Gissing and Sheffield

[2016] FamCA 101

FAMILY COURT OF AUSTRALIA

GISSING & SHEFFIELD [2016] FamCA 101

FAMILY LAW – COSTS – against a case guardian sought for actions said to prolong a trial – power to make an order where case guardian is not a party – difficult role where evidence hard to gather – no basis to depart from s 117(1).

Family Law Act 1975 (Cth)

Dawson v Beasley (2015) 52 Fam LR 402
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Knight v FP Special Assets and Ors (1972) 173 CLR 178
Morgan v Morgan (1865) 12 LT 199
Pryor v Hennessy and Cham [1973] VR 221
Re JJT and Ors; ex parte Victoria Legal Aid [1998] HCA 44; (1998) 155 ALR 251
Steeden v Walden [1910] 2 Ch 393

APPLICANT: Mr Gissing

RESPONDENT: Ms Sheffield

FILE NUMBER: MLC 2548 of 2012

DATE DELIVERED: 25 February 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way Of Written Submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mathews Family Law

COUNSEL FOR THE RESPONDENT: Ms Stoikovska

SOLICITOR FOR THE RESPONDENT: Carew Counsel

Orders

1. That the application by the applicant for costs pursuant to the submission filed on 15 January 2016 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Gissing & Sheffield 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 MELBOURNE

FILE NUMBER: MLC 2548  of 2012

Mr Gissing

Applicant

And

Ms Sheffield

Respondent

REASONS FOR JUDGMENT

1. Arising from orders made on 20 November 2015, Mr Gissing (“the applicant”) seeks an order for costs.  Provision was made in the orders for such an application.

2. In the substantive property proceedings, Ms Sheffield (“the respondent”) was the respondent but her case was “conducted” by Mr R (“the case guardian”) who was appointed as case guardian by an order made on 29 November 2013.

3. The application is for the case guardian and the respondent to be jointly and severally liable for the applicant’s costs.  The respondent (and to the extent that the case guardian is represented by the respondent’s solicitors) and the case guardian, sought that the application be dismissed.

4. By written submission filed 15 January 2016, counsel for the applicant said that the hearing which took seven days should have only taken two. 

5. In relation to the case guardian, counsel for the applicant submitted that the case guardian had been put on notice that his “conduct of the proceedings” might give rise to a costs order.

6. The applicant conceded that generally, the costs of a case guardian should be paid from (in this case) the respondent.  Here, the applicant sought his costs against the case guardian and no suggestion was made as to any costs arrangement between the case guardian and the respondent.

7. In a submission by way of reply and filed 8 February 2016, counsel for the respondent did not taken issue with the question of the jurisdiction or power of the Court to make an order against the case guardian.  What was submitted was that even if the case guardian was on notice as described, that “does not and cannot create an entitlement to a costs order against him”. 

8. Notwithstanding these various positions, it is important to determine whether the Court has power to make such an order. 

9. Both parties acknowledged the power to make any order for costs lies in s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) provides that subject to certain considerations, each party to proceedings under the Act shall bear his or her own costs.

10. The case guardian is not, strictly speaking, a party to the proceedings. 

11. Rule 6.08(1) provides that a person with a disability may start, continue, respond to, or seek to intervene in, a case, only by a case guardian. 

12. Rule 6.09 makes reference to the case guardian “conducting the case”. 

13. Rule 6.10 makes reference to the “case guardian of a party”.

14. Rule 6.13 provides:

    (1)      A person appointed as the case guardian of a party:

    (a)      is bound by these Rules;

    (b)must do anything required by these Rules to be done by the party;

    (c) may, for the benefit of the party, do anything permitted by these Rules to be done by the party; and

    (d) if seeking a consent order (other than an order relating to practice or procedure), must file an affidavit setting out the facts relied on to satisfy the court that the order is in the party's best interests.

    (2)       The duty of disclosure applies to a case guardian for a child and a person with a disability.

15. There is a notation to Rule 6.13 which provides:

    Note 1: The court may order a case guardian to pay costs.

16. Rule 6.14 (which was referred to in the applicant’s submission) says that the court may order the costs of a case guardian to be paid by a party or from the income or property of the person for whom the case guardian is appointed.  But that rule is not relevant here because there is no application by the case guardian.  Here the application is against the case guardian.

17. The traditional view seems to have been that if a proceeding in a civil jurisdiction is brought by a plaintiff under disability and it fails, and costs thereafter follow, the litigation guardian is personally liable for those costs but provided that person has acted properly, he or she is entitled to be indemnified for the costs (see Steeden v Walden [1910] 2 Ch 393). On the other hand, if a defendant in civil proceedings is under a disability, the litigation guardian will not be ordered to pay the costs of a plaintiff unless there is misconduct on the litigation guardian’s part (see Morgan v Morgan (1865) 12 LT 199).

18. Counsel for the applicant referred to Chapman v Freeman [1962] VR 259 which was a case involving an infant’s compromise where the traditional principles just set out would seem to have been applicable. A similar approach was taken in Pryor v Hennessy and Cham [1973] VR 221. These approaches are perhaps unsurprising because they involve infants.

19. Counsel referred to Dawson v Beasley (2015) 52 Fam LR 402. There Judge Jarrett of the Federal Circuit Court dealt with a parenting case where the relevant state tribunal had appointed an adult guardian who refused to accept an appointment as case guardian in the Federal Circuit Court. Judge Jarrett indirectly referred to the statement by Williams J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 113-114 where Williams J said that one of the purposes of appointing a next friend was to have a person on the record “who is personally liable for costs”. Judge Jarrett was dealing with a number of issues none of which is relevant here, but his Honour said:

    [73]     The second basis upon which the adult guardian suggests that dispensation is appropriate is that he is unwilling to become the litigation guardian for fear of being exposed to a costs order.  The adult guardian submits that he is not funded by the Queensland government in that regard.  However, in my view this concern is more illusory that real. 

    [74]     I recognise immediately that there is a possibility, however remote, that a costs order might be made in the present proceedings and that it might be made against (the litigants) litigation guardian if the circumstances so require.  But in my view, the following matters lead to the conclusion that such a possibility is barely discernible…

    His Honour went on to consider the various reasons why his view was as describes one of them being that s 117 of the Act provides that the starting point is that each party should bear their own costs under the Act. Another reason was given that the other litigant in the proceedings was representing himself and therefore had no claimable legal costs; and another was that the Independent Children’s Lawyer was in receipt of legal aid. His Honour observed however that the adult guardian whom his Honour was trying to draw into the proceedings, was fulfilling a statutory role upon an appointment by the relevant state tribunal.

20. The question of the power to make the costs order against a case guardian was assumed in Dawson and not argued.  I have not had any other authority drawn to my attention. 

21. Section 117(2) is not particularly helpful here as it is not a power to make whatever costs order the court desires but rather to make such order “as to costs” as the court considers just. The answer seems to lie in how one defines a party to the proceedings.

22. In Knight v FP Special Assets and Ors (1972) 173 CLR 178 at 192 Mason CJ and Deane J said:

    [33]…the prima facie general principle is that an order for costs is only made against a party to the litigation…there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party…

    [34]For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.

23. The significance of that authority is where the non-party has played an active part in the conduct of the litigation as is required by the role of the case guardian under the Family Law Rules.

24. In Re JJT and Ors; ex parte Victoria Legal Aid [1998] HCA 44; (1998) 155 ALR 251 Faulks J (as his Honour then was) made an order that Victoria Legal Aid set aside funds for the representation of a child in proceedings in this Court. Victoria Legal Aid argued that the order was made without jurisdiction (apart from other considerations). Hayne J (with whom the other justices predominantly agreed) said:

    [95]Some attention was given, in the course of argument, to whether s 117(2) would permit the making of an order for costs against a person not a party to the proceeding but who, nevertheless, had had effective control of the proceeding. I am content to assume, without deciding, that s 117(2) does give the Family Court a power to make an order of the kind dealt with in Knight v FP Special Assets Ltd. But the existence of such a power says nothing of whether an order of the kind made here is authorised by s 117(2). (That is why for present purposes it matters not whether Victoria Legal Aid was properly to be seen as a party to the proceeding in the Family Court.)

    [96]Appearing, as it does, in the context of a provision enabling a court to make orders for costs, which is a provision remarkable only because it departs from the ordinary rule that costs follow the event in favour of a prima facie rule that each party abide his or her own costs, nothing in the context of s 117 supports the construction of s 117(2) upon which the impugned order must depend if it is authorised by that sub-section.

    [97]Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, "costs" as that expression is ordinarily understood in the law.

    [98]In the course of argument it was suggested that the impugned order might be supported by reference to s 68L(2) of the Act, notwithstanding that the trial judge did not purport to rely on this provision. As stated above, s 68L(2) enables the Court to "make such other orders as it considers necessary to secure that separate representation". While s 68L(2) is broadly expressed, it is necessary to read it in the context of the Act as a whole. In particular, s 68L(2) does not provide, by implication, power to do something which is provided for expressly in other provisions of the Act.

25. Assuming therefore that s 117(2) is wide enough to empower the court to make an order against a non-party who has played an active part in the conduct of the litigation, the question is whether that order should be made here.

26. It will be evident from s 117 of the Act that the applicant must show that there are circumstances that justify a departure from the principle in s 117(1) that each party shall bear their own costs.

27. The basis of the applicant’s submission as to the justification was as follows:

    ·The case guardian pursued unmeritorious arguments as reflected in the findings that :

    (i)There was an unfounded assertion as to the applicant’s responsibility for the parties’ tax problem;

    (ii)There was an unfair, if not scandalous accusation, made by the parties’ accountant;

    ·Paragraph 171 of the judgment and 172 read as follows:

    [171]The parties’ evidence upon which each required adjustments to property for the conduct of the other can be encapsulated under the headings that follow. In the case of the respondent, it was asserted:

    ·The applicant made no contribution to the mortgage and refused to agree to the sale of the [Property H] properties and consequently, the mortgages fell into arrears causing increased penalties, legal costs and interest;

    ·The applicant mismanaged the unit 2 property occupied by [Mr B] causing an inability to recover lost rent, significant damage to unit 2 and loss of future rental;

    ·The applicant lived in unit 3 leaving it an unliveable state causing an inability to gain future rental;

    ·Causing the respondent to incur storage fees because the applicant did not collect his personal items from unit 3;

    ·The applicant  caused the boat shed to fall into disrepair;

    ·The applicant sold stock retaining the profits without accounting for them;

    ·The applicant failed to keep proper records causing accounting fees;

    ·The applicant borrowed funds from his parents without the knowledge or consent of the respondent  albeit the amount was unknown;

    ·The applicant dismantled vehicles and incurred loss of value.

    [172]I have rejected virtually all of these claims in the findings set out above. I do not propose to repeat them. Nothing in the evidence of the case guardian justified any adjustment under s 90SF(3)(r) in favour of the respondent.)

    (iii)Allegations against the applicant in relation to County Court proceedings required him to go to the expense of obtaining the file and producing evidence about amounts paid under a previous relationship consent order as well as legal fees;

    (iv)Other matters of a similar nature.

    ·The respondent relied upon irrelevant material and wasted time by the use of affidavits whose evidence was irrelevant to the issue in dispute;

    ·The applicant was cross-examined for three days without any forensic benefit;

    ·There had been a finding of non-disclosure against the respondent in relation to a stream of income.

28. It was submitted by the applicant that having put the case guardian on notice, the case guardian proceeded and, in the final judgment of the court, findings were made questioning his objectivity, his sloppiness in relation to the presentation of evidence, his obsessive pursuit of minutiae, his fabrication of a document and his poor handling of discovery.

29. By her response, counsel for the respondent whilst not disputing the criticisms, submitted that the judgment also provided:

    ·    The applicant was appropriately challenged and documents were put to him;

    ·    Cross-examination was relating to issues that were relevant to the question of contribution and what assets there were for division which required individual consideration;

    ·    The case for the respondent was conducted by the case guardian without evidence from the respondent requiring the applicant’s evidence to be challenged so that justice was done to the respondent’s case;

    ·    Cross-examination of the respondent’s witnesses by the applicant’s counsel took three days;

    ·    It was not reasonable to argue that the case could or should, have only taken two days.

30. It was submitted therefore that a costs order would not be reasonable in the exercise of discretion on either a joint or several basis, or at all.

31. In relation to the evidentiary matter just referred to, much of the case guardian’s evidence of a hearsay nature was struck out by consent.  It was not suggested on behalf of the respondent (or the case guardian) that an attempt was made to introduce that evidence properly.

32. In relation to s 117(1), counsel for the respondent appeared to speak for the case guardian (and made submissions on his behalf) too. The submissions said that:

    Nothing had been done to remove the case guardian;

    The case guardian was appointed on the affidavit evidence of a psychiatrist and on the basis of his friendship with the respondent of 25 years; and

    The respondent was essentially “cognitively paralysed when issues relating to her legal circumstances were raised”.

33. The role of the case guardian therefore would have been more difficult here than usual.  Despite that, the role requires the protection of the respondent’s interests.  The issue is whether there is a justification to order costs and that should be decided on whether or not the case guardian acted diligently (in gathering information) and prudently (deciding which matters required investigation and evidence-testing and which did not).

34. I was certainly critical of the case guardian.  I consider there is here a justifiable assumption that there were many matters in relation to the evidence of a forensic nature which were made by the lawyers (as noted by the applicant’s submission at [16]).  It is difficult to criticise the case guardian (an example of which is referred to in the applicant’s submission at [12] and [13]) both of which amount to criticism of the conduct of the proceeding generally for which the lawyers must take some responsibility.  It is important to observe that no order is sought against the respondent’s lawyers here. 

35. Counsel for the applicant also submitted that cross-examination was extended for three days “without any forensic benefit” but that too must be seen in the context of the role of the lawyers and the apparent inability of the case guardian to obtain any assistance from the respondent.  Counsel’s cross-examination was probably something that should have been done in discovery.  Again, it is difficult to criticise the case guardian for those forensic decisions. 

36. Counsel for the applicant submitted that non-disclosure by the case guardian was something justifying criticism.  Whilst the disclosure obligation clearly falls on a case guardian, the unusual circumstances here were they did not prejudice the applicant because I said:

    [109]…the rental from [Property T] was said to be covering the respondent’s expenses but the mortgage was only $127 per week.  There was no justification for the lack of evidence about the shop because, as was established in cross-examination, in 2012, for a period of eight months, the respondent banked $95,000.  On the basis that [Property T] income was $1300 per week, I conclude that if it was deposited into those same accounts, it would have amounted to about $45,000.  $50,000 therefore of revenue (as distinct from income) remained unexplained even taking into account the tax returns.

    That finding then ultimately translated into the following:

    [263]   …There is every likelihood that the list of assets has been depleted over the four years by in excess of $100,000 when taking into account [Property T] income, the costs on the mortgagee sale, the losses of storage fees and sold property.  A 5 per cent adjustment of the list of assets above is about $124,000.

1. Thus, non-disclosure does not justify a departure from the principle in s 117(1) of the Act.

2. This litigation was complicated because of two predominant matters.  The first was the absence of assistance to the case guardian from the respondent herself.  As I observed in the judgment, no application was made to remove the case guardian in circumstances where his closeness to the respondent personally may, with hindsight, have been a basis for the court to say that he was not the appropriate person because of his loss of objectivity.  However, it is important to note that the applicant well knew of that relationship at the time the case guardian order was made and obviously thereafter.  The role of the case guardian thereafter must be seen as difficult and extending the time of the trial because of the obligation to protect the interests of the respondent.  That however also leads to the second issue.  A very unusual feature of this case was the enormous amount of time invested in pursuing chattels.  The applicant and the respondent were involved in second-hand dealer operations for their very financial existence over a number of years.  That created difficulty in respect of valuation not only because there was no finite record of what existed but also because of where the items were stored.  In and amongst all of those chattels, were motor cars in which the case guardian had a peculiar interest and about which, his objectivity was lacking.

3. Because of the two matters to which I have just referred, this trial was much more complicated than usual.  The discovery process was enormous with thousands of documents.  As late as the trial itself, requests were being made for corroborative proof of modest items that had been spent.  In respect of the respondent, it is difficult to find any basis to say that she contributed to the dilemma in circumstances where the medical report that justified the appointment of a case guardian in the first place, indicated her inability to participate.  In respect of the case guardian, I consider the Morgan principle earlier mentioned should apply here namely that there has to be misconduct to justify a departure from the principle in s 117(1). Misconduct for that purpose has to mean conduct relating to the litigation. In my view, it means pursuing the litigation for an ulterior purpose or one that is deliberately contrary to the interests of (in this case) the respondent. Notwithstanding all of my criticisms of the case guardian for his sloppiness, inappropriate assertions and persistence in relation to minutiae, the reality is that he was endeavouring to get the best outcome that he could for the respondent no doubt guided by the lawyers who have acted for her. In my view, there is no justification here for me to make a finding that there should be a departure from the principles set out in s 117(1) of the Act. The application for costs is dismissed.

I certify that the preceding Thirty Nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 25 February 2016.

Associate:

Date:  25 February 2016