Firth and Hale-Forbes (No. 2) - [2013] FamCA 814

FAMILY COURT OF AUSTRALIA

FIRTH & HALE-FORBES (NO. 2)

[2013] FamCA 814

FAMILY LAW – STAY APPLICATION – Where the father lodged an appeal against final orders made in respect of child support departure – Where the father sought a stay of the child support departure orders pending the determination of the appeal – Where the father was not complying with the orders – Discussion of the law in relation to an application by a party who has not complied with an order of the court – Where the Court found that the father’s non-compliance with the orders, and his inability to demonstrate a lack of capacity to pay in accordance with the orders, or that to do so would cause him hardship, were sufficient grounds to decline to exercise the discretion in his favour – Father’s application for a stay dismissed

FAMILY LAW – SLIP RULE APPLICATION – Where the mother sought a variation of the final orders pursuant to the slip rule – Discussion of the law relating to the exercise of the slip rule –Where the amendments sought by the mother fell into the category of accidental omission – Where one of the amendments sought by the mother fell into the category of clerical mistake – Orders amended as sought by the mother pursuant to the slip rule

FAMILY LAW – COSTS – Slip rule application − Where the father was given every opportunity by the mother to agree to the slip rule amendments and did not − Where the father’s opposition to the application was unreasonable, and was wholly unsuccessful – Father to pay the mother’s costs

FAMILY LAW – COSTS – Interim application − Where the mother was forced to bring the application because of the father’s refusal to consent − Where the consent the father gave in court could have been given earlier had he chosen to do so − Where costs were unnecessarily incurred − Where the father’s financial circumstances are greatly superior to those of the mother − Father to pay the mother’s costs

FAMILY LAW – COSTS – Substantive proceedings in relation to the departure from the child support orders − Where the Court considered the father’s substantial misrepresentation of his income as a matter to be taken into account under s 117(2A)(g) – Where there is a disparity in the relative financial circumstances of the parties − Father to pay the mother’s costs

FAMILY LAW – COSTS – Where the mother sought that any costs payable by the father to the mother be on an indemnity basis – Discussion of the authorities on indemnity costs – Where the Court found that the circumstances of the case did not meet the stringent test for indemnity costs – Costs to be paid on a party and party basis

Family Law Act 1975 (Cth)
Child Support (Assessment) Act 1989 (Cth)
Family Law Rules 2004 (Cth)

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106
Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 71 ALR 287
Colgate-Palmolive Co v Cussons Pty Limited (1993) 118 ALR 248
Fahmi & Fahmi (1995) FLC 92-637
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd & Ors (1988) 81 ALR 397
Hand & Bodilly [2013] FamCAFC 98
Prantage & Prantage [2013] FamCAFC 105
Vance & Vance (2011) FLC 93-461
Watson & Watson (2013) FLC 93-530

APPLICANT:

Mr Firth

RESPONDENT:

Ms Hale-Forbes

FILE NUMBER:

SYC

3026

2011

DATE DELIVERED:

18 October 2013

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Rees J

HEARING DATE:

16 August 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Gersbach

SOLICITOR FOR THE APPLICANT:

Cameron Gillingham Boyd

COUNSEL FOR THE RESPONDENT:

Mr Cummings

SOLICITOR FOR THE RESPONDENT:

Barkus Doolan Kelly

Orders

That the application of the father to stay orders made 10 May 2013 is dismissed.
That pursuant to the slip rule the orders made 10 May 2013 be amended as follows:
(a)       By inserting Order 3.1 That E and B live with the mother.
(b)       That the following order be inserted after Order 11:
11.1 That pursuant to section 112 of the Child Support (Assessment) Act 1089 (Cth), leave be granted for the making of an Order pursuant to Section 118 of the Act.
(c)That Order 12 be amended to insert the word ‘periodic” and substitute the date “1 July 2012” for the date “I June 2012” so as to read as follows:
12. That pursuant to section 118(1) of the Child Support (Assessment) Act 1989 (Cth), the rate of periodic child support payable by the father be varied as follows:
(a)      for the child support period commencing on 1 July 2011 and finishing 30 June 2012, a lump sum of $50,286.60.
(b)      for the child support period commencing on 1 July 2012 and finishing on 30 June 2013, and each year thereafter, the annual rate be $343.33 per week per child.
That the father pay the mother’s costs of and incidental to the application for amendment pursuant to the slip rule as assessed or agreed on a party and party basis.
That the father pay the mother’s costs of and incidental to the interlocutory application filed 29 June 2012 as assessed or agreed on a party and party basis.
That the father pay half of the mother’s costs of the substantive proceedings as assessed or agreed on a party and party basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Firth & Hale-Forbes(No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3026 of 2011

Mr Firth

Applicant

And

Ms Hale-Forbes

Respondent

REASONS FOR JUDGMENT

In this matter the Court heard substantive applications for parenting orders and child support departure orders on 8 to 10 April 2013. The applications were determined by judgment delivered on 10 May 2013. The father, who was the applicant in the substantive proceedings, has appealed against the orders only in respect of the child support departure. He seeks a stay of those orders pending the determination of the appeal. The mother opposes that application.
The mother seeks costs of an interlocutory application filed by her on 29 June 2012 and heard on 3 July 2012.
The mother seeks costs of the substantive proceedings.
The mother also seeks a variation of the final orders pursuant to the slip rule.
The matters were listed on 16 August 2013 for submissions. Because of late filed material, it was agreed that submissions could not be completed and directions were made for the provision of written submissions.

the stay application

The principles relating to the granting of a stay pending appeal are well known but can be conveniently stated by reference to the decision of the Full Court in Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106 as follows:
17.This is an appeal from a discretionary judgment. There are well established principles on the limits on interference by an appellate court with such a judgment (see House v The King (1936) 55 CLR 499; Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716).
18.The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSW LR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 161 CLR 681; Clemett & Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332). The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:
·    the onus to establish a proper basis for the stay is on the applicant for the stay. However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;
·    a person who has obtained a judgment is entitled to the benefit of that judgment;
·    a person who has obtained a judgment is entitled to presume the judgment is correct;
·    the mere filing of an appeal is insufficient to grant a stay;
·    the bona fides of the applicant;
·    a stay may be granted on terms that are fair to all parties - this may involve a court weighing the balance of convenience and the competing rights of the parties;
·    a weighing of the risk that an appeal may be rendered nugatory if a stay is not granted – this will be a substantial factor in determining whether it will be appropriate to grant a stay;
·    some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case;
·    the desirability of limiting the frequency of any change in a child’s living arrangements;
·    the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of the stay for a short period of time; and
·    the best interests of the child the subject of the proceedings are a significant consideration.
Significantly, the Full Court refers to the fact that the granting of a stay is itself discretionary. The orders against which the father appeals are orders for departure from a child support agreement. The father applied to reduce the periodic child support to nil (while continuing to pay the school fees). The mother applied for an increase in the rate of periodic child support.
The factual background of the child support dispute was set out in the substantive judgment, delivered 10 May 2013, as follows:
113.It is common ground that in July 2008 the father commenced an application seeking to vary the parenting orders and specifically the time which the children would spend with each parent. No orders were sought in the father’s application in relation to child support and therefore no financial material was filed by him or by the mother. It was the father’s evidence that in circumstances where, he said, the mother declined to provide financial disclosure, he chose not to provide her with any financial information. The parties entered into negotiations and attended mediation and ultimately reached an agreement which included a variation of the existing child support arrangements. That agreement was embodied in consent orders which were ultimately made by the Court on 10 December 2008.
114.It is common ground that in the negotiations leading up to consent orders relating to child support there was no formal financial disclosure. On 20 May 2008 the father sent an email to the mother in relation to child support. The email read in part “however, if you use the child support calculator and assume your income is 300,000 (which is a guess) and mine is 750,000 (which it is not), the amount due would be zero.” The only reasonable inference to be drawn from the father’s email is that he asserts his income is less than $750,000.
115.At the time of the trial before O’Ryan J in 2005 the income of the father was $549,000 and he was working for four days each week.
Evidence before the Court in these proceedings indicates that in the financial year ended 2008 the father’s actual taxable income was $1,473,065 and the mother’s actual taxable income was $367,642. The mother’s unchallenged evidence is that, if she had known that the father’s taxable income in 2007/2008 was not less than $750,000, as he represented, but $1,473,065, she would never have consented to a variation of the child support orders in December 2008.
The orders which were made provided for a substantial increase in the rate of periodic child support. The father, in support of his application for a stay, swore an affidavit on 19 June 2013. Nowhere in that affidavit does he say whether he is, in fact, paying periodic child support in accordance with the orders made 10 May 2013. After some prevarication on the part of Counsel, then appearing for the father, it was conceded that the father had unilaterally determined to disregard the orders made 10 May 2013 and to continue to pay periodic child support at the level provided in the December 2008 consent orders. There is no evidence in his affidavit that the father was making, or intended to make, any arrangements to pay arrears or that he had paid, or intended to pay, arrears.
Thus the father, who is a legal professional and an officer of the court, asks for the exercise of discretion in his favour, in circumstances where he declines to comply with the very orders he seeks to stay.
The granting of a stay is entirely discretionary.
In Watson & Watson (2013) FLC 93-530, the Full Court, referring to Fahmi & Fahmi (1995) FLC 92-637, considered the law in relation to an application by a party who has not complied with an order of the court. Relevantly the Full Court, at [86962]-[86963], said that the Court may, in its discretion, refuse to hear a party in breach of an order only if that party makes an application in the same proceedings or in the same cause in which the disobedience of an order has occurred.
In the present case, the father seeks a stay of the very orders with which he declines to comply.
If the father’s non-compliance with the orders were not sufficient grounds to decline to exercise discretion in his favour, the following matters would be persuasive.
In the affidavit in support of his application he does not assert either, that he does not have capacity to pay in accordance with the orders, or that to do so would cause him hardship.
Refusal to stay the orders does not render the appeal nugatory.
If the order is not stayed, and the appeal is successful, the father suffers no detriment as he is not presently complying with the order.
If the order is stayed and the appeal is unsuccessful, the father will have avoided paying the proper amount of periodic support for the children.
If the order is not stayed and the appeal is unsuccessful, the father will be liable to pay arrears, but those arrears are no more than the periodic payment he should currently be paying and the resultant interest.
Since the father is not complying with the orders, the mother will not be required to make a repayment if the order is not stayed.
There is no evidence before the Court about when the appeal is likely to be heard and determined. It is assumed that the necessary application for leave will be dealt with at the commencement of the substantive appeal. I do not speculate about whether leave would be granted other than to accept the submission of Counsel for the mother that, on their face, the grounds of appeal do not appear to identify an error of principle.
In so far as the father seeks to rely on the mother’s evidence in cross-examination about the payment of child support for the oldest child, I reject that submission. The transcript clearly demonstrates that the mother’s position was a negotiating one. Her evidence was:
That if the only thing that is stopping … [the father] agreeing to there being no orders in respect of [H] [the oldest child], that he would be required to pay child support in relation to the period of time that he was with me, then I – he need not pay any. I don’t seek any order for child support in respect of [H] and in respect of any time he spends with me.
(Transcript of 10 April 2013, lines 12-16)
The father did not agree to there being no orders in relation to the oldest child and the mother in submissions pursued her application.
The father’s application for a stay is dismissed.

the slip rule application

Boland J, sitting as the Full Court, summarised the law relating to the exercise of the slip rule in Vance & Vance (2011) FLC 93-461 in the following way:
14.In Burrell v The Queen the High Court (Gummow A-CJ, Hayne, Heydon, Crennan and Kiefel JJ) examined the question of finality of orders, and the limited circumstances in which the orders of a superior court of record can be amended. Having discussed the “rule” about finality of litigation, at paragraph 21, their Honours said:
“The power to correct the record so that it truly does represent what the court pronounced or intended to pronounce as its order provides no substantial qualification to that rule. The power to correct an error arising from accidental slip or omission, whether under a specific rule of court or otherwise, directs attention to what the court whose record is to be corrected did or intended to do. It does not permit reconsideration, let alone alteration, of the substance of the result that was reached and recorded.” [footnote omitted]
15.Further, at paragraph 28 their Honours said:
“The parties to an appeal are given procedural fairness by allowing each a proper opportunity to make submissions before the court makes its decision. Once the court announces the decision it has made, any further hearing is exceptional. To hold that parties must be given a sufficient opportunity to consider whether to ask for a further hearing would convert the exception into the rule. That step should not be taken.”
16.The authorities dealing with the limited circumstances in which a superior court can amend its orders under the slip rule are extensively discussed by Spigelman CJ in Newmont Yandale Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411. In that case Spigelman CJ also discussed authorities which deal with the inherent power of a superior court to amend its orders. The Family Court, while a superior court of record, as a court created by statute does not have an inherent jurisdiction derived from the common law, but has such powers as are expressly contained in the Act or other statute conferring jurisdiction and such powers as may be implied by those statutes (see DJL v Central Authority (2000) 201 CLR 226).
17.Two essential criteria have been identified where the slip rule may be invoked:
·where there is a clerical mistake; and
·where there is an accidental slip or an accidental omission.
18.The learned author of Amending Final Judgments and Orders, John Tarrant, (The Federation Press, 2010) explains at page 52 of his text “If a deliberate decision made by a judge results in an error in a judgment or order, that error cannot be corrected under the slip rule. That is because an error arising from a deliberate decision cannot be described as arising from an accidental slip or an accidental omission”.
The mother asks that the orders of 10 May 2013 be amended pursuant to the slip rule in two different particulars. Firstly, she seeks an order that the parenting order be amended by adding a further order 3.1, “That [E] and [B] live with the mother”.
The parenting dispute concerned the time the children should spend with each parent. Ultimately, the orders provided that the children should spend time with the father for five consecutive nights each fortnight. It might be thought to be beyond doubt that the children would otherwise live with the mother but the father opposes the insertion of an order to that effect.
That this was the intended result is made clear in paragraph 91 of the judgment delivered 10 May 2013, under the heading “Conclusion”, which is reproduced below:
91.In considering the arrangements which would best suit the needs of the children the strongest emphasis must be placed upon [B’s] welfare. I accept the evidence of the father and Mr [L] that it would be preferable for these children to have less changeovers and therefore that they should spend a block of time each fortnight with their father. I accept the evidence of Mr [L] that a block of six days with the father would be more than [B] could tolerate. Mr [L’s] evidence was that [B] could tolerate a period of four or five days and I therefore propose to make an order that the children spend five days each fortnight with their father, those days to span a weekend. I consider that this arrangement minimises the reduction in the time the children spend with their father while remaining consistent with [B’s] need to be in the primary care of his mother.

It is the mother’s case that this seemingly unnecessary amendment is made necessary by the father’s conduct. She deposes, in her affidavit sworn 14 August 2013, to a conversation with E in June 2013 when E said to her:
Dad says there is a mistake in the orders. They say he doesn’t have to ensure we stay with you, only that he ensures he returns us to school. He says he doesn’t have to make sure we return to you. If we want to come and stay with him, there’s nothing stopping us. But we said we want to come back to you anyway.
The father denies that the conversation with E took place. However, he also opposes the application to clarify the orders and deposes, in his affidavit sworn 16 August 2013, to conversations with E, about where she will live. He tells her “Well honey, I think you can really decide, but I will need to speak to your mother and make sure she agrees”.
The father submits that the order sought by the mother is a substantive order and cannot be seen as a slip or omission. Whether the amendment could or could not be made by a Registrar is irrelevant where it is clear on the face of the judgment that it was intended that the children should live with their mother when not spending time with their father.
The amendment sought by the mother falls into the category of accidental omission. In so far as the amendment is required, it is only because of the father’s seeking to place on the orders an interpretation that, on any reading of the judgment, is not available. The order will be amended as sought by the mother.
The mother also seeks amendment of the child support departure orders to include in the order an order granting leave pursuant to s 112 of the Child Support (Assessment) Act 1989 (Cth) (“the Child Support Act”) formally granting leave for the making of a departure order. The father opposes that application.
In oral argument on 16 August 2013, Counsel for the father submitted that the issue of leave was not dealt with in the judgment. For the resolution of any doubt, he was referred to the portion of the judgment under the heading “Should the mother be granted leave” commencing at paragraph 112 and concluding at paragraph 124 which is set out:
Having determined that the mother should be granted leave, her application falls to be determined pursuant to the provisions of section 117 which, in section 117(1)(a) requires the Court to consider the matter against the “special circumstances” of the case. I consider that the father’s actions in 2008 whereby he misrepresented his income by a factor of almost 50% would, taken alone, constitute special circumstances.
In the written submissions on behalf of the father, it is submitted that the amendment sought by the mother is not an order capable of being made by a Registrar. Since no application was made to a Registrar, that submission is rejected.
It could not be clearer than that, that it was intended the mother should be granted leave. Having dealt with the issue of leave in the judgment, whether a specific order is required is debatable but, if an order is needed, the failure to make one falls into the category of accidental omission and the order will be amended.
The order will be amended as sought by the mother.
The next aspect of the child support orders which is sought to be amended would make it clear that it is only the periodic child support which is to be varied. A reading of the judgment makes it clear that only the periodic amount was to be varied on the application of either party. Neither party sought to vary the existing orders for payment of private school fees. Paragraph 1 of the judgment records:
The father also seeks orders to discharge his current liability for periodic child support. The father does not seek to discharge the current orders which require him to pay the children’s private school fees and incidental expenses together with their medical expenses insofar as those expenses are not covered by private health insurance.
Paragraph 4 records:
The mother seeks to vary the child support departure orders which had been made in 2008 and to increase the rate of periodic child support which the father was liable to pay from 1 January 2009.
I do not accept the submission on behalf of the father that the expression of the order as sought fails to acknowledge the payment of school fees as part of the father’s child support liability.
Again the error falls into the category of accidental omission and the order will be corrected.
The mother also seeks to correct what is obviously a typographical error in 12(b). Order 12(a) provides for child support in the period 1 July 2011 to 30 June 2012. Order 12(b) provides for child support in the period 1 June 2012 (instead of 1 July 2012) to 30 June 2013.
The father’s written submissions do not address this issue.
The mistake falls into the category of clerical mistake. The orders will be amended pursuant to the slip rule in accordance with the mother’s application.

COSTS

The matters to be considered in an application for costs are set out in s 117(2A) of the Family law Act 1975 (Cth) (“the Act”), reproduced below:
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.
The financial circumstances of the parties were the subject of extensive debate at the substantive hearing. The parties’ respective incomes, as set out in the reasons at paragraph 102, were:
Year  Father  Mother
2008  $1,473,065.00  $367,642.00
2009  $706,086.00  $386,523.00
2010  $867,789.00  $125,238.00
2011  $957,432.00  $408,306.00
2012$602,173.00      $384,359.00
The father in his affidavit sworn 16 August 2013 deposes to having a tax instalment due on 25 August 2013 in the sum of $59,561 and debts of $2,311,004.06. He does not give evidence of his asset position. He does not give evidence that his income is less than it was in 2012. He did not swear a Financial Statement.
The father’s present wife works and the evidence at the hearing was that she earns approximately $550,000. Her income is therefore available to assist in the payment of the expenses of their household.
The father relies on the fact that the mother has sold her home and that her debts will have been discharged from the sale. He adopts the position in her Financial Statement sworn 5 April 2013 and submits, at paragraph 6 of his affidavit sworn 19 June 2013, that, if the sale price of her home was $1,960,000 and her debts were $1,679,108:
As a result of the sale the mother is better off in asset and liability terms by approximately $120,000.00 (after selling costs are taken into account) than her position put to the Court at hearing.
He submits that, if the mother’s liabilities are all discharged, then she will be relieved of weekly payments totalling $4,006 although he concedes that she will have to pay rent.
Even taking that factor into account, the financial circumstances of the father, are substantially superior to that of the mother.
The mother in her affidavit sworn 14 August 2013 deposes to having been involved in an accident on 18 July 2013. She suffered injuries to her ankle, neck and shoulder. She has not accepted new work since the accident and has been unable to fulfil her obligations in relation to matters in which she was involved at the time. Her income is, at the present time affected but she has income protection insurance which may restore her position. In addition, she may pursue a common law claim but common sense suggests that such a claim will take some time to resolve.
The remaining matters in s 117(2A) will be considered in relation to each discrete application.

Costs of the slip rule application

The mother seeks an order that the father pay her costs of the slip rule application. The parties’ respective financial positions are considered above and do not need to be repeated here. The father’s conduct is relevant. He concedes that he was given every opportunity by the mother, in the exchange of correspondence between their respective solicitors, commencing on 15 May 2013 when a minute of the orders sought was forwarded to his solicitors, to agree to the slip rule amendments. He did not do so. His opposition to the application was unreasonable. He was wholly unsuccessful in his opposition to the application. He should pay the mother’s costs as assessed or agreed.

Costs of the interim application heard 3 July 2012

The mother seeks an order that the father pay her costs of the interlocutory application filed 29 June 2012 and heard on 3 July 2012. The factual background of this application is set out in Paragraphs 15 and 16 of the reasons delivered 10 May 2013 and reproduced here:
The oldest child suffers from a medical condition which affects his appearance. The effects have increased as he has grown. He has had a number of admissions to hospital for procedures which ameliorate the changes to his appearance, most recently in 2012. In February 2012 he underwent a surgical procedure which was successful and which his doctors advised would probably need to be repeated in about six months.
The parties were unable to agree that the procedure should take place and the mother filed an application on 29 June 2012 for orders which would facilitate the surgery. That application came before the Court on 3 July 2012 and, at the commencement of the proceedings, the father informed the Court through his counsel that he consented to the procedure. However, the Court was nevertheless required to determine what arrangements should be made for the child’s care both before and after the surgery.
On 22 June 2012 the mother’s solicitors wrote to the father’s solicitors requesting the father’s consent to a medical procedure for the child. The letter made it clear that the procedure would be undertaken in the school holiday period if possible. The letter records that the mother had attempted to obtain the father’s consent “in various emails” but that the father had failed to provide his confirmation that the scheduled procedure could continue. The father was asked to confirm, by close of business on Monday 25 June 2012, that he would consent to the procedure and to the mother’s being responsible for the post-operative care.
At 5.01pm on 25 June 2012, the mother emailed the father. He responded: “I am going to leave this to my solicitor seeing that is the approach you wish to take”.
On 26 June 2012 the father’s solicitors wrote to the mother’s solicitors indicating that it was the father’s position that the treating specialist should be consulted before there was any further surgery and that the father had made an appointment with the specialist on 10 August 2012. Concerns were expressed about the child having time away from school.
A further letter was written by the mother’s solicitors on 27 June 2012, noting that the specialist had already indicated, through his clinical nurse, that he was happy for the procedure to go ahead. There was no response to that letter.
The mother’s application was filed on 29 June 2012 and listed for hearing before me on 3 July 2012. Counsel for the father indicated that the father had telephoned the specialist the previous day and that he consented to the child’s having the procedure on 13 July 2012. That position had not been known to those representing the mother until it was enunciated in Court. Nor did the father explain why the telephone call to the specialist could not have been made on receipt of the mother’s letter of 22 June 2012, thus resolving the need for her to make the application.
Consent to the procedure being forthcoming, the Court was required to determine the appropriate arrangements for the child’s post-operative care. The mother sought orders that the child live with her for two days before and five days after the procedure. The period in dispute was two days. Ultimately, orders were made that the child live with the mother from 9.00am on the day before the procedure until 9.00am on the following Monday. The mother was therefore substantially, not wholly, successful.
However, she should not have been required to bring the application in relation to the surgical procedure. She was forced to do so by the father’s refusal to consent. The consent he gave on 3 July 2012 in Court could have been given earlier had he chosen to do so. Costs were unnecessarily incurred. The father’s financial circumstances are superior to those of the mother. The father should pay the mother’s costs of and incidental to the application, as assessed or agreed.

Costs of the substantive proceedings in relation to departure from the child support orders

The mother seeks an order that the father pay her costs in the substantive proceedings relating only to that part of the application dealing with departure from the child support order. She does not seek costs in relation to the parenting aspects of the proceedings.
The proceedings relating to child support departure were initiated by the father. He sought a departure which would result in his continuing to pay school fees and incidental expenses and medical expenses but no periodic support.
The mother, in response, sought to substantially increase the amount of periodic support in addition to the lump sum payments.
The circumstances in which the mother’s application was brought are set out in the reasons of 10 May 2013 at paragraphs 112 to 118. Those findings, which are set out below, are not challenged:
The orders from which the mother seeks to depart are orders which were made by consent on 10 December 2008. The effect of those orders was to reduce by 50% the periodic child support which the father paid for the children whilst leaving in place orders which required him to pay school and medical expenses.
It is common ground that in July 2008 the father commenced an application seeking to vary the parenting orders and specifically the time which the children would spend with each parent. No orders were sought in the father’s application in relation to child support and therefore no financial material was filed by him or by the mother. It was the father’s evidence that in circumstances where, he said, the mother declined to provide financial disclosure, he chose not to provide her with any financial information. The parties entered into negotiations and attended mediation and ultimately reached an agreement which included a variation of the existing child support arrangements. That agreement was embodied in consent orders which were ultimately made by the Court on 10 December 2008.
It is common ground that in the negotiations leading up to consent orders relating to child support there was no formal financial disclosure. On 20 May 2008 the father sent an email to the mother in relation to child support. The email read in part “however, if you use the child support calculator and assume your income is 300,000 (which is a guess) and mine is 750,000 (which it is not), the amount due would be zero.” The only reasonable inference to be drawn from the father’s email is that he asserts his income is less than $750,000.
At the time of the trial before O’Ryan J in 2005 the income of the father was $549,000 and he was working for four days each week.
Evidence before the Court in these proceedings indicates that in the financial year ended 2008 the father’s actual taxable income was $1,473,065 and the mother’s actual taxable income was $367,642.
The mother’s unchallenged evidence is that, if she had known that the father’s taxable income in 2007/2008 was not less than $750,000, as he represented, but $1,473,065, she would never have consented to a variation of the child support orders in December 2008.
The father in cross-examination conceded that at the time the consent orders were made to vary the child support he was aware that his income for the financial year ended 30 June 2008 would be more than $1 million and that he knew, prior to the making of the orders in December 2008 that his income would in fact be in the region of $1.4 million. He conceded that he could have provided this information to the mother but did not do so.
The misrepresentation by the father was substantial.
On behalf of the father it is submitted that the misrepresentation (which appears to be conceded in the submissions) could only be relied upon by the mother on the issue of leave and could not be relied upon on the issue of costs.
While it is arguable that the misrepresentation should not be taken into account pursuant to s 117(2A)(c) of the Act, it not being “conduct in relation to the proceedings” of the kind there referred to, I consider that the father’s substantial misrepresentation of his income in 2008 is a matter to be taken into account under s 117(2A)(g).
The mother relies on an offer of settlement made by her on 12 July 2013 in the following terms:
1.That the parties applications pending before the Court with respect to child support matters be and are hereby dismissed.
2.That each party pay their own costs of and incidental to the child support proceedings.
The effect of the offer was that periodic child support payments would have continued in accordance with the consent departure order made in 2008. The 2008 orders provided for periodic child support in the sum of $170.75 per child per week. The offer is significant when the ultimate outcome of the proceedings is compared with the offer.
The mother’s applications for departure orders for the financial years 1 July 2009 to 30 June 2010 and 1 July 2010 to 30 June 2011 were dismissed because there was no evidence before the Court of the proper needs of the children in those periods. Those applications, because they were not supported by evidence, did not increase the hearing time.
The father was ordered to pay periodic child support of $322.35 per week per child for the financial year ended 30 June 2012 and $343.33 per week per child from 1 July 2012.
Paragraphs 139 and 140 of the reasons are set out here:
In the circumstances, particularly that the father’s salary is significantly higher than the mother’s, both before and after child expenses are taken into consideration, and that the children spend the majority of time with the mother, it is reasonable that the father contribute to the mother’s costs in caring for the children. In the circumstances of the case I find it appropriate that the father pay 35% of the mother’s costs of care, which equates to $50,286.60 for the financial year ended 30 June 2012 and $58,362.85 for the financial year ended 30 June 2013.
However, the mother seeks an order that in the financial year ended 30 June 2013 and following the father pay $343.33 per child or $53,559 and I propose to limit his liability to that sum for the year ended 30 June 2013 and the following years.
In relation to her applications for a departure in the years ended 30 June 2012 and following, the mother was wholly successful.
I consider that the matters which are set out above, combined with the disparity in the relative financial circumstances of the parties, justify an order for costs, as assessed or agreed, in favour of the mother.

The mother’s application for indemnity costs

The mother asks the Court to make costs orders payable by the father on an indemnity basis. Her Counsel, in his written submissions, recognises that such an order is a very great departure from the normal rule.
The Full Court has most recently considered the law in relation to indemnity costs in Prantage & Prantage [2013] FamCAFC 105. The majority set out the principles to be applied, holding that the principles enunciated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Limited (1993) 118 ALR 248 should continue to be applied in the Family Court of Australia. The principles were summarised as follows:
82. …

1.Section 43 of the FCA confers an absolute and unfettered discretion on the Court to make orders as to costs but the discretion must be exercised judicially.
2.In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:
(a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

In Hand & Bodilly [2013] FamCAFC 98 the Full Court considered the appropriateness of an order for indemnity costs, where party and party costs or solicitor/client costs could be ordered. Rule 19.18 of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
(1)That the court may order that a party is entitled to costs:
(a) of a specific amount;
(b) as assessed on a particular basis (eg lawyer and client, party/party or indemnity); …
In Hand & Bodilly, the difference between party/party costs and solicitor/client costs was accepted to be:
91.…
that on a taxation between parties on a solicitor and client basis, the unsuccessful party has to pay all the costs incurred by his opponent excepting in respect of (1) costs and expenses incurred prior to the institution of the action; (2) journeys and expenses of which the party liable could have no knowledge, and which would not ordinarily be performed or incurred; (3) the employment of more counsel, or the payment to them of larger fees than the circumstances of the case warrant, including the giving of special retainers.
Their Honours went on to compare solicitor/client costs with indemnity costs in the following manner:
102.… Sometimes that discussion equates “solicitor and client” costs with “indemnity” costs but as Santow JA said in Bouras v Grandelis (2005) 65 NSWLR 214:
125. The weight of authority is that solicitor and client costs and indemnity costs are distinct, though the difference between them has been eroded by practice and by inconsistent amendments to the various legislative instruments that make up the costs assessment regime.
126. An order for solicitor and client costs will allow all reasonable costs or all costs as fair justice to the other party will allow. The onus of proving that the costs are reasonable falls on the receiving party.
127. Historically, solicitor and client costs were somewhat more generous than party/party costs. …
It follows that the distinction between indemnity costs and solicitor/client costs, is that the former order provides a complete indemnity for costs actually incurred, with no enquiry as to the reasonableness of the costs incurred. Whereas an order for solicitor/client costs requires an enquiry as to the reasonableness of the costs.
It is open to the court to make a costs order on the basis of party/party costs, solicitor/client costs or indemnity costs.
When considering whether an order for party/party costs would be appropriate, it is instructive to revisit the decision of Sheppard J in Colgate-Palmolive Co & Cussons Pty Limited at 257 where His Honour reviewed the authorities and said:
4. …The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: “the categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 ay 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
In Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 71 ALR 287 at 288, with respect to the court’s discretion in the award of costs, Woodward J said:
That discretion is “absolute and unfettered”, but must be exercised judicially (Trade Practices Commission v Nicholas Enterprises (1979) 28 ALR 201 at 207). Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases where “there is some special or unusual feature in the case to justify the court exercising its discretion in that way” (Preston v Preston [1982] 1 All ER 41 at 58). It is sometimes said that such costs can be awarded where charges of fraud have been made and not sustained; but, in all the cases I have considered, there has been some further factor which has influenced the exercise of the court's discretion — for example, the allegations of fraud have been made knowing them to be false, or they have been irrelevant to the issues between the parties: see Andrews v Barnes (1888) 39 Ch D 133; Forester v Read (1870) 6 LR Ch App 40 Christie v Christie (1873) 8 LR Ch App 499; Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354.
Another case cited in argument was Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 where (at 502) Tadgell J allowed solicitor and client costs because he found the pursuit of the action to have been “a high-handed presumption”.
In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd & Ors (1988) 81 ALR 397 at 401 Woodward J, with respect to the award of costs, referred to what he said in Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd and stated:
No doubt the expression “high-handed presumption” was appropriate in the case Tadgell J [Australian Guarantee Corp Ltd v De Jager [1984] VR 483] had to decide, and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, 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 or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.
The Court needs to be satisfied whether there are exceptional circumstances in this case which would enliven the discretion to award an order for costs on a solicitor/ client or indemnity basis.
However, in the present matter, I do not consider that the circumstances of the case are such as to meet the stringent test for indemnity costs and the costs should be paid on a party and party basis.
The proceedings concerned both parenting and child support matters. It is appropriate that the father pay half of the mother’s costs of the substantive proceedings.

I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 October 2013.

Associate:

Date: 18 October 2013