Grendel and Choat
[2019] FamCA 368
•5 June 2019
FAMILY COURT OF AUSTRALIA
| GRENDEL & CHOAT | [2019] FamCA 368 |
| FAMILY LAW – COSTS – Costs application following a parenting hearing. |
| Family Law Act 1975 (Cth) |
| Coulter & Gerardine [2015] FamCA 287 Rice & Asplund (1979) FLC 90-725 |
| APPLICANT: | Ms Grendel |
| RESPONDENT: | Mr Choat |
| FILE NUMBER: | SYC | 2065 | of | 2010 |
| DATE DELIVERED: | 5 June 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 30 May 2019 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Litigant in person |
| SOLICITOR FOR THE RESPONDENT: | Litigant in person |
Orders
The Response to an Application in a Case filed 26 March 2018 is dismissed.
The Response to an Application in a Case filed 27 May 2019 is dismissed.
The father pay to the mother costs in respect of the proceedings in the sum of $35,000.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Grendel & Choat has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2065 of 2010
| Ms Grendel |
Applicant
And
| Mr Choat |
Respondent
REASONS FOR JUDGMENT
The mother seeks orders for costs.
On 31 January 2019, following a five day parenting trial, final parenting orders were made in favour of the mother for sole parental responsibility of the parties’ 13 year old child and that the child live with her mother and not spend any face to face time or communicate with her father except for the circumstances provided for in the orders.
On 27 February 2019, the mother filed and served an Application in a Case (which the court dated 5 March 2019) seeking that the father pay indemnity costs in the sum of $82,452 paid by the mother “to third parties” in respect of the parenting proceedings brought by the father and costs for enforcing financial orders dated 10 November 2011 and 8 November 2016.
The mother is a professional. She also seeks the father pay a further amount by way of indemnity costs in the sum of $60,165 in respect of work the mother did on her own account in the same set of proceedings.
The proceedings for enforcement of financial orders dated 10 November 2011 and 8 November 2016 were concluded when orders were made on 10 August 2018. At that time, I heard and dismissed the Independent Children's Lawyer’s application for costs in respect of that hearing. The mother’s costs had not been reserved. Rule 19.08(2) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that an application for costs may be made by filing an Application in a Case within 28 days after the final order is made. The mother agreed that she was out of time in terms of bringing a costs application in relation to that hearing. I do not grant leave for the mother to bring a costs application in respect of that hearing so long after that event.
The father, by way of Response to the Application in a Case filed on 27 May 2019, opposes the mother’s application for costs.
The father seeks a number of procedural orders in respect of this application. This cost application should not escalate into “satellite litigation”. I indicated I would determine the applications taking into account my knowledge of this matter as the trial judge on the material which has been filed and the information which the parties have provided. The mother relied upon an affidavit sworn by her on 27 February 2019 and a volume of exhibits (numbering C1 – C68). The father relied upon an affidavit sworn 27 May 2019. The mother sought and was allowed to rely upon written submissions.
Whilst it was far from clear what was sought by the father, it seems that he purported, in his Response to the Application in a Case, to seek final orders relating to what he called “financial issues”. This was in circumstances where the parties entered into final financial orders by consent on 10 November 2011. The father agreed that final property issues had been determined and that part of his application shall be dismissed. The father was concerned that a Response to an Application in a Case which he had filed on 26 March 2018 had not been disposed of. However, on 10 August 2018 orders were made by consent varying the property settlement order of 10 November 2011 and providing that the father do all acts and things and sign all necessary documents to release funds from his superannuation account in the amount of $10,000 to the mother. At paragraph 3.2, it is noted “that these orders, once implemented, will extinguish any liability the [father] has at this date to make payment of his current accrued liability to the [mother], that the [father]’s obligations under the orders for any payment that accrue after this date, continue”. Consequently, the orders of 10 August 2018, dealt with those matters raised in the father’s Response to the Application in a Case filed 26 March 2018. For more abundant caution and to avoid any continuing doubt, I will dismiss the father’s Response to an Application in a Case filed 26 March 2018.
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs. Section 117(2) of the Act provides that if the Court is of the opinion and circumstances justify it doing so, the Court may make an order for costs the Court considers just. Section 117(2A) of the Act sets out those matters to which the court should have regard when considering what costs order, if any, should be made.
In this case, the mother has applied for indemnity costs and r 19.08(3) of the Rules provides that the mother must inform the Court if she was bound by a costs agreement and if so, its terms. The mother has provided at C17, C19 and C27 costs agreements with two firms of solicitors and a barrister.
Financial circumstances
The mother indicates that she has been continuously employed since January 2008, initially part time and then full time once the child became old enough for her to do so. As a result of the litigation, the mother paid in excess of $175,000 in legal fees and borrowed heavily to do so. The father had made allegations of contempt against the mother (which had possible ramifications in respect of her practising certificate) and made allegations in relation to her mental health. The mother has progressively paid down the monies she borrowed for legal fees and currently still owes about $84,000 on credit cards and two former lawyers.
The mother lives with her current husband in accommodation which they have jointly purchased. The mother says there is equity in that home of $436,000 which she holds jointly with her husband. The mother’s taxable income is about $120,000 per annum. The mother supports the child of the relationship, including all payments of health and education expenses for the child.
It is the father’s case that he has no assets and considerable debt.
The father has been on Centrelink benefits for 2 and a half years ($312 per week) but says he is now seeking work. So far, he has been unsuccessful in finding paid employment. He continues to live at this mother’s home.
During the hearing, the father referred to a liability he owed the tax office then in the sum of approximately $132,000 and said that he would never pay that amount because he was an “aspiring” bankrupt. The father is yet to go bankrupt. He currently has an interim minimal payment arrangement with the Australian Taxation Office (“ATO”) and says that he can’t settle his arrangements with the ATO until this application has been determined. He currently pays the ATO $20 per month. The amount he owes the ATO is $141,915 (a base amount of $68,195 with accumulated interest of $73,719). The debt relates to income going back prior to the 2012/2013 financial year.
The mother, in her written submissions, raises issues in relation to personal liabilities that the father indicates he owes third parties.
The mother, in her affidavit, sets out scraps of information which raises questions about what the father has done in his financial dealings over a period going back to as early as 2006 and what he is doing at the current time which might be relevant to his financial circumstances.
The mother asserted that the father has an interest in an equity market business and refers to earnings in that business in December 2006. The mother also raises the issue as to the lack of information about the father’s income in the period from 2008 to 2014. The father denies that this business has any current value nor has it produced any income for many years. The mother asserts the father has historically structured his affairs in a way to obscure the true nature of his financial position and took her to a tax haven when the parties were still together to live for that purpose.
The father has two degrees. The mother submits that although the father claims he has suffered some mental health issues, in his most recent affidavit he asserts (at paragraph 72) that he has adjusted and is functional. At [121] of my Reasons for Judgment of 31 January 2019, I find that the father is a highly intelligent man with marketable skills, who could obtain employment if he chose to do so.
It is not appropriate, within the confines of this cost application, to enter into a full blown financial enquiry as to whether or not anything further can be discerned about the father’s financial position.
The father, at paragraph 79 of his affidavit, says that “It is possible to restructure the father’s financial position and pay a potential award for costs”. He made a similar assertion in oral submissions. It is unclear to me, based on his evidence, as to how that might be achieved unless he has the will and finds a way to exercise his undoubted earning capacity.
And even if a person is impecunious, that does not make them immune from having a cost order made against them.
Legal Aid
Neither party is in receipt of assistance by way of legal aid.
Conduct of the parties in relation to the proceedings
The father’s initial application was that the child live with him in South East Asia. He amended that to an application that the child live with him in Tasmania.
In my Reasons for Judgment of 31 January 2019, I made the following findings about the father’s conduct:
a)That he sought to rely upon a considerable amount of material including six affidavits which contained numerous and lengthy journal articles and papers (at [7]). This material was excessive;
b)That he denied that he perpetrated cyber abuse upon the mother (at [72]), including sending a number of “spoofed” and abusive text messages and emails as well as setting up a fake online profile which contained a topless picture of the mother; and
c)That he has “little empathy and understanding of his contribution towards the multi-factional issue of why the child has rejected him” (at [106]).
During the oral hearing, the father conceded that he had made allegations during the hearing that should not have been made. The example which the father himself highlighted in oral submissions was his assertion during the trial that the mother suffered from a borderline personality disorder. He concedes now that there was no evidence whatsoever to support that assertion. He said he made it because he thought it might be true and he wanted the court to consider it as a possibility. More generally, the father ran a case which alleged the child had been alienated by her mother against him. He ignored the recommendations of the Independent Children's Lawyer and the family consultant.
At no stage did the father’s primary position that the child be sent to live with him in Tasmania have any merit.
The mother submits that the father should have also known that he would be unable to satisfy the Court that there had been a significant change in circumstances from when consent orders were made on 10 January 2013. However, at [37] of my Reasons for Judgment, I observed that both parties and the Independent Children's Lawyer were seeking orders that were different from the orders made in January 2013 and I found that the threshold test raised in Rice & Asplund (1979) FLC 90-725 had been satisfied.
The mother asserts that the father’s evidence in relation to her alienating the child against him was a self-serving conclusion proffered by the father that should have been afforded little or no weight. That is not entirely accurate. Whilst I found that the mother had not deliberately set out to do so, there were occasions when she had shared information with the child that she accepts was inappropriate. I found that the child’s current attitudes are a result of a combination of the child’s lived experience with the father and the mother’s behaviour.
The father bought contempt applications in the Federal Circuit Court of Australia against the mother without merit. Whilst I accept that that is so, they were proceedings (albeit transferred to this court) in another court. The father did, however, make accusations of bias against the Independent Children's Lawyer without merit and pressed an interim hearing when a final expedited hearing had been scheduled.
In his oral submissions, the father indicated that he was “desperately apologetic” to the mother, her new husband (who was present in court) and the child about the way in which he prosecuted the matter.
The father also apologised to the court about statements he had made during the trial, suggesting that I was bias or incompetent. At paragraph 69 of the father’s affidavit in support of his Response to the costs application, he says:
The Father has the highest regard for Justice Watts and the Family Court of Australia. The Father studied many Justice Watts cases in preparation and developed the highest regard for Justice Watts and the Family Court of Australia. I deeply regret suggesting that Justice Watts was either biased or incompetent, apologise sincerely and plead for mercy.
Whether a party has been wholly unsuccessful in the proceedings
The mother submits that the father took a position in litigation to which the mother was forced to respond, which on its face and as it turns out, was wholly unsuccessful. I accept that the father’s motivation for pursuing the litigation as vigorously as he did was a genuine wish for the child to have a relationship with him and being wholly unsuccessful in his parenting application is not a matter upon which I place great weight in the context of this cost application. I accept that the father at the time he pursued his litigation thought subjectively that he had a chance of success. At the same time, the father had written a document which indicated that he wished that the mother be punished for her conduct (as he perceived, of alienating the child). The father, in this application, conceded that he had signed a piece of paper which had said that and that that statement was hard to defend but said that it wasn’t his intention to in fact punish the mother.
Written offers
The mother refers to settlement offers she made to the father in respect of parenting arrangements. On 5 May 2017, the mother made an offer that an order be made that the child spend time with the father as agreed between the father and the mother. On 28 June 2018, the mother made an offer that an order be made that the child spend time with the father as she chooses.
Whilst the order that was actually made was effectively in those terms, a further order was made that the father be at liberty to send letters, cards and gifts to the child for the child’s birthday and/or Christmas and a mechanism for that to happen. I don’t place great weight upon the fact that the father did not accept the terms of the offers made by the mother in relation to parenting.
Other matters
There are no other matters that I consider relevant.
The mother’s ability to obtain professional costs as a solicitor
As indicated, the mother seeks costs of $60,165 for her own legal work, relying upon the authorities referred to in Coulter & Gerardine [2015] FamCA 287. I accept that, had the mother not done that work, it would have had to be done externally by a solicitor whom the mother employed and that the mother is entitled to make a claim for the recovery of her professional costs if a cost order is otherwise appropriate.
Indemnity costs
Exceptional circumstances need to be established for an order for indemnity costs to be made. That is particularly so in a parenting case where the focus is on the best interests of the child.
The mother relies upon the following features of this case to grant her application for indemnity costs:
a)The father’s actions in commencing and continuing the case were in circumstances where he, properly advised, should have known that he had no chance of success and that it must be presumed that they were commenced or continued for some ulterior motive or because of some wilful disregard of known facts;
b)Evidence of particular misconduct causing loss of time for the court or to the other parties;
c)Making allegations which should have never have been made or the undue prolongation by groundless contentions; and
d)Imprudent refusal of an offer to compromise.
The mother abandoned any submission based upon offers of compromise in the context of seeking indemnity costs.
I am unable to presume in this case that the father had an ulterior motive other than his subjective perceptions as to what was in the best interests of the child in conducting the litigation in the way that he did. I accept that the father at the time of the hearing had subjective views about what might be a more appropriate arrangement for the child. He accepts in hindsight, having read the judgment, that some allegations should not have been made by him. Findings against the father in terms of the way he conducted himself in relation to the mother is not the same as a finding of conduct as to how he pursued the proceedings, but as I have mentioned, he denied the mother’s allegation which I found substantiated. Enquiry into those matters prolonged the hearing.
Nonetheless, I am unable to find that exceptional circumstances exist in this case to allow me to make an order for indemnity costs.
Conclusion
Taking into account all relevant considerations pursuant to s 117(2A) of the Act, and in particular, aspects of the case pursued by the father at hearing, it is just that a partial order for party/party costs be made, notwithstanding, the current impecuniosity of the father.
Given the current lack of a relationship between the parties and the unfortunate and protracted history of this litigation, it is best to make an order for the costs to be quantified as agreed or assessed. As suggested during oral submissions, I will make a lump sum order for costs.
The father shall be ordered to pay the mother’s costs in the sum of $35,000.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 5 June 2019.
Associate:
Date: 5 June 2019
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