Emer & Caris (No 2)
[2024] FedCFamC1F 404
•14 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Emer & Caris (No 2) [2024] FedCFamC1F 404
File number: MLC 9665 of 2022 Judgment of: STRUM J Date of judgment: 14 June 2024 Catchwords: FAMILY LAW – COSTS – Ex Tempore Reasons – Where the applicant sought a costs order on an indemnity basis or, if unsuccessful, party-party costs – Where the respondent was found not to be a credible witness – Where the respondent advanced a case which was false and occasioned delay – Where the respondent resides in the applicant’s home rent free – Where an incapacity to meet an order for costs is not a bar to a costs order being made – Where the applicant privately funded his legal representation and the respondent received legal representation pursuant to s 102NA of the Family Law Act 1975 (Cth) (“the Act”) – Where the applicant was put to considerable cost in disproving the respondent’s case – Where the respondent was wholly unsuccessful in her application for a declaration pursuant to s 90RD(1) of the Act – Where the applicant made an offer of compromise to the respondent – Where the offer of compromise was rejected by the respondent – Where the respondent’s refusal to accept the applicant’s offer of compromise was imprudent – Order for indemnity costs. Legislation: Family Law Act 1975 (Cth) ss 90RD, 90SM, 102NA, 117 Cases cited: Calderbank & Calderbank [1975] 3 All ER 333
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Cooper & Oakley (No 2) [2012] FamCAFC 187
Davida v Davida(Costs) [2011] FamCAFC 61
Emer & Caris [2024] FedCFamC1F 251
Fitzgerald & Fish & Lynch (2005) 33 Fam LR 123
Kohan & Kohan (1993) FLC 92-340
Latoudis v Casey (1990) 170 CLR 534
Lehrmann v Network Ten Pty Ltd (Costs) [2024] FCA 486
Munday v Bowman (1997) FLC 92-784
Penfold v Penfold (1980) 144 CLR 311
Prantage & Prantage (2013) 49 Fam LR 197
Division: Division 1 First Instance Number of paragraphs: 54 Date of hearing: 6 June 2024 Place: Melbourne Solicitor for the Applicant: Sage Family Lawyers The Respondent: Litigant in person ORDERS
MLC 9665 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR EMER
Applicant
AND: MS CARIS
Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
6 JUNE 2024
THE COURT ORDERS THAT:
1.The Respondent pay the Applicant’s costs of and incidental to these proceedings fixed in the amount of $56,324.40, being the Applicant’s costs sought on an indemnity basis.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 the pseudonym Emer & Caris has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRUM J
INTRODUCTION
The respondent (“the respondent”) in these proceedings sought a declaration, pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”), that a de facto relationship existed between the applicant (“the applicant”) and her between late 2016 and September 2021.
On 17 April 2024, I made a declaration that the applicant and the respondent were never in a de facto relationship. These reasons for judgment should be read in conjunction with my reasons for that declaration (see Emer & Caris [2024] FedCFamC1F 251).
I also ordered on that date that any party seeking an order for costs file and serve written submissions and any material in support within 14 days, namely by 1 May 2024. I further ordered that any party opposing an order for costs file and serve responding written submissions and any material in support within 28 days, namely by 15 May 2024.
DISCUSSION
On 1 May 2024, the applicant filed written submissions and an affidavit of his solicitor. The respondent should have filed written submissions and any material in response by 15 May 2024. She did not do so. She has, in my brief exchanges with her this day, confirmed that she was aware of the orders that I made, including for the filing of submissions, and that she was aware that an application for costs had been made against her.
On 3 May 2024, the respondent’s solicitors at trial filed a Notice of Ceasing to Act, having been appointed by reason of an order made pursuant to s 102NA of the Act. Not having received any submissions by the respondent by 15 May 2024, on 23 May 2024, an email was sent by my chambers to the respondent’s email address requesting that she advise by 4.00pm on 24 May 2024 whether she wished to file responding written submissions and, if so, that she seek leave to do so, given she was out of time. Again, there was no response to that email.
On 29 May 2024, the parties were advised by my chambers that the matter would be listed for mention on this day, given the lack of response by the respondent. There was, again, no response by her, or on her behalf, and the first sign of life from her, since I delivered my substantive judgment, was by her appearance this morning. I stood the matter down, in order for an interpreter to be made available for her, as she had at trial.
The applicant seeks costs on three bases: on an indemnity basis in the sum of $56,342.40; alternatively, 85 per cent of his indemnity costs, in the sum of $47,875; and further and in the alternative, party/party costs at scale, in the sum of $41,544.67.
This was not a case in which, in my opinion, it was reasonably arguable that the parties were ever in a de facto relationship. At [32] of my reasons for judgment (see Emer & Caris [2024] FedCFamC1F 251), I said, inter alia:
…There are a number of aspects of the respondent’s evidence which give me concern regarding the accuracy and honesty of her evidence…
I identified some of the aspects of the respondent’s evidence which gave me concern as to her credibility, including her evidence that the signature which purported to be hers on a so-called “private lease agreement” by the applicant to her of his Suburb E property was not hers; that the applicant and she underwent a religious marriage ceremony; and that she fell pregnant to the applicant, which pregnancy was subsequently terminated.
In the recent decision of Lehrmann v Network Ten Pty Ltd (Costs) [2024] FCA 486, Lee J, in dealing with an application for costs arising from those proceedings, relevantly for present purposes, said as follows. At [49], his Honour stated:
It follows, it is submitted, that Mr Lehrmann engaged in an abuse of the Court's processes, ran a case based on falsities, and put Network 10 to the cost of defending a baseless proceeding. Given the subject matter and the success of the substantial truth defence, the seriousness of such conduct cannot be overstated and is of such a character as to justify an award of indemnity costs.
At [54], Lee J referred to his finding that:
…Mr Lehrmann had sexual intercourse with Ms Higgins and yet ran a primary case based upon the fanciful and knowingly false premise that in the early hours of 23 March 2019, he was preoccupied with noting up details as to French submarine contracts.
At [55], Lee J said as follows, in relation to Mr Lehrmann:
…He wrongly instructed his senior counsel to cross-examine a complainant of sexual assault, in two legal proceedings, including, relevantly for present purposes, this case, on a knowingly false premise.
Finally, at [56], Lee J said:
Indeed, this was misconduct in the running of his case of such a character, that even if I had not reached the level of satisfaction that Mr Lehrmann raped Ms Higgin (and Mr Lehrmann was therefore entitled to judgment of $20,000), in the counterfactual explained in the judgment, I would have declined to award costs in Mr Lehrmann’s favour. This would have been the appropriate exercise of discretion in those circumstances given Mr Lehrmann had acted in serious breach of his obligations under Part VB of the FCA Act in advancing a case he knew was false and which occasioned much delay, inefficiency and increased cost. …
I consider that many of the criticisms made by Lee J of Mr Lehrmann, in the passages of his Honour’s costs judgment to which I have referred, are applicable here. I have found that the respondent advanced a case that she knew was false and which occasioned much delay, albeit not of the magnitude in that case. This case spanned six days and, in particular, increased costs to the applicant who was privately funded, unlike the respondent, who was funded by the public purse, through Victoria Legal Aid, by reason of a grant of legal aid pursuant to s 102NA of the Act.
Section 117(1) – (2A) of the Act provides as follows:
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party's own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) 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.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
It is well settled that, although s 117(2) of the Act requires a finding of justifying circumstances as an essential prerequisite to the making of an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.
Further, it is also well settled that there is nothing to prevent any one factor being the sole determinant for an order for costs and, in that regard, I refer to the decision in Fitzgerald & Fish & Lynch (2005) 33 Fam LR 123.
I have been provided with fulsome and helpful submissions on behalf of the applicant, drawn by counsel who appeared on his behalf at trial but who does not appear today, and certainly no criticism is made in that regard. The gravamen of those submissions is that there are circumstances warranting an order for costs in favour of the applicant, and on an indemnity basis.
Turning to the various matters to which I must have regard under s 117(2A) of the Act, as addressed by the applicant. They are as follows.
As to paragraph (a) of s 117(2A) of the Act, namely, the financial circumstances of each of the parties to the proceedings, the only evidence before me is that at trial. The applicant deposed to being self-employed as a tradesperson, earning approximately $3,500 gross per week. He deposed to expenditure of $3,358 per week, including $873 per week in mortgage repayments for his Suburb E property, in which the respondent was residing, without his consent, and in which I am told today, she continues to reside, without any payment by her.
The applicant deposed to having a net asset position, including his relatively nominal superannuation entitlement, of approximately $54,000, and to living in a rental property with his wife and four children, of whom he is the sole income earner. None of this evidence was the subject of any meaningful challenge at trial.
The respondent deposed to earning $1,105 gross per week as a labourer and to a total expenditure of $528 per week. She further deposed to receiving additional household income from her two adult children, in the total sum of $1,900 per week, and otherwise to having net assets totalling about $14,000.
It is put on behalf of the applicant that, in cross-examination at trial, after having already adopted her Financial Statement as being true and correct, the respondent suggested for the first time that she was no longer employed in her labourer role. However, that had not previously been disclosed, nor was any documentation produced in support of that. It is correctly submitted that, even if the Court were to take that evidence at its highest, neither impecuniosity nor an incapacity to meet an order for costs are, per se, a bar to a costs order being made. See: Cooper & Oakley (No 2) [2012] FamCAFC 187 at [14].
It is further submitted that the best evidence before the Court, being the sworn Financial Statement of the respondent, prepared by her former solicitors and adopted by her in the witness box prior to cross-examination, is that she has surplus income in excess of $550 per week.
As to paragraph (b) of s 117(2A) of the Act, namely, 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, the applicant has privately funded his legal representation at all material times throughout these proceedings. On the other hand, on 24 May 2023, following the respondent’s former solicitors being granted leave to withdraw, an order was made for Victoria Legal Aid to provide the respondent with legal representation pursuant to s 102NA(1)(c)(ii) of the Act. That, in my view, is an important consideration. The applicant has been put to costs in the order of $56,000 on an indemnity basis, whereas the respondent has had the benefit of the public purse funding proceedings that, by reason of my findings, should not have been brought.
As to paragraph (c) of s 117(2A) of the Act, namely, the conduct of the parties in relation to the proceedings, a number of submissions are made on behalf of the applicant. It is submitted that the respondent was found, on the whole, not to be a witness of credit. That is correct. In particular, the applicant points to the following findings that I made.
First, the respondent’s narrative with respect to the alleged ceremonial marriage in Tasmania in late 2016 was wholly implausible; she confabulated her evidence on the topic, in certain respects; and I found her evidence on this issue, in cross-examination, to be a recent invention.
Secondly, the applicant points, correctly, to the respondent’s allegation, in relation to the termination procedure that she underwent in 2020, that it related to a foetus conceived with the applicant, and that the applicant attended with her upon Dr S in 2020, which was rejected. It is submitted that her credit was impugned, insofar as she asserted that she fell pregnant to the applicant and that he was her sole sexual partner during the period in which they were alleged to be in a de facto relationship. That is so.
Thirdly, the applicant points to the allegation of the respondent, namely, that he monitored and controlled her finances, which was inconsistent, as I found, with her evidence that he took no issue with her withdrawal of large cash sums to donate to a local Country B community cooperative. It is submitted that this was an attack on his “conduct and character” and that, without more, that allegation ought not to have been made. I do not necessarily agree with that submission. However, ultimately, I rejected her evidence that he monitored and controlled her finances.
Fourthly, it is submitted that the respondent’s evidence, together with that of her ancillary witnesses, with respect to her alleged contributions to the Suburb E property, was found to be inconsistent and contradictory. I, indeed, so found. It is submitted this was a critical finding in circumstances where those alleged contributions were a key pillar of her case and were, it in essence, the basis upon which she maintained that she was entitled to remain in the Suburb E property and to an alteration of interests therein.
Fifthly, the applicant points to the fact that the respondent’s allegation, that the so-called ‘private lease agreement’ was a ‘fake’, was rejected. It is submitted, and correctly so, in my view, that was tantamount to an allegation of fraud and having regard to the severity of same, it was incumbent upon the respondent to adduce an appropriate level of evidence. This could, and should, have included, as I observed, evidence from a handwriting expert to provide a proper basis for that allegation. In the absence of such evidence, it is submitted the allegation ought not to have been made. I agree.
The applicant acknowledges - correctly, in my view - that cost orders are not meant to be punitive. Rather, they are intended to compensate a successful party against the expense to which he or she has been put by reason of the proceedings. See: Latoudis v Casey (1990) 170 CLR 534 at [13]. In this case, the applicant has been put to the considerable cost of proving his case by reference to substantial corroborative documentation adduced into evidence and by the giving of evidence, both via his affidavit material and in cross-examination. That evidence was not successfully challenged in respect of any significant aspect of this case.
By contrast, when viewed in its totality, the paucity of corroborative evidence produced by the respondent in support of her allegations reveals a manifestly weak case that ought not to have been pressed.
Reliance is not placed upon paragraph (d) of s 117(2A) of the Act.
As to paragraph (e) of s 117(2A) of the Act namely, whether any party to the proceedings has been wholly unsuccessful in the proceedings, it is submitted, and I agree, that the respondent has been wholly unsuccessful in her application for a declaration pursuant to s 90RD(1) of the Act. As the person who sought that positive declaration, it was incumbent upon the respondent, who bore the burden of proof, to establish that a de facto relationship existed between the applicant and her, and she failed to discharge it. Conversely, the applicant has been wholly successful in resisting such a declaration.
Given that the sole focus on the proceedings to date has been the threshold question, it is submitted by the applicant that the respondent has been wholly unsuccessful in the proceedings. I agree. Indeed, by reason of the declaration I made on 17 April 2024, the substantive proceedings between the parties in this Court are at an end, save for the issue of costs.
As to paragraph (f) of s 117(2A) of the Act, namely, whether either party to the proceedings has made an offer in writing to settle the proceedings, I have read the affidavit of the applicant’s solicitor who appears today, Ms Mastroianni, and, in particular, annexure NM2 to that affidavit, filed on 1 May 2024.
It is clear from that document that, on 28 April 2023, the applicant, through his solicitors, made an offer of compromise in writing to the respondent, by her solicitors on the record at the time, to settle the proceedings. The terms of that offer provided, without the applicant conceding the existence of any de facto relationship between the parties, for the applicant to make a payment to the respondent in the sum of $20,000. The offer was expressly said to be made to avoid the parties incurring further costs. I observe that the proposed payment represented approximately 37 per cent of his net assets.
It is submitted by the applicant that the respondent had the benefit of rent-free accommodation in his Suburb E property, to the value of approximately $32,400, for the 18 month period from late 2021 to early 2023. Further, that situation was ongoing at the conclusion of the trial in late October 2023, and I have been informed, albeit from the bar table, by both parties that the situation, inexplicably, still persists.
The letter of offer further indicated that, whilst the respondent had retained the applicant’s motor vehicle, said to be worth $18,000, without his consent, he would take no action against her, or in relation to that vehicle, if the offer were accepted.
The letter of offer was expressly stated to be made in accordance with the principles in Calderbank & Calderbank [1975] 3 All ER 333 and Cutts &Head [1984] 1 All ER 597. The offer was expressed to be open for acceptance until 4.00pm on 5 May 2023. The respondent did not accept that written offer of compromise. It is submitted by the applicant that she should have done so and, by reason of the declaration that I made on 17 April 2024, I agree. By the time the offer was made, both parties had filed their trial material in preparation for the first trial listing in this matter on 10 May 2023. The respondent was well appraised of the applicant’s case. She was privately represented at the time and, it is submitted by the applicant, the Court can, and should, infer that she was made aware of the risks of refusing to compromise in the face of that written offer. There is no suggestion that is not the case.
It is also submitted that, by reason of being wholly unsuccessful in her application, and therefore being barred from seeking any substantive relief pursuant to s 90SM of the Act, it is clear the respondent has not achieved a better result than that which was put to her in the offer of compromise.
Lastly, in relation to such other matters as the court considers relevant, pursuant to paragraph (e) of s 117(2A) of the Act, the applicant points to the fact that, against his wishes, the respondent and her children, including her two adult children, have remained in the Suburb E property from late 2021 until the making of the declaration on 17 April 2024 and, indeed, thereafter, until the current time. This is so, without the respondent making any contribution whatsoever to the mortgage and, notwithstanding her assertion of having an interest in that property, this expense has been left, in its entirety, to the applicant, who has otherwise had to meet additional accommodation expenses for his family and him.
It is put on behalf of the applicant, and it would appear manifestly so, that he has been unable to secure vacant possession of the Suburb E property, pending determination by the Court of whether the parties were, in fact, in a de facto relationship or not. He submits that, even if the respondent had continued to contribute $1,800 per month towards the mortgage, pursuant to the ‘private lease agreement’ entered into between them, which I found to be the case, there would have been a contribution of nearly $64,800 by her towards the mortgage. Instead, the applicant, whilst bearing the entirety of that cost, has also been put to the additional expense of these proceedings, in which the respondent ultimately comprehensively failed to establish that she made any contribution towards the purchase of the Suburb E property.
The applicant has put into evidence, in support of his costs application, as Exhibit NM1 to his solicitor’s affidavit, a costs agreement, by which he is bound. He acknowledges, in his written submissions, that an order for costs departing from the Court scale should be of an exceptional kind. In that regard, he refers to the decision of the Full Court in Kohan & Kohan (1993) FLC 92-340, and also to the decision of the Full Court in Davida v Davida(Costs) [2011] FamCAFC 61 at [17].
It is further acknowledged by the applicant that there needs to be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. That is made clear by the decision of the Federal Court in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at [233] and also the decision of the Full Court of this Court in Prantage & Prantage (2013) 49 Fam LR 197.
In Munday v Bowman (1997) FLC 92-784, Holden CJ, in the Family Court of Western Australia, identified a number of circumstances in which costs on an indemnity basis may be warranted. First, where it appears that an action has been commenced or continued in circumstances where a party, properly advised, should have known that he or she had no chance of success. In this regard, I observe that, as is apparent from my earlier reasons for judgment and, in particular, the evidence of the respondent which I did not accept, she should have known that she had no chance of success.
Secondly, allegations of fraud were made by the respondent, knowing them to be false. She squarely alleged fraud on the part of the applicant and, notwithstanding that it was within her province to obtain a handwriting expert, either as a single expert or as an adversarial expert, she did not do so. She failed in establishing that allegation.
Thirdly, regard can be had to evidence of particular misconduct causing loss of time to the Court and to other parties. In the particular circumstances of this case, I consider that many of the matters in respect of which there was extensive cross-examination, and which required findings, were ultimately a loss or a waste of time to the Court and to the applicant and thereby required him to incur greater legal costs than he otherwise would have.
Fourthly, Holden CJ referred to the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions. In that regard, I refer to my findings in relation to the abortion which the respondent underwent, in circumstances where I found that the applicant was not the father of that unborn child. Similarly, the allegation of some kind of ceremonial marriage, which came undone in cross-examination, was the subject of adverse findings by me.
Lastly, Holden CJ referred to an imprudent refusal and offer to compromise. I have already referred above to the respondent’s refusal of the applicant’s written offer of settlement in late April 2023.
CONCLUSION
Given the matters which formed the subject of my reasons for judgment delivered on 17 April 2024, and with the benefit now of knowing that an offer of settlement was made, I am of the view that the respondent’s refusal to accept the applicant’s offer of compromise can properly be described as imprudent. This was not a case in relation to which reasonable minds might have differed. Given my findings of credit, the respondent must have known that her case was substantially founded upon untruths.
Whilst I take into account, and I am cognisant of, the comments of the Full Court in Prantage & Prantage (2013) 49 Fam LR 197, in my view, in the particular circumstances of this case, it is appropriate to make an order for indemnity costs and I shall so order.
In any event, I note that the range of costs sought by the applicant is, at its highest, $56,324.40 and, at its lowest, $41,544.67. On either basis, a costs order may well be a pyrrhic victory for the applicant because, it would seem on the evidence before me, there is at least a likelihood that any order I make will not be capable of being satisfied. However, that is not a reason not to make a costs order.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 14 June 2024
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