this costs’ issue was on the mother’s conduct in relation to that episode. It was conceded by the mother’s counsel that the mother had not sought to suspend the extant orders leaving the father to file not just an application to resume his time on an interim basis but also an application for a substantive change of residence.

13. In addition to those matters, the letter from the solicitor could not have enabled anyone to understand what was happening. It took the father’s investigation to ascertain that the authorities were not interested in him. He ascertained also that they were not concerned about his father.

14. Extant parenting orders always permit a concerned parent to act protectively and decline contact time where a child makes such serious allegations but the responsibility then falls to that parent to bring the matter back to court to change the orders. Unilateral action is to be decried and here, the misleading letter did not help.

15. I was also critical of the mother in this same period for having not reality- tested what the child was saying and for not having spoken to the father about what was said to her. Unfortunately, that is not uncommon in families where all forms of trust have vanished but the “fact sheet” attached to all orders of this court, not to mention orders for equal shared parental responsibility, highlight the obligations on parents to co-operate with one another. In this case, with the benefit of legal advice, the mother should have instituted proceedings. The mother’s counsel conceded as much.

16. Having issued proceedings, the father’s contact was resumed by court order but the allegations continued thereafter.

17. Counsel for the mother submitted that it was significant that there was no challenge at trial to the evidence of the mother that the child had made, and continued to make, statements to her about his grandfather.

18. After the resumption of the father’s time, there were further unilateral acts of the mother to stop the father’s time. Her counsel submitted that the mother had support for her position because she had attended upon, and been listening to, two experts. A psychologist Dr F and a Paediatrician Dr P, created in the mother’s mind that there was substance to the child’s allegations. Unfortunately, as the testing of the evidence established, those professionals had limited evidence to work with. In any event, their views formed the basis of the mother’s belief that she was acting protectively towards the child by stopping his time with his father. Again however, it is important to understand that the allegations did not relate to the father but there was certainly an assertion that he did not believe his father had done anything wrong which gave rise to the assertion that he would not protect the child from the grandfather. As time rolled on in 2017, the mother did bring an application to restrict the father’s time but contact was resumed albeit under strict conditions.

19. Insofar as any of these matters are relevant to a costs’ application, it is significant that in the reasons for judgment, I said:

    [39]During 15 months between 2016-2017, of the allegations about the paternal grandfather, and the concerns about the father’s incapacity to protect the child, the mother had access to a number of expert views. 

    [40]…the mother had a report by consultant forensic psychologist [Ms H].  Her report was dated 20 December 2016.  Her evidence was contained in an affidavit filed 23 January 2017…

20. Ms H assessed the grandfather as a low risk.

21. In my reasons, I also observed that the mother had the views of the Department of Health and Human Services and police.  Their investigators acknowledged that nothing had been said to them by the child to corroborate what the mother alleged he had said to her.

22. At [42], I said that from March 2017, the mother had the affidavits of the paternal grandparents whose evidence about the possibility of the events was powerful.

23. The mother put the truthfulness of the father in issue. He filed an affidavit denying discussing with the mother his parents’ sleeping arrangements and in particular, the possibility of the child sleeping alone with the grandfather. I accepted the father’s evidence.

24. In January 2017, the parties were dealing with psychologist, Ms G who wrote that the allegations were concerning and needed investigation. But, in May 2017, Ms G wrote that the mother needed to suspend her focus on the sexual abuse issue and to look at behavioural issues.

25. In August, the parties attended upon a family consultant who wrote that the mother resolutely maintained there was a risk to the child. Allegations of conspiracy and cover-up were then made. That expert considered there was an alternative explanation for the child’s behaviour rather than giving substance to the allegations.

26. In cases where allegations are made by a vulnerable child, the court must act protectively but also balance the rights of that child under the Act to have a relationship with a parent knowing that the allegations are to be tested. It is unfortunate that some of these cases are delayed which compounds the problem because costs begin to rise. It is also unfortunate that when statements are made by a child such as the child, with the absence of any trust, the father is in a difficult position. It is difficult, if not impossible, to prove a negative and whilst all of the experts pore over the facts, time ticks by.

27. In this case, as the matter continued towards a trial, affidavits were filed, prepared by lawyers, and the evidence of all parties including that of the independent children’s lawyer was clear. The evidentiary position became clearer when outlines of arguments were filed.

28. The mother commenced a second day of her cross-examination indicating that she had thought about things and decided that despite having all of the relevant evidence for some time, there was no longer any doubt in her mind and she apologised to the father and his family for having accepted what the child said as being true. Commendable though that may have been, unfortunately, the father had been in this litigation for a long time and had been endeavouring to prove the negative.

29. I find that the approach of the mother in April 2016 and that relating to the period after the case was set down for trial in 2017 were not a proper and balanced assessment of the evidence. Apart from the obvious mounting evidence, that last moment change can be seen though her apology. Had that position been adopted much earlier, at least a significant portion of the father’s costs (and those of the independent children’s lawyer who has not sought costs) would have been avoided.

30. There is therefore a justification for departure from the principle that each party their own costs.

31. Before any order can be made, the court must contemplate the matters in

    
    

    s 117(2A) of the Act. Those matters are addressed next.

32. The financial circumstances are such that neither party is wealthy. Each has a modest amount of equity in the home in which they live. The father’s equity is greater than that of the mother but in either case, the amount is not large.

33. Each party is in employment with the father earning about $92,000 and the mother about $76,000.

34. Each party has borrowed heavily from family. It is apparent that this is connected to the proceedings. Whilst it was submitted by the mother’s counsel that there is no evidence that the quantum of the debt will be called in, this is not a property matter but rather an assessment of the financial circumstances of each party to see whether there is a just cause to make a party contribute towards the other’s costs. As will be apparent, the father’s costs have been incurred as a result of the litigation and unsurprisingly, his parents came to his aid. He would not have that level of debt had it not been for the matters to which I referred in paragraph 29 above. So too the mother’s debt is high but that is a matter that was within her control.

35. There are no apparent legal aid considerations here.

36. Much of the focus of the respective submissions was on the conduct of the parties but the court should distinguish between the person as a litigant and the person as a parent.

37. Section 117(2A)(c) focuses on the conduct of the parties in relation to “pleadings, particulars, discovery” and similar matters but it is also prefaced by the words “without limiting the generality of the foregoing”. On any view however, this provision is directed to the litigant rather than the parent. The court is able to consider whether the litigant acted appropriately particularly with the emphasis in the court’s rules at rule 1.04, 1.06, 1.07 and 1.08. I consider I am entitled to take into account the matters I mentioned in paragraph 29 above. Even if that interpretation is stretching the meaning of the rule, I consider I am entitled to take those matters into account because of

    
    

    s 117(2A)(g).

38. The court may also consider whether a party has failed to comply with past orders which action causes or contributes to the litigation. It is timely to remember that attached to the final orders, and incorporated into them, was a statement that the parties had to be proactive in relation to the operation of the orders. Unilateral action is to be criticised. In this case, the mother failed to consult the father, kept him in the dark and then capitulated at the end. “Capitulation” is a strong word but it was the word used in final address by counsel for the independent children’s lawyer. I find that the mother’s actions until trial indicated an unjustifiable position relating to past orders and obligations.

39. Another matter is whether a party has been wholly unsuccessful. That must apply here in the case of the mother.

40. It is important to observe that not all of those factors need to be present; the court just needs to consider them.

41. Despite the apparent straitened circumstances of the mother, that alone is not a basis for not making a costs’ order. Times can change and orders are judgments which are good for years to come.

42. The mother submitted that she had a belief based on the Dr F and Dr P advice and the statements of the child kept coming but that does not explain why, with the evidence mounting which pointed (with some objectivity) to another explanation for the child’s behaviour, the mother pushed on. I repeat that costs are not a punishment but are designed to compensate the party being dragged along. Unlike many family law cases in which parties compromise their positions, this case was not open to that negotiation because the issue concerned the unacceptability of the risk to the child in relation to both parties. The question was whether one case was without evidentiary foundation.

43. With the benefit of legal advice, the application in April 2016 should not have been necessary. So too, with that same benefit, the proceedings should not have been continued on the issue of the unacceptable risk to the child in the father’s care. However, it must be said that because there was no prospect of the mother agreeing to a change of residence as was evident by her counsel’s final submissions at trial, the father had little choice but to prove the point that the child was at risk in the mother’s care. That step meant that he would have incurred the costs in any event for some portion of the trial. However, it is clear to me that at least half of the time here was unnecessarily spent on the issue of whether or not the father was an unacceptable risk to the child.

44. I find in the circumstances that it is just to make an order for costs here.

45. The father then seeks what was described as indemnity costs.

46. Counsel for the father referred to Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225. But other authorities include Munday v Bowman (1997) FLC 92-784 and Prantage & Prantage (2013) FLC 93-544.

47. In Prantage, at [151]-[152] Murphy J who agreed with Thackray and Ryan JJ said:

    …the Act, the Rules read as a whole, and existing authority each evidence a clear intention that a significant disparity between the level of costs provided for in Schedule 3 and the fees payable by a client to their legal practitioner militates against an award of indemnity costs or, if the circumstances otherwise warrant such an order, operates as a brake on the quantum that might otherwise be awarded.

    Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party ... shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context. That, it should be observed, is not a fetter on this Court’s discretion to award costs or indemnity costs if justice so requires it (see Oshlack v Richmond River Council[1998] HCA 11; (1998) 193 CLR 72, at 134 (particularly subpar [3]), per Kirby J). Rather it recognises that an order for indemnity costs, has a particular context in this jurisdiction.

1. As Murphy J observed at [153], it is important to protect access to justice in family law matters by not exposing a litigant to the usual order for costs seen in other litigation. That is also the nub of the mother’s submission here that the court needs to be cautious not to deter parents from raising these issues. However, “Magellan” cases are probably more difficult than others because of the matters I earlier mentioned and the difficulty in proving the negative. In addition, the court must take a protective stance for children in interim applications of this nature and that can add to the burden of the parties wanting a resolution.

2. As Murphy J said in Prantage:

   The trial Judge referred to r 1.08(1)(g), (h), (i) and (j) but other Rules also seek to underscore an intention to keep costs to a minimum. For example, r 1.05(1) makes it mandatory, in the usual course, to comply with the pre-action procedures. One of the Objects of those procedures is, in turn, to “limit costs” (para 1(5)(c) of Schedule 1 to the Rules). The Rules oblige the Court to apply them in a way that “promotes the saving of costs” (r 1.07(1)(d)).

3. The point his Honour was making was that the court should not ignore its own rules by allowing significant costs in circumstances where the parties, albeit aware of what the scale of costs provide, will sign costs agreement well above the scale. Thus, even had the father accepted that despite the mounting evidence against the mother’s position, he ought not to have gone to the elaborate lengths he did to expend the amount that he ultimately incurred. In signing the costs agreement, the father well knew that his costs would be above those that the court would normally consider.

4. Counsel for the father submitted that with the serious accusations made by the mother, the matter warranted the attention of senior counsel. I have no doubt that the father saw that as appropriate and incurred the high fees that he did but that must also be seen in the context of the mounting evidence. He must have known that if he was successful having incurred those high costs, he might not have been able to recover them.

5. Counsel for the father relied on the Full Court decisions in Medlon and Medlon (2015) FLC 93,664 and Danks and McCabe (2017) FLC 93,767.

6. In Medlon, Strickland J sitting as a judge alone found that the proceedings should never have been brought. I could not say that applies here. In Danks, Strickland J considered on appeal that the case fell within the category of cases where the appeal had no chance of success, there were irrelevant allegations of fraud and there were allegations that should never have been made. Again, there was a problem in this case and its resolution should have come about earlier but on any view, having regard to the findings I made, there would have been some form of proceeding based on the second issue of unacceptable risk.

7. I could not find in the circumstances of this case fell within Colgate-Palmolive v Cussons Pty Ltd (supra) but the facts are more that of a misguided parent whose attention to resolving the litigation properly was missing.

8. It is just therefore to make an order for costs in relation to all of the attendance circumstances from the father’s application in April 2016 and a portion of the costs he incurred in the ultimate trial. As I considered there were two risk situations to be considered and each was equally important, I consider the father should have half of his costs of and incidental to the trial on a scale basis; that half being because he had the onus of establishing that the mother was an unacceptable risk to the child by virtue of the attachment problem and her inability to accept that there was an alternative explanation for the statements that the child was making. It would be artificial to try and divide those costs into their different causes of actions so to avoid that, I consider that the whole of the father’s costs from the day after the case was set down should be assessed and then divided by two. All of those costs including counsel’s fees should be calculated according to the relevant scale and if the parties do not agree, they will have to have those costs assessed.

I certify that the preceding Fifty-Five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 November 2017.

Associate: 

Date:  10 November 2017