Green & Knowles (No. 2)

[2009] FamCA 541

FAMILY COURT OF AUSTRALIA

GREEN & KNOWLES (NO. 2) [2009] FamCA 541

FAMILY LAW – COSTS – Circumstances justifying order – offer of settlement – Independent Children's Lawyer's costs to be borne by a party

Family Law Act 1975 (Cth)

Penfold v Penfold (1980) 144 CLR 311
Jensen and Jensen (1982) FLC 91-263
I and I (No 2) (1995) FLC 92-625

APPLICANT: Mr Green

RESPONDENT: Ms Knowles

INDEPENDENT CHILDREN’S LAWYER: Ms Macgregor

FILE NUMBER: MLC 1172 of 2007

DATE DELIVERED: 25 June 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Mushin J

HEARING DATE: By written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Litigant in Person

SOLICITOR FOR THE APPLICANT: N/A

COUNSEL FOR THE RESPONDENT: Mrs Benjamin

SOLICITOR FOR THE RESPONDENT: JP Stevens Lawyers

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mrs Hooper

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Macgregor Solicitors

UPON APPLICATION made to the Court AND UPON CONSIDERING WRITTEN SUBMISSIONS from or on behalf of all parties:

IT IS ORDERED THAT:

1. Failing agreement as to costs within 30 days, the costs of the wife and the Independent Children’s Lawyer including the costs of these applications, be assessed pursuant to the provisions of Chapter 19 of the Family Law Rules 2004 as between parties as and from 24 October 2008, and when so assessed be paid by the husband.

2. All applications be otherwise dismissed.

3. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel.

IT IS NOTED that publication of this judgment under the pseudonym Green & Knowles is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1172  of 2007

MR GREEN

Applicant

And

MS KNOWLES

Respondent

And

INDEPENDENT CHILDREN’S LAWYER

REASONS FOR JUDGMENT

introduction  

1. On 15 April 2009 I delivered reasons for judgment (“the reasons”) and made orders (“the orders”) in respect of parenting matters regarding the two children of the marriage. On 20 April 2009 I made further orders for the filing and service of written submissions on issues of costs arising from the orders.

2. Both the wife and the Independent Children’s Lawyer (“ICL”) have made applications for costs against the husband. In considering those applications I have read the following written submissions:

   a)by the ICL filed on 4 May 2009;

   b)by the wife filed on 4 May 2009;

   c)by the husband in response filed on 4 June 2009;

   d)by the ICL in reply filed on 9 June 2009; and

   e)by the wife in reply filed on 10 June 2009.

3. The husband has submitted that I should find that "there is no costs application on foot … ."  That submission relies on what is asserted by him to be late service of the wife's written submissions in accordance with my orders.  It appears that the husband did not receive the wife's written submissions within the required time.  It was suggested on behalf of the wife that there was some difficulty with the husband's address for service.  That issue was raised on several occasions during the final hearing.  In the circumstances, I instructed my Associate to advise all parties that the time for filing written submissions in accordance with my orders would be extended to enable the wife to file her application and for the husband to respond within the time frame previously provided in the orders.  Accordingly, I reject the husband's submission that "there is no costs application on foot."

4. The relevant legislative provision is section 117 of the Family Law Act 1975 (“the Act”). The primary provision, which is contained in subsection (1), is that in proceedings under the Act each party bears his or her own costs. However subsection (2) empowers me to make an order for costs if I consider it just to do so.

5. There are a number of authorities relevant to this application.  In Penfold v Penfold (1980) 144 CLR 311, 315 the High Court held with regard to the relationship between those two subsections:

   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.

   Their Honours then proceeded to state the fundamental requirement of subsection (2):

   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". (emphasis added)

6. That approach was followed by Nygh J in Jensen and Jensen (1982) FLC ¶91-263, p 77,471 as follows:

   However, the High Court in Penfold v. Penfold has made it quite clear that the Court has a wide discretion in awarding costs and that it is not necessary for there to be established special circumstances before an order for costs can be made, nor indeed is it necessary for the Court to give any reasons at all for making an order as to costs.

   … subsec. (2) makes it clear that the Court must consider the merits or demerits of each particular case, but the merits or demerits of that particular case need not be extraordinary or special before an order for costs can be justified.

7. In considering whether it is just to make an order for costs I must have regard to the provisions in subsection (2A), which are in the following terms:

   (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.

8. In I and I (No 2) (1995) FLC 92-625, p 82,277 the Full Court of this Court held that:

   “the … relevant matters referred to in section 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.”

9. With regard to costs sought by or against the ICL, section 117(3) of the Act provides:

   To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.

background

1. The parties’ children are presently aged 9 and 5. As discussed at length in the reasons, the older child has significant disabilities. The substantive proceedings sought parenting orders with regard to the two children of the marriage and, in particular, the questions of the time they spend with each parent and the division, or otherwise, of parental responsibility. The issues of parental responsibility focussed on the children’s schooling and the health of the older child.

2. The final hearing of this matter was originally set down for five days.  However, it required hearing time of 15 days which spanned approximately six months. I listed the matter for mention on five other days.  I explained the cause of that six-month period in the reasons. The wife and the ICL have submitted that the final hearing was significantly prolonged because of the conduct of the husband both in the preparation and running of his case.

3. Essentially, the orders provided for the children to live in the primary care of the wife and spend time with the husband on each alternate weekend from after school on Friday to Sunday evening with one evening in the other week. It is important for present purposes that I decided that the weekend time which the children spend with the husband was to be extended to the commencement of school on either the Monday or Tuesday, at his election, provided he accommodates them within a 15 km radius of their school. The orders as to time during school holidays and special occasions were weighted marginally in favour of the husband.

4. In addition to the apportionment of time spent by each of the wife and the husband with the children, the most strenuously contested aspects of these applications related to parental responsibility in the areas of the children’s schooling and the older child’s health. I held in respect of both of those that the wife was to have sole parental responsibility. The parties otherwise retained joint responsibility.

discussion

1. I now turn to a consideration of whether it is just to make an order for costs in light of the provisions of Subsection 117(2A) of the Act and the parties’ submissions in these applications.

Section 117(2A)(a) – Financial circumstances

1. The first matter of consideration is the financial circumstances of each of the parties. I have previously found that the wife carries the lion's share of the financial burden of the children. At paragraphs 226 to 234 of the reasons I held as follows:

   226.… the wife has had a significantly greater financial burden than has the husband.  There are several aspects of this matter.

   227.The first matter of financial factors relates to the husband's income.  As I have already found, he works as a self-employed [professional].  His taxable incomes for the last three years (he not having received an assessment of income-tax for the year ending 30 June 2008) were as follows:

   •       30 June 2005 - nil;

   •       30 June 2006 - $13,364; and

   •       30 June 2007 - nil.

   228.The second financial factor relates to child support.  When the parties settled their financial matters as described above, they entered into a Child Support Agreement.  That agreement was part of the overall settlement. As part of that overall settlement, the sum of $12,699 arrears of child support was forgiven by the wife.

   229.During his cross examination, there was some question as to whether the husband was in arrears of child support.  Counsel for the wife put to him that there were enforcement proceedings pending in the Federal Magistrates Court.  At best, the husband was uncertain about the nature of those proceedings.  He was also not prepared to admit to arrears.  At a relatively early point during this trial, I offered to accept a transfer from that Court to enable the parties to resolve all the litigation in the one place at the one time.  I had the impression that the parties were prepared to accept that suggestion.  However, within several days of that offer I was informed that the parties had settled those proceedings by the husband paying to the wife the sum of $11,500.  I infer from that settlement that the husband was in substantial arrears of child support.

   230.In response to cross examination on behalf of the wife that the husband's attitude towards the payment of child support for the children suggested a poor attitude towards parenting, the husband asserted that he had paid several amounts of cash to the wife.  At first he swore that the money had been paid "in the last two years" and a little later, in response to a challenge with regard to the time, he swore "that would be the last three years".  He swore that he had paid "somewhere around $5000 to $10000".  In response to a question that he was therefore asserting that the wife was lying when she asserted that she had not received any money from the husband in the last three years, he accepted that proposition.  The husband swore that he paid the monies in cash amounts of $1000, $2000 and $3000.  In the first place those last three amounts add to $6,000, so at the very least his earlier evidence of the total amount he had paid commencing at $5,000 must have been wrong.

   231.I do not accept the husband's evidence with regard to the payments referred to in the last paragraph.  The husband is meticulous in his assembly of evidence which he can use against the wife and the concept that he paid cash without getting any receipt is inconceivable.  I find that the wife’s evidence of not receiving any money for the past three years is to be preferred.

   232.The husband conceded that "as a general proposition", the non-payment of child support may be a relevant factor.  But by way of further instance of the husband's lack of insight with regard to child support, he swore: "I have never been aware that she has been short of money."

   233.The husband's approach towards the payment of child support described above and his limited taxable income is to be seen in the context of other activities which suggest at least a reasonable lifestyle.  The husband commenced building two residential units in about February 2004.  The cost varied between $1.2 million and $1.8 million.  The average interest was approximately 11% on the first 80%.  There was substantial combined interest, not all of which was offset against his income-tax because one of the units was, at one stage, his principal place of residence.  One of the units was sold in September 2005 for a loss of between $100,000 and $200,000 and the other unit was sold in approximately August or September 2008.

   234.The husband and Ms [A] have had two overseas trips since the commencement of their relationship.  One of those trips was to New Zealand and the other was to Paris and Spain.  The latter trip took place several months before the commencement of this trial.  It appears that Ms [A] paid for most of both of those trips.  The husband and Ms [A] have taken the children for a holiday to Tasmania.

2. In addition to the above findings, at the time that the parties settled financial matters arising out of the breakdown of their marriage, they entered into an agreement pursuant to which the wife is responsible for 75% of the costs of the children's education.

3. At the commencement of this trial the wife was represented by a senior Queen’s Counsel leading junior counsel. Likewise, the husband was represented by Senior Counsel. The ICL instructed a very senior member of junior counsel. All counsel are highly experienced in this jurisdiction. Given the nature of these proceedings the representation of all parties was entirely appropriate. Both senior counsel sought leave to withdraw from the proceedings prior to their conclusion.  Queens Counsel for the wife informed me that on his client’s side, that was for financial reasons. While there was some indication of similar reasons for the withdrawal of Senior Counsel for the husband, I am unable to make a specific finding.

4. I have included the details in the previous paragraph because of the husband’s submission that the wife had engaged Queens Counsel because she “wanted to make a grand gesture with an extravagant legal team.” He submitted that his briefing of Senior Counsel was only in response to the wife’s action. In light of my previous finding that all the legal representation was appropriate, it is unnecessary to consider the husband’s position further.

5. The wife submitted that she had borrowed against the equity in her home to ease the financial strain of the proceedings. In response the husband tendered a copy of a Title Search of the wife’s residence, as evidence that there has been no dealing registered on the property since the commencement of these proceedings. In the circumstances I do not find it necessary to determine that issue.

6. Each party submitted that a lack of success by them in this application would leave them “technically insolvent”. That is a relevant issue in my consideration. The extent that the husband submits that that may result in his not being permitted to practice his profession, again I take that matter into account.

7. In the reasons, I found that the husband and his partner had been able to travel overseas.  There was no evidence that the wife was able to do so.  The wife owns her residential property at L, in the inner suburbs.  The husband’s fiancée has purchased land at V in the outer suburbs and they are intending to build a house.  The wife’s residential commitments impose financial pressures on her. The husband’s residential opportunities are in large part financed by his fiancée.  The wife has the primary residence and overwhelming financial responsibility of the children.

8. The husband submits that the wife’s mother told him that she had paid the wife’s legal costs of approximately $300,000. In reply the wife submitted that her costs of the proceedings are approximately $269,000. She has financed that in part by an increase in the existing mortgage on her home of approximately $94,000 and has received a gift from her mother of an unspecified amount. They are relevant facts to which I will refer below.

Section 117(2A)(b) – receipt of Legal Aid

1. Neither the husband nor the wife has received assistance by way of legal aid. Subsection (5) provides that I must disregard the fact “that the independent children's lawyer is funded under a legal aid scheme … ”. Accordingly this provision is not relevant to these applications. Subsection (4) is also not relevant.

Section 117(2A)(c) – conduct of the parties

1. The conduct referred to in this paragraph relates to the entirety of the proceedings including all aspects prior to the commencement of the final hearing.  Submissions have been made on behalf of the wife and the ICL that the husband’s conduct during the final hearing prolonged the trial thereby increasing legal costs. In my view that last submission has considerable weight. It is appropriate that I discuss it as part of my considerations of the parties’ competing proposals during the final hearing.      

2. The ICL submitted that the husband’s “… affidavit material was inadequate and largely inadmissible…” and that his “… proposals and assertions were not substantiated by evidence.”   At the commencement of the final hearing, I was required to rule on issues of admissibility of evidence.  The husband’s affidavits contained significantly greater portions of inadmissible material than did that of the wife.  However, my experience suggests that that is a frequent problem.  In my view, it is not sufficient to be considered as a relevant matter in these applications.

3. The husband submitted that a day had been lost because the wife’s counsel was unavailable. That is partly correct. However, in addition, the second report of Ms N, referred to in the reasons, which was vital to the resumption of the final hearing, had not been released because the husband had not paid her account.

Section 117(2A)(d) – proceedings necessitated by a failure to comply with previous orders

1. This paragraph is not relevant to these applications.

Section 117(2A)(e) – whether any party has been wholly unsuccessful and Section 117(2A)(f) – whether there was a written offer to settle

1. Because paragraphs (e) and (f) of the subsection are, in my view, at the heart of these applications, I consider them together.

2. Without minimising other matters, there were 3 fundamental issues in these proceedings. They were:

   ·the consequences of the husband’s proposal that his primary residence was to be at V;

   ·the older child’s health; and

   ·the schooling of both children.

   The husband was wholly unsuccessful on each of those points. I turn to a discussion of those matters.

3. On the first day of the final hearing I raised with all counsel, and particularly with Senior Counsel for the husband, the issue of the geographical distance between the parties and the manner in which it might impinge on the ultimate decision in these applications. All counsel recognised the significance of that issue and considerable time was spent on it during the hearing. From the outset I made it clear to the husband that I found difficulties in his proposal and that if he were to amend it to provide that he live closer to the wife during the school week, an equal sharing of the children may well become a realistic possibility.  While there were some indications that he may be prepared to consider such an amendment, ultimately he adhered to his primary position.

4. One aspect of the husband's proposal was demonstrated to be misleading. After I delivered judgement in the substantive application, the husband filed a Notice of Appeal to the Full Court of this Court. That appeal is pending. Following the filing of the Notice the husband sought a stay of certain of the orders. During the hearing of that application he informed me that in January 2009, that is, during the lengthy adjournment of the final hearing, he surrendered the lease of the K property which had previously been a significant part of his proposal. He conceded that he had not disclosed that to the Court or the other parties to the proceedings until that moment.  Apart from the fact that he mislead the Court, his actions confirmed yet again that he was not prepared to make any concession on that vital issue.

5. With respect to the other two issues outlined in the bullet points above, the evidence against the husband was overwhelming. He was wholly unsuccessful on both of them.

6. During the final hearing of this matter, all counsel informed me of their respective proposals for resolution of the substantive applications.  They did so by way of proposed minutes of orders which were marked as exhibits in the proceedings. 

7. In addition, on 24 October 2008 I formulated a written list of eight questions for counsel by way of aide memoire which, in my view, encapsulated all the issues which I would be required to determine.  That document was not marked as an exhibit in the proceedings and does not appear to have been otherwise formally accepted into evidence.

8. With regard to my formulation referred to at the end of the previous paragraph, the husband has submitted:

   Immediately following the completion of the Wife's evidence about halfway through the case the Judge told the parties that “this is either a 7/7 or a 6/8 case either way” meaning the Husband's position held sway with the Judge in that respect.

   While I do not presently have access to the relevant transcript, I am confident that what actually occurred was quite different.  In the first place, from the beginning of this final hearing I made it quite clear that I regarded the husband's proposal, insofar as it included accommodating the children at V, as being very important in my thinking.  At no time during the final hearing did I qualify that proposition. 

9. The list of questions referred to above were questions and not a determination as appears to be suggested by the husband.  The suggestion that I expressed the view that this may have been effectively an equal sharing case without having regard to the fundamental geographical issue of the husband accommodating the children at V is incorrect.

10. Exhibit “M15” which was accepted into evidence on 23 October 2008 is a minute of proposed orders on behalf of the wife for resolution of this matter.  It may be summarised as follows:

    ·the parties share joint parental responsibility with respect to the children with the exception of the issues of schooling and the older child's health which are both to be the sole responsibility of the wife;

    ·in the alternative, that a specified paediatric neurologist be responsible for the older child's treatment and the wife liaise with him on all relevant matters;

    ·a further alternative sought orders for the children to attend specified schools and restraint against the husband with respect to most issues of his involvement therein;

    ·the children live with the wife and spend time with the husband each alternate weekend from the conclusion of school on Friday until the commencement of school on Tuesday providing that the husband accommodate the children in specified suburbs closer to the wife's residence than V;

    ·substantial times be spent by the husband with the children during school holiday periods; and

    ·various other restraints against the husband.

11. Counsel for the wife tendered a further minute of proposed orders on 12 November 2008 which was marked exhibit “M20”.  The wife's proposals were similar to those referred to in the previous paragraph.  There is no need to detail those proposals for present purposes.

12. The orders in so far as they relate to the major issues provide:

    (1)That the wife have the sole duty and responsibility of making all decisions with regard to –

    (a)which school/s the children [X] born on […] June 2000 and [Y] born on […] July 2003 shall attend from time to time together with any special needs of [X] relating to all aspects of his education; and

    (b)       all aspects of [X’s] health including –

    (i)       choice of medical and other like practitioners; and

    (ii)      treatment and therapy.

    (2)Subject to paragraph (1) hereof, the husband and the wife otherwise jointly share the parental responsibility of making all decisions with regard to the care, welfare and development of the children.

    (3)….

    (4)The children live with the wife.

    (5)The husband spend time and communicate with the children as follows:

    (a) during school term –

    (i)from the conclusion of school on Friday to 6 p.m. on Sunday in each alternate week commencing on the first Friday of each school term and fortnightly thereafter;

    (ii)time pursuant to sub-paragraph i) hereof be extended to either the commencement of school on Monday or the commencement of school on Tuesday provided that the husband accommodates the children at his property at [K] or such other accommodation within a radius of 15 km from the children's school/s; 

    (iii)in the event that the husband seeks to avail himself of the provisions of sub-paragraph ii) hereof, he shall give the wife not less than seven days notice in writing thereof provided however that in the event that he proposes availing himself of that provision on a regular basis, he is not required to give written notice thereof on each specific occasion but may do so on a long term basis; and

    (iv)from the conclusion of school until 7 p.m. on each alternate Monday provided that such time be spent within the Melbourne metropolitan area and the husband give the children dinner prior to their return to the wife; and

    (b)      during school holidays -

    (i)for one half of the first and third term school holidays to be agreed between the parties and failing agreement the first half;

    (ii)for the entirety of the second term school holiday period;

    (iii)for two periods each of two weeks during the December/January school holidays to be agreed between the parties;

    (iv)     …

13. Throughout the final hearing, the husband’s proposal was for the children to spend equal time with each of the parents on a week about basis.  In addition, he proposed shared parental responsibility on all issues.  He vehemently opposed the wife's proposals with regard to the older child's health and the schooling of both children.

14. At the outset of the final hearing, counsel for the ICL was reluctant to express a position on behalf of her client.  However, initial reservations were expressed with regard to the husband’s proposal that the children be accommodated at V.  Accordingly, the ICL raised the geographical issue at the outset.  Otherwise, the ICL supported the wife’s proposals and in particular, the two exhibits of minutes of proposed orders referred to above.

15. Ultimately, the proposition that both the wife and the ICL have been wholly successful, particularly on the three main issues on which the parties were in dispute, is inescapable.  As I informed the husband on many occasions during the final hearing, had he accepted that the geographical issue constituted a significant difficulty in his case, the outcome may well have been quite different. 

16. The husband submitted that were I to make orders for costs against him in accordance with the present applications, he would be technically bankrupt and if he were to go into formal bankruptcy, he may not be able to practise his profession.  That may well be correct.  However, that is something which he should have taken into account in making his decision to continue with the applications, particularly in light of the open offers contained in the exhibits discussed above.

17. Ultimately, a party to proceedings, and particularly the ICL who is dependent on the public purse, must be able to protect him or herself from the outlay of enormous funds by way of legal costs in contesting expensive and protracted litigation.  While in my view an order for costs in a parenting case is unusual, that does not mean that such an order cannot and should not be made in the appropriate matter.  In circumstances in which parties have gone to inordinate lengths to attempt to fashion a proposed resolution of litigation in light of the available evidence, to decline an order for costs would be totally unjust for those parties.  A wholly unsuccessful party, as is the husband in this matter, cannot proceed with impunity, ignoring the weight of the evidence and adhering dramatically to the proposition that his is the only proposal which is in the best interests of the children.  The fact that he has been wholly unsuccessful in the litigation, as looked at in light of the wife’s open offer contained in exhibit “M15”, is an extremely persuasive reason to grant an order for costs to both the wife and the ICL as and from the date of that exhibit.

18. There are other factors in favour of allowing the wife’s application as follows:

    ·the wife is in a difficult financial position to which the husband makes very little contribution and does not concede that he should be making a greater contribution;

    ·the wife has the overwhelming financial responsibility for the children and in particular, the older child's disabilities;

    ·by far the greater part of this trial was spent on issues on which the evidence asserted by or on behalf of the husband was not proven; and

    ·the significant findings against the husband with regard to his credibility in the proceedings support the submissions that his conduct prolonged the trial.

19. It is appropriate that the husband effectively have a day to consider the offer and the costs be paid from 24 October 2008.

conclusion

1. Accordingly I find that it is just, in accordance with the Act, that the costs of both the wife and the ICL of and incidental to these proceedings and including these applications, be paid by the husband as between parties as and from 24 October 2008.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mushin

Associate: 

Date:  25 June 2009