Garvey & Jess (No 2)

[2017] FamCA 784

FAMILY COURT OF AUSTRALIA

GARVEY & JESS (NO. 2) [2017] FamCA 784

FAMILY LAW – COSTS – Where the wife made an application for a stay of parenting orders pending appeal – Where the husband made an application for costs – Where the wife’s application for a stay is dismissed – Where the wife is ordered to contribute to the costs of the husband fixed in the sum of $10,000 – Where court ordered that payment be deferred until the finalisation of the financial proceedings.

Family Law Act 1975 (Cth)

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106
Anderson & Senior (Stay Appeal) (2013) FLC 93-556
Bele & Vaughan [2011] FamCA 724
Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Cook’s Construction Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] QCA 322
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123
Kohan & Kohan (1993) FLC 92-340
Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Prantage & Prantage [2013] FLC 93-544
Stephens & Stephens [2010] FamCAFC 172; (2010) 44 FamLR 117
Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2009] QCA 349
Yunghanns v Yunghanns (2000) FLC 93-029

APPLICANT: Mr Garvey

RESPONDENT: Ms Jess

FILE NUMBER: BRC 2175 of 2016

DATE DELIVERED: 28 September 2017

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Carew J

HEARING DATE: 28 September 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Galloway

SOLICITOR FOR THE APPLICANT: Barry Nilsson Lawyers

COUNSEL FOR THE RESPONDENT: Mr Hackett

SOLICITOR FOR THE RESPONDENT: Hirst & Co

Order

1. The application by the respondent for a stay of paragraphs 1 and 2 of the order made 3 August 2017 is dismissed.

2. The respondent is to contribute to the costs of the applicant of and incidental to paragraph 34 of the Further Amended Initiating Application filed 1 November 2016 concluded by paragraph 18 of the order made 3 August 2017 fixed in the sum of $10,000 with payment deferred until the finalisation of the financial proceedings.

3. By consent, the further progress of the financial proceedings be stayed pending finalisation of the appeal by the respondent against paragraph 18 of the order made 3 August 2017.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 2175 of 2016

Mr Garvey 

Applicant

And

Ms Jess 

Respondent

EXTEMPORE REASONS FOR JUDGMENT

1. This matter returns to me today for a determination of the respondent’s application for a stay of paragraphs 1 and 2 of the order made by me on 3 August 2017 (“the order”) and for determination of the applicant’s costs application of and incidental to the determination of paragraph 34 of the Further Amended Initiating Application filed 1 November 2016.

2. The applicant commenced proceedings in this Court by filing an Application in a Case relating to the enforcement of a Financial Agreement and has been treated as the applicant thereafter. The respondent filed an Application Initiating Proceedings in which she sought inter alia a parenting order. Nothing turns on this but for convenience I will continue to refer to the parties in that way although the Stay Application is in fact the respondent’s application.

the stay application

1. The relevant paragraphs of the order are as follows:

   (1)The applicant and respondent shall have equal shared parental responsibility for all major long term issues (as that term is defined in section 4 of the Family Law Act 1975 (Cth)) for the children [C] born … 2007 and [D] born … 2009.

   (2)The children shall live with the respondent and spend time with the applicant during school term time as follows:

   (a)In week 1 and each alternate week thereafter, from the conclusion of school on Wednesday until the commencement of school Friday; and

   (b)In week 2 and each alternate week thereafter, from the conclusion of school on Wednesday until the commencement of school on Monday (or in the event that Monday is a public holiday or a pupil free day, until the commencement of school on Tuesday).

2. The respondent filed her Application for a Stay on 15 September 2017 supported by an affidavit. A further affidavit was filed by leave today.

3. The order has been in place now for some eight weeks.

4. Prior to the order the arrangements for the children were that they lived with the father from Thursday after school until Saturday morning in one week and from Thursday after school until Sunday afternoon in the alternate week and with the mother at other times. School holidays were shared equally in a week about arrangement and the parties consented to an order to that effect at the time the matter was last before me. At that time the respondent argued that the status quo should be maintained “as it was working” although on a final hearing she is seeking to reduce the time the children spend with the applicant to each alternate weekend.

legal principles applicable to a stay application   

1. The law relating to the granting of a stay is not in issue although there was some discussion about whether or not circumstances of an exceptional nature were required to justify the granting of a stay.

2. Rule 22.11 of the Family Law Rules 2004 (Cth) relevantly provides:

   (a)The filing of a Notice of Appeal does not stay the operation or enforcement of the order appealed from, unless otherwise provided by a legislative provision.

   (b)If an appeal has been started, … any party may apply for an order staying the operation or enforcement ... of the order to which the appeal or application relates.

3. The granting of a stay pending the determination of an appeal to the Full Court is a discretionary decision which will be informed by matters such as:[1]

   i)The bona fides of the person making the application for the stay;

   ii)Whether a successful appeal will be rendered nugatory if the stay is not granted;

   iii)The merits of the appeal;

   iv)Any delay in bringing the stay application;

   v)When the appeal is likely to be determined; and

   vi)The balance of convenience.

   [1] Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106; cfAnderson & Senior (Stay Appeal) (2013) FLC 93-556 (as to whether special or exceptional circumstances required at [34]; Bele & Vaughan [2011] FamCA 724; see also Cook’s Construction Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] QCA 322 at [12] and Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2009] QCA 349 at [19]

respondent’s submissions

1. It is submitted by Mr Hackett for the respondent (who is the applicant in the stay application) that the stay should be granted having regard to the following matters:

   a)There is no issue concerning the bona fides of the respondent;

   b)While a successful appeal from the interim order concerning equal shared parental responsibility would not be rendered nugatory if a stay were not granted it is submitted that there are practical difficulties with the order when:

   i)The order is contrary to the final relief sought by the respondent;

   ii)No such order was sought on an interim basis by either party; and

   iii)There were factual disputes concerning domestic violence (both before and after separation) which directly impacted upon the parties ability to co-parent as highlighted in the two family reports

   And those practical difficulties support the granting of a stay;

   c)The applicant’s unilateral arrangement for one of the children to attend sports classes during the time the child lives with him in circumstances where two years ago the child suffered two unexplained fractures demonstrates the in-ability of the parents to co-parent; 

   d)A successful appeal from the interim order concerning the time spent with the applicant will be rendered nugatory because that additional time cannot be undone and the impact on the children is unavoidable especially if their time with the applicant is reduced as sought by the respondent in her final order;

   e)The change in the parenting arrangements effected by the order was significant and the previous arrangement had been in place since June 2015 although the respondent’s agreement to the parenting plan which set out that arrangement is alleged to have been entered into by the respondent under duress;

   f)The desirability of limiting the frequency of any change in the children’s living arrangements favours the grant of the stay;

   g)On its face the grounds of appeal raise an arguable case;

   h)There has been no inordinate delay in bringing the application;

   i)While it is not known when the appeal may be determined it may be some nine to twelve months away;

   j)The balance of convenience favours the stay.

applicant’s submissions

1. Mr Galloway for the applicant (the respondent to the Stay Application) submits the stay should not be granted for the following reasons:

   a)The circumstances are not exceptional;

   b)There is a possibility that the substantive parenting application may be heard before the appeal;

   c)The order is interim only and thus if there are circumstances justifying a reversion to the previous parenting arrangements a further interim application could be brought;

   d)The modest increase in the time the children spend with the father is likely to result in the appeal being dismissed;

   e)The arrangements pursuant to the order have now been in place for some two months and a stay of the order would unnecessarily involve yet a further change in the children’s living arrangements and a stay of the equal shared parental responsibility order would leave the parties with no order in relation to parental responsibility;

   f)There is a marked lack of merit in the appeal;

   g)There is no evidentiary basis for the stay.

discussion

1. There is no issue as to the bona fides of the respondent.

2. I am not persuaded that a successful appeal will be rendered nugatory in any respect. True it is that the additional time spent with the father would not be recoverable but that does not in my view alter the capacity of change in the event of a successful appeal.

3. The children’s arrangements have already changed pursuant to the order and have been in place for some eight weeks. A granting of the stay will it seems lead to an agreement to revert to the previous arrangement as that was the respondent’s position at the interim hearing although there will be no order in place to that effect. Both parties submit that the number of changes should be kept to a minimum and I agree.

4. The respondent raises in her most recent affidavit some issues with the children’s adaption to the new arrangements although no such evidence was deposed to in her first affidavit. The applicant on the other hand deposes to the children adapting well. If it is the case that the interim order warrants review the respondent is not precluded from bringing a further interim application. The respondent raises issues about the father’s unilateral involvement of one of the children in an extra-curricular activity given a history of unexplained fractures and submits this supports the granting of a stay as it shows the inability of the parents to co-parent. Firstly, I am not persuaded that a decision to involve a child in an extra-curricular activity during the time the child is with that parent is a matter involving a major long term issue but if I am wrong in that regard it seems to be to be preferable for the equal shared parental responsibility order to remain in place because it requires decisions to be made jointly. A stay of the order would entitle each party to make decisions without a requirement for them to be made jointly. That seems to me to be a worse situation for the children than leaving the order in place.

5. The order put in place living arrangements that the children expressed a very clear wish for and the arrangements were supported by Mr F although it was not of course his role to determine any factual issues in dispute.

6. The order also enabled each party to spend an uninterrupted weekend with the children each alternate week and provided for the changeovers to occur in the main at school which given the allegations made against the applicant seem to be preferable.

7. While the prospects of success of the appeal may not be high I do not find they entirely lack merit. The appeal may be some time off although Mr Galloway informed the Court that the parties have a directions hearing before the appeals registrar on 23 October 2017 but it was conceded that the hearing was unlikely to be until next year.

8. On balance I am not persuaded that the order should be stayed. In coming to that conclusion I have particular regard to the fact that the order has already been implemented and in place for some eight weeks and that the arrangements were ones that the children expressed a strong wish for. I consider the continuation of the equal shared parental responsibility order to be preferable to there being no order in place.

costs

1. The costs application arises out of the dismissal of the respondent’s application to set aside a financial agreement in circumstances where it was found that the respondent’s position in seeking for a second time to in effect set aside a financial agreement was unreasonable in the Anshun[2] sense and amounted to an abuse of process.

   [2]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598

2. The applicant seeks an order for the costs on an indemnity basis fixed in the sum of $51,559.25 or in the alternative on a party and party basis fixed in the sum of $27,753.71. Mr Galloway eschewed the suggestion that costs should be assessed and urged upon me the fixing of a sum whether or not that reflects the sum sought. It was submitted that if a costs order is made payment of it should be deferred until at least the determination of the appeal.

3. Although I made an order for each party to file submissions in relation to costs the respondent’s submissions did not really address the issue, her position being that the decision in relation to costs should be deferred pending the outcome of the appeal and further that she may wish to consider joining her former legal advisors to enable a costs order to be made, if made, against them personally. It was submitted that she is unable to address those matters without waiving legal professional privilege and to do so would be inappropriate prior to the appeal outcome. Mr Hackett declined the opportunity to prepare further submissions and was content to make them orally given my indication that I wished to deal with the costs issue today if possible, including the suggestion that there should be a deferral of that determination.

4. Mr Hackett, for the wife, conceded, correctly in my view, that an order made against his client would not prejudice his client’s ability to seek indemnity against the proposed third parties should that be warranted, other than perhaps that it would involve proceedings in another court.

How costs applications are determined

1. In this jurisdiction parties are generally required to bear their own costs.[3] However, where justifying circumstances exist, s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) empowers the Court to make such order for costs as the Court considers just.

   [3] Section 117(1) Family Law Act 1975 (Cth)

2. In the exercise of that discretion regard must be had to the factors set out in s117(2A) of the Act, so far as they are relevant.

3. Those factors are as follows:

   a)the financial circumstances of each of the parties to the proceedings;

   b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   g)such other matters as the court considers relevant.

4. No one factor has more weight than any other nor is it necessary for more than one factor to be present.[4]

   [4] see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 at 130

5. When discussing the subparagraphs in s 117 the High Court in Penfold v Penfold[5] said:

   It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.

   [5] [1980] HCA 4; (1980) 144 CLR 311 at 315

6. When considering what specific order to make, Rule 19.18 of the Family Law Rules 2004 (Cth) (“the Rules”) empowers the Court to make an order:

   a)of a specific amount;

   b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   c)to be calculated in accordance with the method stated in the order; or

   d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

7. In considering what specific order should be made the same Rule provides that the Court may consider any of the following factors:

   a)the importance, complexity or difficulty of the issues;

   b)the reasonableness of each party's behaviour in the case;

   c)the rates ordinarily payable to lawyers in comparable cases;

   d)whether a lawyer's conduct has been improper or unreasonable;

   e)the time properly spent on the case, or in complying with pre-action procedures; and

   f)expenses properly paid or payable.

8. The term ‘costs’ is not defined in the Act but the Dictionary to the Rules provides that:

   Costs means an amount paid or to be paid for work done by a lawyer, and includes expenses.

9. The term ‘expenses’ is also defined in the Dictionary to the Rules:

   Expense means an amount paid to a third party, other than a lawyer, for work done in a case or services provided for a party.

1. In Stephens & Stephens[6] the Full Court observed:

   67. We also observe that in Re JJT; Ex parte Victoria Legal Aid[1998] HCA 44; (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey[1990] HCA 59; (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors(2001) 188 ALR 143 per Full Court of the Federal Court at [12] and Brott and Joachim [2006] FamCA 256; (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.

   [6][2010] FamCAFC 172; (2010) 44 Fam LR 117

2. A court will not lightly make an order for costs to be paid on an indemnity basis. There would need to be some circumstance of an exceptional nature to justify that course.[7]

   [7] Kohan & Kohan (1993) FLC 92-340; Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248; Yunghanns v Yunghanns (2000) FLC 93-029

3. The Full Court in Prantage & Prantage[8] discussed the meaning of ‘indemnity costs’ and said:

   16. Before discussing the merit of the appeal, we should state our understanding of the meaning of the expression “indemnity basis”.

   17. Although the Explanatory Guide to the Family Law Rules 2004 (“the Rules”) is not formally part of the Rules, we accept as accurate its definition of “indemnity basis” when applied to a costs order as being:

   an entitlement to  costs , including  costs  under a  costs agreement, for all  costs  incurred, other than  costs  that are unreasonable in amount or that have been incurred unreasonably.

   [8][2013] FLC 93-544

the respondent’s argument

1. The following further submissions were made on behalf of the respondent:

   a)The determination of the costs application should be deferred until after the determination of the appeal for the following reasons:

   i)If the appeal is unsuccessful it is likely that there would be a consent order for the payment of the applicant’s costs;

   ii)If it succeeds the costs order would fall;

   b)The wife has no financial capacity to pay a costs order;

   c)A concession was made by senior counsel for the applicant at the interim hearing that the Anshun principle had no application to an interlocutory order;

   d)The circumstances do not warrant the making of an indemnity costs order;

   e)If a costs order is made it should be as agreed or assessed as the sums claimed appear on their face to be excessive.

applicant’s argument

1. The circumstances warrant a costs order on an indemnity basis for the following reasons:

   a)The respondent raised no issue in support of her further application to set aside the financial agreement that was not within her knowledge at the time of the hearing in 2016 when her application in relation to the financial agreement was dismissed;

   b)The respondent was given every opportunity from 2015 to identify why the agreement should be set aside and chose to proceed on the limited basis she did in 2016;

   c)The respondent was invited to withdraw her further application and put on notice that indemnity costs would be sought if she persisted and her application failed (as it did);

   d)The respondent was wholly unsuccessful.

discussion

1. I am not persuaded that I should defer determination of the costs application until after the appeal. Given the comments made on the applicant’s behalf I consider it unlikely that the parties would be able to reach agreement in relation to the issue of costs in the event the appeal fails. The wife would not be precluded from seeking indemnity against third parties should any costs order be made against her. If a costs order is made or indeed not made then that will give each party the opportunity to appeal against that decision and have it dealt with at the same time as the appeal should that be necessary.

2. As to the merits of the application it is true that the wife was wholly unsuccessful and the course of correspondence did give her the opportunity to raise all bases upon which she contended the agreement should be set aside. Her failure to do so has embroiled the parties in further litigation. However, I am not satisfied that the case warrants an order on an indemnity basis.

3. I do however consider that the respondent should pay the applicants costs or at least contribute to them. The fact that the wife may be impecunious is not of itself a reason to dismiss the application.

4. But for Mr Galloway’s submissions that a fixed sum should be ordered I would have been inclined to order the costs to be assessed. However, I am assisted by a detailed schedule of costs prepared on behalf of the applicant and I consider it preferable if at all possible to avoid further costs to the parties so long as there is no prejudice thereby caused. As mentioned during the hearing I am not satisfied on the face of the schedule that all of the costs sought should be included. Some appear to me to be more properly described as solicitor/client costs and as the hearing also involved parenting matters some of the costs relating to the appearance would have been incurred in any event. Accordingly, doing the best I can and having considered the various sums claimed I propose to order a fixed sum of $10,000 with payment deferred until the finalisation of the financial proceedings.

I certify that the preceding Forty-One (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 28 September 2017.

Associate:

Date:  28 September 2017