Cresswell & Conroy (No 2)
[2023] FedCFamC2F 669
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Cresswell & Conroy (No 2) [2023] FedCFamC2F 669
File number(s): PAC 4677 of 2016 Judgment of: JUDGE OBRADOVIC Date of judgment: 16 June 2023 Catchwords: FAMILY LAW – COSTS – Application for indemnity costs – Application for ICL’s costs – Scale costs ordered Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Cochrane & Cochrane [2012] FMCAfam 984
Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801
Collins & Collins [1985] FamCA 15
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158
Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364
Greedy and Greedy [1982] FamCA 41
I & I (No.2) [1995] FamCA 80
Jensen &Jensen [1982] FamCA 57
Kohan & Kohan [1992] FamCA 116
Latoudis v Casey [1990] HCA 59
Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157
Munday v Bowman (1997) FLC 92-784
Penfold & Penfold [1980] HCA 4
Ragatta Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115
Renald & Renald (Costs) [2018] FamCAFC 4
Stasiuk & Guild [2021] FamCAFC 62
Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd [1991] FCA 225
Division: Division 2 Family Law Number of paragraphs: 43 Date of last submission/s: 17 May 2023 Date of hearing: In Chambers Place: Parramatta Counsel for the Applicant: Ms Houghton Solicitor for the Applicant: Wilkinson, Throsby & Edwards Counsel for the Respondent: Ms Breeze Solicitor for the Respondent: STC Legal Counsel for the Independent Children's Lawyer: Ms Stollier Solicitor for the Independent Children's Lawyer: Brian Samuel & Associates ORDERS
PAC 4677 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS CRESSWELL
Applicant
AND: MR CONROY
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
JUDGE OBRADOVIC
DATE OF ORDER:
16 JUNE 2023
THE COURT ORDERS THAT:
1.Within 3 months, the applicant, Ms Cresswell, pay the costs of the respondent, Mr Conroy, assessed in the amount of $178,743.
2.Within 28 days, the applicant, Ms Cresswell, pay the costs of the Independent Children’s Lawyer assessed in the amount of $18,115.
3.Within 28 days, the respondent, Mr Conroy, pay the costs of the Independent Children’s Lawyer assessed in the amount of $16,465.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Cresswell & Conroy (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE OBRADOVIC:
On 15 March 2023, the Court made orders and delivered its Reasons for Judgement in respect of both final parenting and property adjustment orders. The Court’s reasons, together with the relevant background can be found at Cresswell & Conroy [2023] FedCFamC2F 274 (“Judgment”).
Although a Notice of Appeal was filed in respect of the Judgment on 23 April 2023, no stay application has ever been brought, either in respect of parenting or property orders as made.
In accordance with the orders dated 15 March 2023, the parties were invited to file and serve evidence and written submissions in respect of any costs applications.[1]
[1] This order was made subsequent to the respondent making submissions in respect of costs in his submissions sealed 1 December 2020, in the substantive proceedings, and the applicant submitting in her written submissions sealed 14 December 2020, that the question of costs be adjourned after judgment was delivered.
Both the Independent Children’s Lawyer (“ICL”) and the respondent in the substantive proceedings, Mr Conroy (“respondent”), press for orders for costs:
(a)The ICL seeks both parties contribute to its costs in the amount totalling $36,229, with the applicant in the substantive proceedings, Ms Cresswell (“applicant”), to pay $18,115 and the respondent to pay $16,465, acknowledging the respondent had made an initial contribution of some $1,650 in June 2020; and
(b)The respondent seeks costs on an indemnity basis against the applicant in the sum of $387,310.
The applicant opposes the making of any adverse costs order against her.
As no objection has been raised by any of the parties, the Court proposes to deal with the costs applications on the papers. In that respect, the Court has read and had regard to the following:
(a)Affidavit of Brian Samuel, sealed 15 March 2023;
(b)Written Submissions of the Independent Children’s Lawyer in Respect to Costs, sealed 15 March 2023;
(c)Written Submissions for Costs by the Respondent Husband and Father (Mr Conroy), sealed on 12 April 2023;
(d)Bundle of documents under heading “Tender Bundle of Respondent in the matter of Costs”, lodged with the Court on 12 April 2023;
(e)Submissions in Response to Application of Costs on Behalf of Father and Independent Children’s Lawyer, sealed on 1 May 2023; and
(f)Written Submissions for Costs by the Respondent Husband and Father (Mr Conroy), in Response to the Submissions of the Mother, sealed on 18 May 2023.
RELEVANT LEGAL PRINCIPLES
The principles in respect of costs orders in family law proceedings are well known.
The starting position with respect to costs, as set out in s.117 of the Family Law Act 1975 (Cth) (“Act”) is that, subject to sub-section 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[2] No one factor under s.117(2A) prevails over any other factor. It is a matter of weight that is accorded to each of the relevant factors in the Court’s discretion.[3]
[2] For example, Collins & Collins [1985] FamCA 15.
[3] Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157 at [24] (“Medlon”)
The High Court held in Penfold & Penfold[4] that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
[4] [1980] HCA 4 (“Penfold”).
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which an applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a “clear case”.[5]
[5] Penfold; Jensen &Jensen [1982] FamCA 57.
Any one of the factors in s.117(2A) may be the sole foundation for an order for costs.[6] Nevertheless, the relevant matters in s.117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.[7]
[6] PBF as Child Representative for AF [2005] FamCA 158 at [41]; Renald & Renald (Costs) [2018] FamCAFC 4 at [11] (“Renald”).
[7] I & I (No.2) [1995] FamCA 80; Renald at [11].
In Latoudis v Casey[8] the High Court stated as follows:
[I]n exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.
[8] [1990] HCA 59 (“Latoudis”) at [13]; also, referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane [2012] FMCAfam 984 at [17].
In determining what order, if any, should be made under s.117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
The Court has the power to order costs on an indemnity basis.[9] An order for indemnity costs in proceedings to which s.117 applies is exceptional.[10]
[9] Kohan & Kohan [1992] FamCA 116 (“Kohan”); Latoudis.
[10] Kohan; Stasiuk & Guild [2021] FamCAFC 62.
The principles in respect of indemnity costs orders are also well known,[11] relevantly: [12]
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;[13]
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud;[14]
(c)Evidence of particular misconduct causing loss of time to the court and to other parties;[15]
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;[16] and/or
(e)An imprudent refusal of an offer to compromise.
[11] See generally Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801.
[12] Medlon at [28] referring to Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660.
[13] See Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364 (“Fountain Selected Meats (Sales) Pty. Ltd”).
[14] Fountain Selected Meats (Sales) Pty. Ltd.
[15] Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd [1991] FCA 225.
[16] Ragatta Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115.
It is unnecessary to spell out detailed reasons for decisions in costs matters.[17]
[17] Greedy and Greedy [1982] FamCA 41; Renald at [12].
DETERMINATION
Neither the applicant nor the respondent have put on any evidence as to their respective current financial circumstances.
The applicant submits that the effect of the order sought by the respondent would bankrupt her. The applicant does not put on any evidence as to the inevitability of her financial ruin if she was faced with a costs order. Presumably, the submission is made on the basis that the quantum of costs sought by the respondent exceeds the applicant’s available assets. This is a risk of litigation.
While a submission is made that the respondent, following the payment of his legal costs, will be left behind in the amount of $47,007, such submission is likewise not supported by any evidence, and it is entirely unclear on what basis that submission is made. Just because the total costs incurred by the respondent might be as much as $387,310, and the Court has found that following the property adjustment order he will receive $340,303, this does not mean that the amounts are simply subtracted from each other. The Court accepts however, that this may ultimately be the net outcome to the respondent of the proceedings, that is, that his total legal costs are greater than the benefit of the property adjustment order. This is a risk of litigation.
In its Judgment, the Court accepted that the respondent was in debt to his mother in the amount of $181,069 arising out of legal fees he had paid to date. However, the terms of that loan are not before the Court.[18] At time of Judgment the respondent had $122,037 in outstanding legal fees. The costs agreement between the solicitor and the respondent is before the Court, however, of itself, it only speaks to its terms. It now appears that based on the documents in the respondent’s tender bundle, there remains $39,980 in unpaid legal costs.
[18] Albeit some oral evidence was given in the substantive proceedings about an expectation that the moneys be paid back.
Furthermore, no explanation is offered by the respondent as to why there is a difference between the amount of costs he seeks on an indemnity basis, namely $382,030 (or alternatively $387,310),[19] and the costs which were found to have been incurred by him at the time of final hearing (totalling $303,106). It is not the role of the Court to cross-check the respondent’s calculations against his primary documents, nor to reason away a discrepancy where no explanation about that discrepancy is offered.
[19] The respondent’s submissions on costs refer to the amount of $387,309.71 (which the court has rounded up to the nearest dollar) at paragraph 5 of the submissions but to a different amount of $382,029.71 (which the court has rounded up to the nearest dollar) at paragraph 13 of the submissions.
The Court is aware of the parties’ financial circumstances in so far as they form part of the findings in the Judgment. Following the making of the property adjustment orders, the applicant was to have assets to the value of $278,430 and the respondent $340,303. The Court, in its Judgment, indicated that the property pool may likely be eclipsed by the total legal costs.
The conduct of the applicant during the proceedings is a significant factor weighing in favour of the Court exercising its discretion to make a costs order against her in respect of the respondent’s application for costs.
The Court, in its Judgment, found that there was clear evidence of non-disclosure of relevant financial matters by the applicant, and that the applicant did not impress as a witness of truth. The Court found that the applicant was prepared to mislead and in fact did mislead in order to support her case. The applicant’s evidence was found to be in many respects wholly unreliable and in many aspects bordering on the bizarre. Furthermore, the Court found that the applicant did not facilitate time between the child and the respondent in accordance with interim orders, that she ignored court orders, that she made concessions that she had breached court orders, that she did not want to be bound by court orders and that she had flouted and disregarded court orders even during the hearing. The Court gave little weight to the applicant’s evidence where it was not independently corroborated by evidence arrived at from business records and subpoenas, and where the evidence of the applicant and the respondent were in conflict, the Court preferred the evidence of the respondent.
Neither party was wholly unsuccessful in the proceedings to the extent that both parenting and property adjustment orders were ultimately made, and each of them sought orders of this type.
The respondent made three offers of compromise, two with respect to property adjustment and one with respect to parenting. The applicant would have been better off had she accepted any of those offers than she ultimately was following the final hearing and the final orders made. Indeed, there had been an agreement in respect of parenting on the second last day of final hearing which was later reneged upon by the applicant. The exact terms of the agreement that was reached but later rejected however, are not before the Court.
These Reasons for Judgment should be read together with the Judgment, not only to understand the chronology but also to understand the findings made in respect of the applicant’s credit and conduct during the proceedings.
As is clear from the Judgment, there were a number of interim parenting orders, the appointment and subsequent discharge of a case guardian, and in total 14 days of final hearing over almost 3 years, with over 700 pages of transcript, many hundreds of pages of evidence and lengthy written and oral submissions.
These were protracted proceedings, in part impacted by the COVID-19 pandemic and restrictions that were in place from time to time, but mostly protracted due to matters associated with the conduct of the applicant. There was also regrettably, delay in the delivery of the Court’s Judgment.
The proceedings commenced in October 2016 and concluded in March 2023, a period of over 6 years. During that time, the respondent was twice hospitalised following acute mental health episodes. One such episode caused the Court to appoint a litigation guardian for her, with such litigation guarding being ultimately discharged following expert evidence as to the applicant’s mental health and competence in respect of making parenting decisions.
Costs are not about punishment, they are about compensation. The applicant brought these proceedings. She was ultimately unsuccessful both in respect of the actual parenting orders she sought and in respect of the actual property adjustment orders she sought.[20] She was legally represented at various times throughout the 6 plus years of the proceedings, and for 10 out of the 14 days of the final hearing.[21]
[20] The orders as made were not in accordance with the applicant’s application to the Court.
[21] From day 5 of the final hearing, 18 May 2020 to the conclusion of the final hearing.
The submission in the applicant’s case, that the Court’s finding that there is no evidence of any mental health diagnosis which might go to explaining some of the applicant’s behaviours “does not mean that there was not mental health evidence which could help explain aspects of the conduct of the litigation”, is most unhelpful given that no attempt is made to point to any such evidence which could explain aspects of the conduct of the litigation.
Indeed, the applicant has now been legally represented for some time. Those legal representatives accepted instructions from the applicant. It is therefore appropriate to infer that the applicant must have been legally competent at all relevant times she was legally represented for the legal representatives to act on her instructions.
There are circumstances justifying the making of a costs order.
The circumstances are not exceptional such as to warrant the making of an indemnity costs order. The respondent has failed to meet that high bar.
Taking into consideration the relevant s.117(2A) matters as discussed earlier in these reasons, an order that the applicant pay the respondent’s solicitor’s costs in accordance with the current scale as set out in sch.1 of Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth) is to be made, noting also that it was appropriate for Counsel to appear at all events she appeared at, instructed by the respondent’s solicitor.
Costs are assessed as follows:[22]
[22] The Court events are taken from the Court file.
Item Description Amount (incl. GST) 2 Initiating and Opposing an application that includes interim orders.[23] $2,357 3 Initiating or Opposing Application for interlocutory orders:[24] · Application in a Case filed 7/6/17 $1,964 · Application for Recovery filed 2/10/19 $997 · Application for Review filed 4/10/19 $997 · Opposing an Application Contravention filed by applicant’s case guardian on 31/10/19 $997 · Opposing an Application in a Case filed 8/11/19 $1,964 · Opposing an Application in a Case filed 23/2/20 $1,964 · Application in a Case filed 18/12/20 $1,964 4, 5, 6 & 13, Procedural Hearings, Conciliation Conference, Dispute Resolution and Daily Hearing Fee (not already specified): · Mention - 15/11/16 $321* · Mention - 29/11/16 $321* · Child Dispute Conference - 16/3/17 $1,964 · Interim Hearing - 31/03/17 $2,357* · Conciliation Conference - 8/6/17 $1,964 · Duty List, Mention - 3/7/17 $321* · Mention - 8/8/17 $321* · Interim Hearing - 26/10/17 $2,357* · Mention - 4/6/18 $321* · Mention - 30/7/18 $321 · Final Hearing Day 1 - 11/2/19 $2,357* · Final Hearing Day 2 - 12/2/19 $2,357* · Final Hearing Day 3 - 13/2/19 $2,357* · Final Hearing Day 4 - 15/2/19 $2,357* · Interim Hearing - 22/2/19 $1,178* · Mention - 16/5/19 $321* · Duty List, Mention - 21/10/19 $321* · Mention - 13/12/19 $321* · Mention - 14/2/20 $321* · Duty List, Mention - 1/5/20 $321* · Final Hearing Day 5 - 18/5/20 $2,357* · Final Hearing Day 6 - 19/5/20 $2,357* · Final Hearing Day 7 - 20/5/20 $2,357* · Final Hearing Day 8 - 21/5/20 $2,357* · Final Hearing Day 9 - 2/11/20 $2,357* · Final Hearing Day 10 - 3/11/20 $2,357* · Final Hearing Day 11 - 4/11/20 $2,357* · Duty List, Mention - 23/12/20 $321* · Final Hearing Day 12 - 12/8/21 $2,357* · Final Hearing Day 13 - 18/11/21 $2,357* · Final Hearing Day 14 - 19/11/21 $2,357* 13, 14 Daily Fee for Counsel with Advocacy Loading in respect of each interim hearing and final hearing day (marked with * above) $63,632[25] 10 Attendance at hearing to take judgment and explain orders: · Interim judgment delivered - 9/5/17 $321 and $321 · Final judgment delivered - 15/3/23 $321 and $321 15 Drafting, conferences and chamber work (allow 100 hours for solicitor (over 6 years) and 50 hours for junior counsel (over 6 years)) $26,000 and
$18,05016 Disbursements (as per tax invoices in tender bundle)[26] $9,903 TOTAL: $178,743
[23] Court events not included, see under item 13.
[24] Court events not included, see under item 13.
[25] Rounded up to nearest dollar.
[26] Rounded to nearest dollar.
As such, the applicant is to pay the respondent’s legal costs assessed in the amount of $178,743. Noting the quantum of the order to be made, the applicant will be given 3 months to make such payment.
Lastly, the ICL seeks costs in accordance with Legal Aid NSW’s scale of fees in the total amount of $36,229, inclusive of counsel fees, disbursements and GST.
The Court is satisfied that there are circumstances justifying the making of a costs order in respect of the ICL’s costs, and that the parties should bear such costs on an equal basis. The respondent has already made contribution of $1,650.
Accordingly, the applicant is to pay the ICL’s costs in the amount of $18,115, and the respondent is to pay the ICL’s costs in the amount of $16,465, such costs to be paid within 28 days.
For all of those reasons, orders as set out at the forefront of these Reasons for Judgment will be made.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic. Associate:
Dated: 16 June 2023
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