Garwood & Shipton (No 7)
[2023] FedCFamC1F 935
•3 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Garwood & Shipton (No 7) [2023] FedCFamC1F 935
File number(s): ADC 4995 of 2018 Judgment of: KARI J Date of judgment: 3 November 2023 Catchwords: FAMILY LAW - COSTS - Where the respondent sought that the primary judge recuse herself from hearing the proceedings – Where the application was listed for hearing on 6 September 2023 - Where the respondent informed the court at the hearing on 6 September 2023 that the recusal application was to be withdrawn – Implicit in the respondent withdrawing her application is an acknowledgement that the respondent no longer considered it to be meritorious – Where the withdrawal of the application leads to a conclusion that the application was wholly unsuccessful - Application for an indemnity costs order – Where the court considers there to be justifying circumstances for the making of a costs order - Where the Court is not satisfied that the circumstances of the case warrant an order for indemnity costs – Costs ordered fixed in the amount of $25,000 Legislation: Family Law Act 1975 (Cth) ss 4AA, 102NA, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 2.23, 5.02, 10.02, 12.17, 15.05
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Garwood & Shipton (No 4) [2022] FedCFamC1F 104
Kohan & Kohan (1993) FLC 92-340
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Robinson & Higginbotham (1991) FLC 92-209
Munday & Bowman (1997) FLC 92-784
Division: Division 1 First Instance Number of paragraphs: 66 Date of hearing: 15 September 2023 Place: Adelaide Counsel for the Applicant: Mr Manetta Solicitor for the Applicant: Culshaw Bishop Lawyers Counsel for the Respondent: Mr Cox SC, assisted by Ms Hume Solicitor for the Respondent: Angela Ferdinandy ORDERS
ADC 4995 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GARWOOD
Applicant
AND: MS SHIPTON
Respondent
ORDER MADE BY:
KARI J
DATE OF ORDER:
3 NOVEMBER 2023
THE COURT ORDERS THAT:
1.That paragraph 1(a) of the Amended Application in a Proceeding filed 13 August 2023 by the Respondent be dismissed.
2.That the Respondent pay the Applicant’s costs thrown away fixed in the amount of TWENTY-FIVE THOUSAND DOLLARS ($25,000) with the same to be paid within 60 days of these orders to the Culshaw Bishop Lawyers Trust Account.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Garwood & Shipton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These reasons relate to a costs application bought by the applicant father in relation to an application made by the respondent mother, but withdrawn, seeking orders that Justice Kari be recused from hearing these proceedings.
The application was filed on 13 August 2023, by way of a further amendment to an extant Application in a Proceeding that had been earlier filed by the respondent.
By his application for costs, the applicant asks the court to not only make an order for the payment of his costs in relation to the recusal aspect of the Application in a Proceeding, but also that the quantum of costs be paid by the respondent on an indemnity basis.
The respondent opposes the making of any order for costs. It goes without saying therefore that she also opposes the making of an order for the payment of costs calculated on an indemnity basis. If however the court is favourably disposed to the application for costs, the respondent alternatively asks that the same be adjourned until the finalisation of the substantive proceedings, given the costs claims separately made and/or foreshadowed by her.
For the reasons that follow, a costs order shall be made, with the quantum of the same to be fixed.
BACKGROUND
These proceedings have a relatively intense history before the court. This being the fifth published interlocutory judgment that I have delivered in the matter since September 2022.
The substantive proceedings relate to the parenting arrangements for the parties’ daughter X (born 2018), together with the threshold jurisdiction question of whether the parties were in a de facto relationship so as to enliven the court’s jurisdiction to make property adjustment orders between the parties.
For present purposes it is necessary to understand the following history of the parties and their relationship:
(a)The applicant was born in 1974.
(b)The respondent was born in 1969.
(c)The child X was born as a result of an artificial conception procedure undertaken in the United States in 2017, using the applicant’s genetic material and donor eggs.
(d)The respondent’s case is that the applicant was nothing more than a sperm donor.
(e)The applicant does not agree that his purpose was simply to provide the genetic material for X’s conception. Moreover, he asserts that the parties were in a de facto relationship within the meaning of s 4AA of the Family Law Act 1975 (Cth) (“the Act”).
(f)While the respondent agrees that the parties were girlfriend and boyfriend, she denies that the parties were ever in a de facto relationship.
(g)It is otherwise an agreed fact that for a period of time the applicant was the Chief Operating Officer of the respondent’s business, which operates a business at several sites.
(h)While there is much more to the respondent’s case, for present purposes it is important to understand that two significant allegations have been made by her in relation to the applicant. The first allegation is that she was the victim of a rape perpetrated by the applicant, and the second is that the applicant misappropriated a significant amount of funds from the respondent’s business.
The substantive proceedings are presently in a state of suspended animation in circumstances where:
(a)The final hearing commenced before me on 5 September 2022. That hearing was listed for 12 sitting days. The final hearing became protracted for a range of reasons and did not conclude. At this juncture, the respondent is the only witness to have given oral evidence.
(b)Additional final hearings dates were allocated for the conclusion of the final hearing commencing on 17 April 2023 with a further 13 sitting days allocated.
(c)Sometime in or about February 2023 the respondent became self-represented; filing a Notice of Address for Service to that effect on 17 February 2023.
(d)At a time when the respondent was self-represented, an application was made by the applicant that the provisions of s 102NA(2) of the Act apply to these proceedings, prohibiting either of the parties from personally cross-examining the other of them. That question was favourably determined on 16 February 2023, with the court publishing ex tempore reasons (Garwood & Shipton (No 4) [2022] FedCFamC1F 104), and making orders pursuant to s 102NA(1)(c)(iv) to that effect.
(e)By 6 March 2023 the respondent obtained new legal representation. Her current solicitors filing a Notice of Address for Service on 6 March 2023. There was however some significant confusion about the extent to which the respondent’s new legal representation had been engaged, with the respondent appearing on her own behalf on occasion thereafter with respect to interlocutory applications that she then pressed.
(f)Be that as it may, on 31 March 2023, the respondent filed an Application in a Proceeding, in which, significantly for present purposes, she sought an adjournment of the continuation of the final hearing for a period of “at least six months”.
(g)The respondent’s application for an adjournment of the final hearing was granted with the consent of the applicant on 12 April 2023. The reason for this, as best as the court can understand, was largely due to the respondent obtaining new legal representation and needing time to prepare for the resumption of the final hearing.
(h)On 5 May 2023 new final hearings dates were allocated for the sitting weeks commencing 7 August 2023, 14 August 2023 and 28 August 2023; 15 sitting days in total.
(i)Between 5 May 2023 and 2 August 2023 there was a flurry of activity in the proceedings. That flurry of activity included the filing of various interlocutory applications and cross applications by each of the parties. In particular, the respondent filed two separate Applications in a Proceeding (on each 11 and 28 July 2023), all of which were met with the filing of a Response by the applicant (on each 21 July 2023 and 3 August 2023). In addition, the applicant filed an Application in a Proceeding on 2 August 2023. For present purposes it is not necessary to understand the subject matter of each of those interlocutory applications, other than to note that they will likely need to be determined prior to the resumption of the final hearing.
(j)However, against the backdrop of the part heard final hearing set to resume on Monday, 7 August 2023, the respondent filed an Application in a Proceeding out of hours on Thursday, 3 August 2023 at 5.57pm. By that application, of significance for preset purposes, the respondent sought an order restraining both the applicant’s solicitor personally together with the firm of solicitors from continuing to represent the applicant in the proceedings.
(k)At the first day of the resumption of the part heard trial on Monday, 7 August 2023, and in the face of the Application in a Proceeding filed on 3 August 2023, the court was initially advised that the applicant’s solicitor sought leave to withdraw and cease acting for the applicant in the proceedings. Ultimately however, over the course of the hearing the applicant terminated his instructions to both his solicitor and the firm of solicitors. These events culminated in an unopposed adjournment of the final hearing for a period of a week to 14 August 2023.
(l)By the hearing on 14 August 2023, the applicant was able to secure alternate legal representation. However, given the inability of those new legal representatives to adequately prepare the matter, the balance of the final hearing dates in the weeks commencing 14 and 28 August 2023 were vacated; again unopposed on the part of the respondent. New final hearings dates were then allocated, essentially consuming the month of February 2024 out of an abundance of caution and to avoid the matter being again adjourned part heard. In addition, the matter was listed for mention on 21 August 2023 to procedurally mange the balance of the extant interlocutory applications.
Significantly for present purposes the respondent has filed two amendments to the Application in a Proceeding first filed on 3 August 2023. In that regard:
(a)On Sunday 6 August 2023 at 7.38 pm an Amended Application in a Proceeding was filed. The significant amendment to that application was that the respondent additionally sought an order that the applicant’s senior counsel be restrained from acting in the proceedings. Least it not be obvious, this amended application was again filed out of hours. This time on the Sunday night before the trial was to resume on the Monday, and came hot on the heels of the application filed out of hours the preceding Thursday (3 August 2023), seeking orders to restrain the solicitor, and solicitors firm from acting.
(b)On Sunday 13 August 2023 at 8.27 pm (again out of hours the Sunday night before the adjourned resumption of the part heard final hearing on the Monday) a Further Amended Application in a Proceeding was filed. The amendment made by the respondent on that occasion is the subject matter of the costs application to which these reasons relate. Namely the proposed order set out at paragraph 1(a) which provided as follows:
The Honourable Justice Kari recuse herself from hearing this action on the grounds summarised in Schedule A hereto.
Before discussing the circumstances that have given rise to the costs application, there are some preliminary observations that are important to record about the very recent history of the litigation:
(a)Firstly, I observe that on 14 March 2023 an order was made restraining the parties from filing any further interlocutory applications without the leave of the court. This order appears to have been entirely ignored.
(b)Secondly, I observe that, unhelpfully, two amended interlocutory applications have been filed by the respondent on a Sunday late at night on the day prior to the scheduled final hearing in the proceedings. The filing of these applications at that time is certainly a breach of r 2.23(5) of the Rules which requires any documents intended to be relied upon at a hearing to be filed “at least 1 day before the date fixed for that event”, which with reference to r 15.05(3) the calculation of time, does not include any day that the Registry is closed; explicitly not a Saturday or a Sunday. In addition, r 2.23(4) provides that any document filed electronically (as occurred here), if filed “after 4.30 pm by legal time in the Australian Capital Territory is taken to have been received by the filing registry on the next day the filing registry is open”. This means that for all intents and purposes the two amended applications that were filed, were filed at 8.45 am (being the time that the Adelaide Registry opened) on the same day that the proceedings were listed to commence at 10.00 am; a notice period to the court and the applicant of 1 hour and 45 minutes.
(c)These matters will be brought to account later in these reasons. However at this juncture I record that this practice should be discouraged. It is not one that finds any approval from the court. It is not only discourteous to the court, but it is also discourteous to the other party and particularly so as it affords no procedural fairness. Moreover such conduct lends itself to a favourable consideration of either an adjournment application, with an order for costs thrown away, or the court refusing to accept the late filed documents.
(d)Finally, I pause to comment that the delay between the commencement of the trial in September 2022 and the resumption of the trial now scheduled in February 2024, is something that troubles me greatly. In particular because these parties will continue to have this litigation hanging over them for such a long period, coupled with the significant legal costs they are each expending.
THE CIRCUMSTANCES LEADING TO THE COSTS APPLICATION
Procedural management of the recusal application
As discussed, the application which has resulted in the applicant making a costs application arises from paragraph 1(a) of the Further Amended Application in a Proceeding filed 13 August 2023 (“the recusal application”).
At the hearing on 14 August 2023, the proceedings were generally adjourned to 21 August 2023.
At the hearing on 21 August 2023, the recusal application was listed for interim hearing on 6 September 2023. The proceedings were however additionally adjourned to a further procedural hearing on 29 August 2023. This additional procedural hearing was listed at the request of the applicant’s counsel, to enable the applicant to consider his position generally, but also specifically with respect to the recusal application.
At the hearing on 29 August 2023 a regime for the filing of documents was set and orders were made in the following terms:
1.That the Father be at liberty to file one further affidavit with respect to the Interim Hearing on 6 September 2023 with such affidavit to be filed and served no later than 12 noon on 4 September 2023.
2.That the Mother be at liberty to file and serve any affidavit in reply thereto no later than 4.00pm on 5 September 2023.
3.That the parties otherwise file and serve a Case Outline Document and Summary of Argument no later than 4.00pm on 5 September 2023.
4.That the hearing on 6 September 2023 be relisted to 2.15pm that same day.
The applicant complied with Order 1 by filing an Affidavit on 31 August 2023.
The respondent complied with Order 2 by filing an affidavit from her solicitor on 4 September 2023.
At the hearing on 6 September 2023, the court was informed that the respondent no longer pressed the recusal application. As a result the applicant pressed his application for costs thrown away. Accordingly, the following orders were made:
1.That the Applicant Father’s application for costs thrown away with respect to paragraph 1(a) of the Amended Application in a Proceeding sealed 13 August 2023 shall be listed for interim hearing at 11:30 am on 15 September 2023.
2.That any affidavit upon which the Applicant Father intends to rely be filed and served no later than 4:00 pm on 13 September 2023.
3.In the event that the Respondent Mother wishes to rely on any affidavit, she is to file and serve the same by no later than 4:00 pm on 14 September 2023.
4.That leave be given for the Applicant Father’s Counsel to appear at the hearing by Microsoft Teams, with advice as to the need for the same to be given to chambers no later than 12noon on 14 September 2023.
5.That the parties be at liberty to personally attend the adjourned hearing by way of Microsoft Teams.
The substance of the recusal application
The recusal application was grounded in the principles of apprehended bias. Whilst the submissions annexed to the recusal application were lengthy, they can be distilled to the following:
(a)At a hearing on 31 August 2022, prior to the commencement of the trial, I called the matter on to inform the parties of certain matters which may lead to an objection being taken to me hearing the matter. While the hearing contained more discourse than produced here, the salient aspect of what fell from me in discussion with the legal representatives was as follows:
HER HONOUR: … it’s with some trepidation that I raise the following matters. Yesterday afternoon it came to my attention that I appear to have acted for, [Ms AL], your client’s former partner […] - - -
[FATHER’S COUNSEL]: [Ms AC].
HERHONOUR: [Ms AC]. Now, can I say that, and I can see your shock.
[FATHER’S COUNSEL]: Yes.
HERHONOUR: Can I say the following about it. I have absolutely no recollection. I know that that’s - - -
[FATHER’S COUNSEL]: I’ve read what was said and - - -
HER HONOUR: Look, I actually haven’t report the report.
[FATHER’S COUNSEL]: No.
HERHONOUR: But the way it came about was that understanding that there was a report, I asked my associate to pull up the file number and I saw the name. It hadn’t - - -
[FATHER’S COUNSEL]: Clicked.
HERHONOUR: - - - twigged to me before, and it did twig to me at that moment, and this was a digital filed that got pulled up on her screen, not mine, so it drove me to my client conflict register from when I was at the Bar and I saw an entry in relation to her. Can I say the following about all of that. I then at my direction – and it’s not something I’ve personally done – I directed my associate to go through the court file to identify if I had ever appeared at a time when an order had been made in the matter and the answer to that question is no. I personally genuinely have absolutely no recollection of the matter whatsoever. I then went through – because I’ve maintained fairly comprehensive records. I’ve never sent an invoice in the matter and I’ve never reduced any advice to writing so far as my records indicate. Now, that’s not a comprehensive answer, but that’s as far as my records indicate at the moment. But I accept that from your client’s perspective that may well be a disqualifying factor despite all of the matters and the way in which I’m conveying things have panned out. Now, I’m not going to require you to make an answer right now. I think that’s something that you need to talk to your client about, [Ms AL].
[FATHER’S COUNSEL]: I agree.
HERHONOUR: But in light of the comments I’ve made about my absolute lack of recollection of the matter, I think it’s only appropriate that – and I – [Ms AD’s] office were my instructors, but not [Ms AD], [Ms AE], according to my records, but I assume that [Ms AD] would have retained the file and would be able to tell you pretty quickly the extent of my involvement in the matter in a cursory way whether I ever appeared at a conference or something of that nature or produce matters to writing.
Ultimately the matter was adjourned to the following day to enable each of the parties to consider the matters that I had raised. In addition to the matters that I raised with the parties in relation to the applicant’s former wife, the respondent’s counsel also raised with the court an enquiry as to whether I had ever taken instructions in relation to the respondent’s previous matrimonial proceedings. As a result, the adjournment additionally enabled the respondent to make whatever enquiries she considered necessary.
When the matter returned before me the following day (1 September 2022), neither party took any objection to me hearing the proceedings. It was against that background that the final hearing commenced before me on 5 September 2022.
As set out earlier, the final hearing is part heard, thus far with only the respondent having given oral evidence.
It is now apparent that the respondent together with her new legal advisors have considered that there are a range of matters to be dealt with by the respondent when the trial resumes. In particular the respondent has an extant interlocutory application in which she seeks leave to call additional witnesses not previously identified by her. The particular evidence which the respondent seeks to address has arisen over the course of her cross examination, and not as a result of matters deposed to by the applicant. The evidence centres around the allegation squarely made by the respondent at paragraph 1,016 of her Trial Affidavit filed 23 July 2022, that the applicant misappropriated certain funds from her business at a time when he was employed in the business.
In the context of those enquiries, the respondent and her legal advisors have revealed evidence which they shall seek to adduce when the final hearing resumes which the respondent asserts not only supports the respondent’s allegations she has made about the misappropriation of funds, but which they also categorise as the applicant and his solicitor being engaged in an alleged “taxation fraud”. The respondent alleges that the timing of when this alleged taxation fraud occurred coincides with the period of time in which the applicant and his former wife were engaged in litigation following the breakdown of their relationship.
Against that background, the respondent’s concerns are argued in the following terms in the Annexure to the recusal application:
4.The above matters give rise to "a reasonable apprehension on the part of a fair- minded lay observer of the possibility that” Kari J "might”' have an attitude "incompatible with the degree of neutrality required dispassionately to resolve issues" in these proceedings involving [Mr Garwood] (QYFM v Minister for Immigration [2023] HCA 15) in that:
4.1. a lay observer might expect that Kari J might have formed some sort of relationship or loyalty to [Ms AC] and/or her instructing solicitor and might feel aggrieved or a sense of injustice (or feel that [Ms AC] or her instructing solicitor might feel aggrieved or a sense of injustice) arising from:
4.1.1.the falsities and non-disclosures in the [Ms AC] proceedings;
4.1.2. the likely non-disclosures to Services Australia;
4.1.3. the attempts taken with [AN Finance] to be paid partly in "vouchers"; and/or
4.1.4.the non-disclosures, falsities and/or abuse of process in these proceedings;
especially given the matters the subject of the falsities and non‑disclosures arose from matters raised by [Ms AC] initially – ie, she clearly had a keen interest in those issues; and/or
4.2. the matters otherwise give rise to a risk of:
4.2.1. conscious or unconscious judicial bias against the applicant; or
4.2.2. conscious or unconscious "compensatory bias" 1 against the respondent - ie, aware of a possible bias against the applicant based on all of his and his solicitor's misconduct, or the appearance of that, the judge - in order to avoid the actuality or appearance of that bias – consciously or unconsciously leans the other way and favours the applicant.
The respondent filed two affidavits in response to the recusal application. The first in support of his Response filed 28 August 2023 and the second on 31 August 2023 in accordance with the orders made 29 August 2023.
Relevantly for present purposes, in the affidavit filed 31 August 2023 the Applicant deposed that he had made enquiries of his former wife’s solicitor on 25 August 2023 (with the permission of his former wife). That in response to that enquiry, his former wife’s solicitors responded under cover of letter dated 31 August 2023 in the following terms:
I refer to you letter dated 25 August 2023.
I confirm that I have personally reviewed all of my files in respect of the matter of [Ms AC] ADC 4936 of 2016 (noting that the file was opened in 2015 and I have reviewed the files relating to the period prior to the commencement of proceedings).
I confirm that I can identify the following in respect of Ms Penelope Kari of Counsel (as she then was):
1. On 12 February 2017 [Ms AE] of my office sent an email to Ms Kari asking whether she could appear in the matter of [Ms AC] before Justice Mead on 20 February 2017 for [Ms AC]. I enclose a copy of that email.
2. I confirm that there was no reply from Ms Kari and my firm briefed [Mr AF] for the hearing on 20 February 2017.
3. On 24 April 2017 [Ms AJ] of my office telephoned [AG Legal] to see if Ms Kari was available for the hearing on 1 May 2017. She spoke to “[Ms AE]” at [AG Legal] who informed her that Ms Kari should be ok to attend and she would do a conflict check and call if there were any problems. I enclose a copy of the file note.
4. A decision was made to brief [Ms AH] (as she then was) and on 26 April 2017 [Ms AJ] of my office telephone [AG Legal] to cancel the booking of Ms Kari for 1 May 2017. I enclose a copy of the file note.
5. [Ms AH] appeared on 1 May 2017 and remained counsel for the duration of the matter.
In response to your request for specific documents (using your numbering for ease of reference) –
1. There are no letters of engagement for the provision of legal services by Ms Kari to [Ms AC] on my file.
2. There is no fee agreement on my file from Ms Kari.
3. There are no invoices rendered by Ms Kari on my file.
4. As there are no invoices rendered by Ms Kari on my file, there were no payments to Ms Kari.
5. There are no notes of attendances, no letters of engagement sent to Ms Kari and no opinions or reports from Ms Kari about [Ms AC’s] matter on my file.
6. There are no notes of attendance with Ms Kari as there were no appointments with Ms Kari, and there were no appointments made with Ms Kari (other than court bookings as set out above).
7. Ms Kari did not attend Court on behalf of [Ms AC] at any time.
8. There are no notes or letters regarding the disengagement of Ms Kari on the matter as she was never engaged in the first place.
From my review of the matter:
1. No-one from my office spoke to Ms Kari about the matter at any time. If they did then consistent with our usual practice there would have been a corresponding file note (which there is not) and time entry into our billing system (which there is not).
2. There was only one direct communication with Ms Kari which was the mail inquiring as to her availability on 12 February 2017. The other communication was between our practice manager at the time and the clerk at [AG Legal].
3. From my review of the file, Ms Kari was not at any time provided with any information or documentation in respect of the matter of [Ms AC] (aside from being told the upcoming Court dates as set out above).
I trust this is of assistance to the Court.
On 4 September 2023, the respondent’s solicitor filed an affidavit setting out that upon receipt of the letter from the applicant’s former wife’s solicitor on 31 August 2023, the respondent on the same day wrote to the applicant’s solicitors to inform them that the respondent no longer pressed the recusal application. The solicitor went on to depose that she was instructed to “seek that the hearing date on 6th September be maintained for directions only”.[1]
[1] Affidavit of Angela Clare Ferdinandy filed 4 September 2023, paragraph 6.
Inexplicably however, at no point between 31 August 2023 and prior to the hearing on 6 September 2023 did the parties mutually send correspondence to the court advising that the recusal application was not to be pressed and that the hearing date was to be maintained for “directions only”. Nor did the respondent either file a Notice of Discontinuance as provided for in r 10.02 of the Rules, or file any further amendments to the Application in a Proceeding abandoning that part of the application.
At the hearing on 6 September 2023 the court formally noted that the recusal application was no longer pressed. Additionally procedural orders were made to progress the applicant’s costs application to a hearing. Those orders were:
1.That the Applicant’s Father’s application for costs thrown away with respect to paragraph 1(a) of the Amended Application in a Proceeding sealed 13 August 2023 shall be listed for interim hearing at 11:30am on 15 September 2023.
2.That any affidavit upon which the Applicant Father intends to rely be filed and served no later than 4:00pm on 13 September 2023.
3.In the event that the Respondent Mother wishes to rely on any affidavit, she is to file and serve the same by no later than 4:00pm on 14 September 2023.
4.That leave be given for the Applicant Father’s Counsel to appear at the hearing by Microsoft Teams, with advice as to the need for the same to be given to chambers no later than 12noon on 14 September 2023.
5.That the parties be at liberty to personally attend the adjourned hearing by way of Microsoft Teams.
THE COSTS APPLICATION
The applicant’s costs application can be found in the Response to an Application in a Proceeding filed on 28 August 2023, directed solely to the recusal application, in which the applicant seeks the following orders:
1.That the mother’s application at 1(a) of her Further Amended Application filed on 13 August 2023, do be dismissed.
2.That the mother do pay the father’s costs of an incidental to all matters in these proceedings from 31 August 2022 to 21 August 2023 on an indemnity basis.
3.That the mother do pay the father’s costs of and incidental to the Further Amended Application [in a Proceeding] on an indemnity basis.
In compliance with the orders made on 6 September 2023, the applicant filed an affidavit on 13 September 2023. By that affidavit the applicant abandoned paragraph 2 of his Response. The affidavit otherwise serves as the vehicle to set out (amongst other things) the quantum of the applicant’s costs claim. Those costs are itemised as follows:
(a)Costs calculated on an indemnity basis total $49,956.50 and include:
(i)Solicitors’ fees and disbursements billed in the amount of $18,689 and anticipated in the amount of $6,655.[2]
[2] Applicant’s Affidavit filed 13 September 2023, paragraph 20.
(ii)Junior Counsel fees for Mr Manetta estimated in the amount of $3,300.[3]
[3] Applicant’s Affidavit filed 13 September 2023, paragraph 15.
(iii)Senior Counsel fees for Mr AM KC billed in the amount of $5,500 and unbilled in the amount of $550.[4]
[4] Applicant’s Affidavit filed 13 September 2023, paragraph 16.
(iv)Senior Counsel fees for Ms AL SC in the amount of $15,262.50.[5]
(b)Costs calculated pursuant to Schedule 1 of the Rules[6] totalling $49,543.36 or reduced to $45,934.96 “for senior counsel fees for court attendances”[7] comprised of:
(i)Item 4 of the scale for 4 procedural hearings on each 6, 21, 29 August and 6 September 2023 in the amount of $8,374.48 ($2,093.62 for each hearing).[8]
(ii)Item 2 of the scale in the amount of $3,483.70 for opposing an application that includes interim orders up to the completion of the first court hearing.[9]
(iii)Item 15 on the scale for drafting, conferences and chamber work in the amount of $7,216.80 for Mr AM KC, $14,433 for Ms O’Connor SC, $2,308.98 for Mr Manetta and $11,086.40 for solicitors’ fees.[10]
(iv)Disbursements in the amount of $2,640.[11]
(c)Costs calculated on a party:party basis calculated on a 20 per centum reduction basis totalling $36,841.20.
[5] Applicant’s Affidavit filed 13 September 2023, paragraph 17.
[6] Applicant’s Affidavit filed 13 September 2023, paragraph 31.
[7] Applicant’s Affidavit filed 13 September 2023, paragraph 31.9.
[8] Applicant’s Affidavit filed 13 September 2023, paragraph 31.1.
[9] Applicant’s Affidavit filed 13 September 2023, paragraph 31.2.
[10] Applicant’s Affidavit filed 13 September 2023, paragraphs 31.3 to 31.6.
[11] Applicant’s Affidavit filed 13 September 2023, paragraph 31.7.
THE LEGAL FRAMWEWORK
Costs applications in respect of proceedings under the Family Law Act 1975 (Cth) (‘the Act’) are governed by s 117 of the Act.
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the court may give such weight as it considers appropriate to any relevant factor.[12]
[12] Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 at [24].
The Rules also provide assistance when considering the making of an order for costs. In particular, r 12.17(1) provides the method for the calculation of costs:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
In addition, r 12.17(3) sets out the matters that may be considered in the calculation of costs:
(3)In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c)the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre-action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
DISCUSSION
I propose to have regard to only those relevant factors prescribed by s 117(2A).
The financial circumstances of the parties
The information before the court from the successive Costs Notices filed by each of the parties suggests that the legal costs incurred by each of the parties are of monolithic proportions.
(a)The applicant’s most recent Costs Notice filed 6 September 2023 puts his total legal costs and disbursements incurred to that point at $910,200.74 (Items 1-5 in the Notice). To date those costs have been paid either personally by the applicant or by way of loan from the applicant’s mother (of an unspecified amount).
(b)The respondent’s most recent Costs Notice filed 15 September 2023 is a little less clear, however her total paid legal costs and disbursements to that point appear to total $1,392,199.97 (Item 1 in the Notice), with at least a further $30,446.52 owing (Item 2 in the Notice), and possibly a further $20,839 unbilled (Item 4 in the Notice).
In his affidavit filed 13 September 2023 the applicant deposes[13]:
(a)His income is $5,094 per fortnight (net);
(b)His rent is $1,000 per fortnight;
(c)He pays $2,000 per fortnight to his solicitors;
(d)He pays his former partner Ms AC $602.85 per fortnight by way of child support;
(e)He has a payment plan in place with the Australian Taxation Office in the amount of $123.61 per fortnight to pay his tax debt, which he expects to have fully paid by 19 March 2024.
[13] Applicant’s Affidavit filed 13 September 2023, paragraph 23.
In her affidavit filed 14 September 2023 the Respondent deposes that if she was ordered to “meet any order for costs” she would suffer “serious financial hardship”.[14] The affidavit thereafter sets out:
(a)That the C Group of which she is the Sole Director and Shareholder was valued at 30 June 2022 by Forensic Accountant Mr AK as a “going concern”/Enterprise Value at $4,786,000.[15]
(b)There are various liabilities owed by the Group to the Commonwealth Bank of Australia ($4,800,000) and Australian Taxation Office ($1,684,000) and payroll taxation liabilities ($562,000).
(c)The respondent has taken a mortgage in the amount of $1,245,000 secured by her home in M Town (which she asserts has a value of $2,000,000) and injected the sum of $715,000 by way of loan to the Group (the balance of $530,000 asserted to have been applied to legal fees).[16]
(d)The respondent draws an income of $208,000 per annum ($4,000 per week gross), but asserts that she is unclear whether she will continue to “derive the income that I do currently from the business”.[17]
(e)The respondent deposes that she is currently unable to meet her expenses from her income, identifying her weekly costs to include $1,058 to the ATO, $629 in travel fees to and from M Town, $650 per week in interest in her credit cards, and otherwise fully meeting all of X’s expenses and her own expenses.[18]
[14] Respondent’s Affidavit filed 14 September 2023, paragraph 19.
[15] Annexure “A” to the Respondent’s Affidavit filed 14 September 2023, paragraph 2.8.1.
[16] Respondent’s Affidavit filed 14 September 2023, paragraph 22.3.
[17] Respondent’s Affidavit filed 14 September 2023, paragraph 28.
[18] Respondent’s Affidavit filed 14 September 2023, paragraph 29.
While there may be conjecture between the parties about their respective financial circumstances, I am unable at this stage to make any findings in that regard.
Taking each of the parties at face value, it is clear that they can each ill afford this litigation.
Whatever the case may be however, impecuniosity is not a bar to the making of a costs order.
Conduct of the parties in relation to the proceedings
The respondent seeks to bring to account the applicant’s overall conduct in the litigation, with detailed submissions made by her counsel in that regard during the hearing.
While I have had regard to those oral submissions, I do not propose to traverse those matters in detail in these reasons. That is because in my view:
(a)This is a discrete application;
(b)I am presently unable to make findings about the parties’ respective conduct as I am part heard in the substantive proceedings;
(c)Ultimately the broader conduct of the parties that does not relate to this application will be a factor to be considered in the ultimate determination of the proceedings (and the determination of any relevant interlocutory proceedings), if and when a costs application is made and/or determined in that regard.
What is however exercising my mind at this juncture are those matters earlier identified about the timing of the making of the recusal application, coupled with the timing of when and how the application was withdrawn; all at the eleventh hour. Those factors in my view support the making of a costs order.
Whether any party has been wholly unsuccessful in the proceedings
In Robinson & Higginbotham (1991) FLC 92-209 at 78,417, Nygh J stated that the concept of being wholly unsuccessful is “a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed”.
Whilst ordinarily it would be appropriate not to comment about the merits of an application that has been withdrawn, here it is appropriate to make some comment. Implicit in the respondent withdrawing her application in my view is an acknowledgement that the respondent no longer considered it to be meritorious.
However even if I am wrong about that, in circumstances where the application has been withdrawn, there is no other conclusion that can be reached other than the application being wholly unsuccessful.
This factor speaks in favour of making an order for costs.
Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer
The court understands that the applicant invited an offer from the respondent with a view to resolving the applicant’s costs application. No such offer was forthcoming.
There is no evidence before the court, beyond that recounted in the parties’ respective affidavits and summarised earlier, as to whether there were attempts by the parties to resolve the recusal application prior to the ultimate abandonment by the respondent.
Conclusion as to whether a costs order should be made
For all of the reasons that I have identified I am satisfied that on balance an order for costs should be made.
Given the position advanced by the respondent, it now behoves the court to consider:
(a)Firstly whether further consideration of the application for costs be adjourned; and
(b)If not adjourned, the basis upon which the order for costs should be calculated.
Should further consideration of the application for costs be adjourned?
The respondent’s position is that if the court is minded to make an order for costs, further consideration of the same be adjourned to abide the ultimate determination of the matter. The respondent takes this position in light of the matters she alleges in relation to the conduct of the applicant and his former solicitor in relation to the alleged taxation fraud.
I am not however minded to take up the position promoted on behalf of the respondent for all of the reasons that I have already identified; in particular those discussed at [45].
On what basis should the order for costs be calculated?
It is well understood that an order for indemnity costs is a “very great departure” from the “normal standard”.[19]
[19] Kohan & Kohan (1993) FLC 92-340.
I have had regard to those matters discussed in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, particularly at 262.
I have also had regard to the helpful summary of the circumstances that might justify an order for indemnity costs, enunciated by Holden CJ in Munday & Bowman (1997) FLC 92-784 at 84,660:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c) Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
(As per the original)
I have had regard to the quantum of costs sought by the applicant, and the various bases upon which the same has been calculated.
I have also had regard to the Costs Agreement between the applicant and his current solicitors.[20]
[20] Annexure “BWR9” to the Applicant’s Affidavit filed 13 September 2023.
On any view the costs that have been incurred by the applicant in relation to this application are significant.
I am not, however, satisfied that there are matters that warrant the making of an order for indemnity costs.
Understanding, however, the significance of the application in the broader context of the litigation and the part heard final hearing, it is unsurprising however that additional care and attention was given to the recusal application by those advising the applicant; particularly in circumstances where they have only recently been instructed in the proceedings, and running alongside the recusal application is an extant application to restrain the applicant’s counsel Ms AL from continuing to represent him in these proceedings. Having said that however, there is some concern in my mind that is likely to be some significant overlap in the counsel fees incurred in relation to this application, and the broader proceedings.
For all of those reasons, I am minded to make an order fixing the costs to be paid in the amount of $25,000, with the same to be paid within sixty days of the order.
For all of those reasons I make those orders that appear at the commencement of these reasons.
I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 3 November 2023
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