Garwood & Shipton (No 7)

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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- Where the respondent informed the court at the hearing on 6 September 2023 that the recusal application was to be withdrawn – Implicit in the respondent withdrawing her application is an acknowledgement that the respondent no longer considered it to be meritorious – Where the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.

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Details
Case
[2023] FedCFamC1F 935
Decision Date

CaseChat Overview and Summary

In the case of Garwood & Shipton (No 7), the parties were involved in protracted parenting and property adjustment proceedings before the Family Court of Australia. The respondent, Ms. Shipton, sought a recusal of the primary judge, but subsequently withdrew the application at the hearing, acknowledging its lack of merit. The court considered an indemnity costs order application from the applicant, Mr. Garwood, due to the respondent's unsuccessful recusal application. The court found justifying circumstances for a costs order, but concluded that the circumstances did not warrant an indemnity costs order. The court ordered the respondent to pay $25,000 in costs to the applicant. The court also dismissed the respondent's application for an adjournment of the final hearing and vacated previously allocated final hearing dates. The case has a history of multiple interlocutory applications and cross-applications, and the substantive proceedings are currently suspended.

The court assessed whether further consideration of the costs application should be adjourned and the basis for calculating the costs order. The court rejected the respondent's argument for an adjournment, finding the matter ready for determination. The court examined the circumstances that might justify an indemnity costs order, considering factors such as the presence of ulterior motives, false allegations, misconduct, and the making of groundless contentions. The court concluded that while justifying circumstances for a costs order existed, the case did not meet the threshold for an indemnity costs order.

The court ordered the respondent to pay $25,000 in costs to the applicant within 60 days of the order. The form of the order is subject to review or variation under the relevant Federal Circuit and Family Court of Australia Rules. The decision underscores the importance of assessing the merits of legal applications and the potential consequences of unsuccessful applications, including costs orders.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.