Harrelson and Harrelson (Costs)
[2017] FamCAFC 156
•11 August 2017
FAMILY COURT OF AUSTRALIA
| HARRELSON & HARRELSON (COSTS) | [2017] FamCAFC 156 |
| FAMILY LAW – APPEAL – COSTS – Where the appeal was allowed in part – Where both parties seek their costs of the appeal assessed on an indemnity basis – Financial circumstances of the parties – Conduct of the parties to the proceedings – Whether the appeal has been wholly unsuccessful – Offers of settlement – Where the offers of settlement did not reflect the outcome of the appeal – Where the circumstances do not justify an order for costs – Costs applications dismissed. |
| Family Law Act 1975 (Cth) s 117 Federal Proceedings (Costs) Act 1981 (Cth) |
| Federal Circuit Court Rules 2001 (Cth) r 16.05(2) |
| APPELLANT: | Mr Harrelson |
| RESPONDENT: | Ms Harrelson |
| FILE NUMBER: | SYC | 2940 | of | 2014 |
| APPEAL NUMBER: | EA | 112 | of | 2016 |
| DATE DELIVERED: | 11 August 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | In chambers |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | Heard by way of written submissions |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 July 2016 |
| LOWER COURT MNC: | [2016] FCCA 1632 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Matthews Folbigg Pty Ltd |
| SOLICITOR FOR THE RESPONDENT: | Santone Lawyers |
Orders
Each of the applications for costs is dismissed.
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 Harrelson & Harrelson (Costs) 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).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 112 of 2016
File Number: SYC 2940 of 2014
| Mr Harrelson |
Appellant
And
| Ms Harrelson |
Respondent
REASONS FOR JUDGMENT
Introduction
In this matter each party seeks an order that the other party pay his or her costs of the appeal from orders of Judge Brewster, in each case to be assessed on an indemnity basis. The appellant seeks an order in the sum of $30,122 and the respondent in the sum of $8,437.60 or $10,648.60 including the costs of the Application in an Appeal.
Alternatively, each party seeks a costs order assessed on a party and party basis.
The competing applications arose out of the following orders made by me on 11 May 2017, which allowed the appeal in part. The orders were:
(1)The appeal be allowed in part.
(2)On the application of both parties, Orders 14 and 18 of the Orders of Judge Brewster made 4 July 2016 are set aside forthwith and Order 7 is set aside on and from the first return date of the remitted re-hearing before the Federal Circuit Court of Australia.
(3)The issue of the time that the children are to spend with the parties during the December/January school holidays is remitted to the Federal Circuit Court of Australia for re-hearing.
(4)The appeal is otherwise dismissed.
(5)Any party seeking an order for costs is to file and serve written submissions in support within 28 days of today. Any submissions in reply are to be filed and served within a further 28 days.
As can be seen, Orders 1 to 3 were made by consent.
In my reasons I explained the basis of those orders as follows:
3.The father appeals from the order providing for the mother to have sole parental responsibility for X’s health (Order 1) and against the order as to the time the children are to spend with him (Order 4).
4.The primary judge made a suite of further orders providing for the time the children were to spend with each party during school holidays and on special days together with a number of ancillary orders.
5.The father appealed against some of these orders (Orders 7, 14 and 18) but it is unnecessary to deal with them in detail as the parties resolved that aspect of the appeal during the hearing.
6.Order 7 of the primary judge’s Orders set out the time the children were to spend with each parent during the December/January school holidays. The mother accepted that his Honour gave no reasons at all as to why her proposal for school holiday time was preferred to the father’s proposal. The transcript of the submissions made to the primary judge does not assist in determining why the mother’s proposed orders were accepted. Order 7 will therefore be set aside on the application of both parties. The parties could not agree on a replacement order and that aspect of the matter will be remitted to the Federal Circuit Court of Australia for re-hearing. As it is likely that it may take some time before that court is able to resolve that issue, it is desirable that there be some, as opposed to no, orders in place to govern school holiday time in the interim. Accordingly, the parties agreed that the current Order 7 should remain in place until the matter returns to the Federal Circuit Court.
7.The parties also agreed that Order 14 (which dealt with the school the children were to attend) and Order 18 (which dealt with travel within Australia) should be set aside. In the course of submissions before him, the primary judge clearly indicated that he would not be making those orders, which had been proposed by the mother. It is clear that those orders were made inadvertently. His Honour’s Reasons record that:
41.I have basically copied the wife’s application in my orders and the drafting is that of her lawyers. I have not had them proof read to see if there are any typographical errors....
8.It is appropriate therefore that these two orders be set aside.
9.Finally, the father originally also sought to appeal against Orders 11(b) and 16 of the primary judge’s Orders. The appeal against Order 11(b) was withdrawn and the appeal against Order 16 was abandoned at the beginning of the hearing of the appeal.
The appeal against Orders 1 and 4 did not succeed.
The parties raised the following considerations in support of their applications for costs:
·the financial circumstances of the parties (s 117(2A)(a));
·the conduct of the parties to the proceedings (s 117(2A)(c));
·whether any party has been wholly unsuccessful (s 117(2A)(e));
·the offers made in writing to settle the appeal (s 117(2A)(f)).
It is necessary to add that the parties had some difficulty in complying with the directions made for the filing of submissions on the issue of costs. Ultimately, the respondent brought an Application in an Appeal seeking to review the decision of the Appeal Registrar to accept submissions which were filed outside the time provided for in the orders.
Notwithstanding that decision, which I consider to be entirely correct, I extended the time for the respondent to file submissions in reply and a further Financial Statement. I declined to receive a lengthy affidavit from her which was, in my opinion, largely inadmissible and which raised contentious issues, such as the value of property or the appellant’s business which would require a contested hearing to resolve. Such a course would be in neither party’s interest. I also take into account the appellant’s amended submissions (which were arguably filed out of time) save for the documents attached that sought to contest the value the respondent ascribed to her property.
Financial circumstances of the parties
The respondent’s financial position as at 6 June 2017 was that she owned a property at Suburb D which she valued at $1,270,000. It is subject to a mortgage of $376,630. She also owes her parents $3,000, which is the balance of an advance of $7,000. The respondent needed this sum to complete the refinancing of the property.
The respondent’s weekly income is $1,540 with an estimated expenditure of $1,886 per week.
As I have said the respondent filed a further Financial Statement dated 6 July 2017. The significant difference was that her income had fallen to $321 per week as, apparently, she had resigned from her employment. Her expenses had also fallen by some $300 per week.
The children live with her and spend five nights per week with the appellant during school term. The school holidays are equally shared.
As at 19 June 2017 the appellant owned a property he valued at $1,150,000 and a business valued at $268,000. The property was subject to a mortgage of $734,424. His weekly income is $2,330 with an estimated expenditure of $2,470. He says he pays the respondent $445 a week for child support. The respondent’s position as disclosed in her more recent Financial Statement was that he pays $283 per week.
As I have said the respondent’s costs of the appeal were $8,437.60 and the appellant’s $30,122. In her first statement of financial position the respondent disclosed no outstanding obligation to her lawyers but, according to the second, she owed them $5,983. According to the appellant, he owed his lawyers $9,500. Presumably he has already paid the balance between that sum and the amount he claimed.
The parties seem, generally, to be in a not dissimilar financial position which could not be said to be strong. The respondent’s submissions indicated that she was looking for new employment and thus her present lack of income is unlikely to be permanent.
I do not consider that a consideration of the parties’ financial position assists in the determination of this application.
Conduct of the proceedings
Order 14 made by the primary judge dealt with the school the children were to attend. The effect of the order was that if the parties could not agree on a school, the children would be enrolled in a school in the catchment area of the respondent’s residence. As I have indicated, the order was made inadvertently, as the primary judge had declared in the course of submissions that it would not be made.
The appellant submits the respondent opportunistically took advantage of the order being made to suggest to Judge Boyle on 18 August 2016 that she may move her residence and the children’s school “within the next three months”, requiring her Honour to consider and determine the appellant’s stay application, which otherwise would have been unnecessary.
That would seem to be confirmed by paragraphs 4 and 5 of the respondent’s submissions in reply which stated:
4.The Respondent did not accept the Appellant’s settlement offer, which was to set aside Order 14 in the FCC proceedings, as the judgment in the FCC proceedings resulted in her having to refinance the [B Street] mortgage for an amount for which she had not yet received approval to refinance from her bank. She also held concerns that she would not be able to afford the mortgage repayments on that loan, given that she was only earning $508 gross at that time.
5.Had the Respondent been unable to refinance the [B Street] mortgage or afford the mortgage repayments, she would have had to consider moving closer to her parent’s house in [Suburb C] or residing with them with the children. This may have necessitated a requirement for the children to move schools, in the catchment area where the mother was living.
However, it appears from the respondent’s recent Financial Statement that she owes the appellant $2000 being the costs of the stay application, or at least balance of the costs, that Judge Boyle ordered her to pay. That aspect of the matter has therefore, to that extent, already been taken into account and should now not be given significant weight.
The appellant also submitted that any appeal against Orders 7, 14 and 18 would invariably be successful.
Clearly, Orders 14 and 18 were unsustainable and vulnerable on appeal or on an application to the primary judge under r 16.05(2) of the Federal Circuit Court Rules 2001 (Cth).
As Order 7 was made without reasons, it too was vulnerable to an appeal.
However, as I shall shortly explain, the respondent did not accept that to be the case until the hearing of the appeal.
This consideration is however intimately connected with the various offers made by the parties to which I shall now turn.
The offers made by the parties
The appellant referred to an offer made three days after the primary judge’s orders were made. The letter said:
We refer to the above matter and to the short judgment which we received on Tuesday.
We write particularly with reference to Order 14. At paragraph 41 Judge Brewster indicates that he has not ‘proof read’ the orders but that he cannot see anything ‘unduly inappropriate or onerous.’
This is directly contrary to His Honour’s comments on 25 November 2015 at approximately 12.20pm at which time the proposed Order 14 was raised with our client. Our client disagreed strongly with the inclusion of that order and His Honour opined that the proposed order was ‘presumptive’ and that he did not intend to micro manage the matter and make that order. Our client also recalls that His Honour also made a reference to not giving the wife a ‘blank cheque’ with regard to enrolment.
Our client also does not agree that Order 1 is in [X]’s best interests. We note that issue was also substantially ventilated at hearing and, with respect, His Honour’s reasons for making of that order do not reflect the weight of evidence (including Dr [L]’s opposition to same).
Our client would like to avoid an Appeal in relation to the parenting orders – which we submit is highly likely to be successful. Order 14 particularly – which gives the mother carte blanche to move the children to any school of her choosing – in any location – cannot stand uncorrected.
To avoid the financial and emotional trauma of further litigation please confirm whether or not your client would consent to an order as follows:
‘Order 14 of the orders made on 4 July 2016 is discharged.’
We look forward to your urgent response.
In the absence of same we are instructed to lodge an Appeal.
Yours faithfully
[Solicitor’s name and contact details]
In his submissions the appellant described the offer as “very reasonable”.
The offer clearly provides that the appellant would not appeal against Order 1 if, by consent, Order 14 was set aside. If it had been accepted the appeal would have been avoided. However, the letter makes no mention of Order 4 which was also the subject of an unsuccessful appeal or Orders 7 and 18 which were successfully appealed.
The Notice of Appeal was filed on 29 July 2016, thus giving the respondent three weeks in which to consider the offer. It was effectively withdrawn by the filing of the Notice of Appeal and was not later repeated.
On 19 January 2017, nearly six months after the Notice of Appeal was filed, lawyers acting on behalf of the respondent forwarded a written offer which proposed:
·Order 14 be set aside.
·Order 7 be amended so as to provide that the children spend equal time with each parent during the December/January school holidays but on the basis that each parent spend different time with Y on his birthday.
·Order 11 be varied so that the mother was to provide the children with the mobile phone.
·Orders be made to set times for the children to speak to either parent when they are in the care of the other.
The offer did not refer to Order 18 and the proposed orders went beyond the issues raised in the appeal.
The appellant’s lawyers replied on 23 January 2017. They proposed:
·Orders 1, 4, 7, 11(b), 14 and 18 be discharged.
·Order 16 be varied.
·The children spend each alternate week with the father from 3.00pm Tuesday until 3.00pm the following Monday and half the school holidays.
·The children attend the school identified in the letter.
This offer does not reflect the outcome of the appeal as Orders 1 and 4 were not set aside and no order was made as to the children’s school (other than to set aside Order 14).
The appellant withdrew the challenge to Order 11(b) in his Summary of Argument filed on 24 January 2017. The challenge to Order 16 was withdrawn at the hearing of the appeal.
For her part, the respondent sought to maintain Orders 7, 14 and 18 until after some testing of her position occurred on the morning of the hearing of the appeal. After a short adjournment she indicated agreement to those orders being set aside. As the passage of my earlier reasons quoted at the outset makes clear, there was no proper basis for opposing the appeal against these orders.
Both parties should have but did not accept the reality of their position until late into the piece. In particular the approach of the respondent in attempting to maintain Orders 7, 14 and 18 unnecessarily prolonged that aspect of the matter and led to other proceedings being required.
Had the appellant only appealed against Orders 7, 14 and 18, the offer made on 7 July 2016 would clearly support a costs order in his favour. He did not, however, and also appealed against both the order for parental responsibility and the order as to the time the children were to spend with him. They were significant and substantial issues which attracted the bulk of the written and oral submissions. The costs of the appeal were thus greatly increased, for both parties, by the inclusion of these grounds. As I have said, the appellant was wholly unsuccessful with respect to them.
I therefore do not consider that the offer made by him in July 2016 should be given decisive weight. Whilst it is true that, if accepted, there would have been no appeal, the rejection of that offer did not justify the commencement of a substantial but unsuccessful appeal against the orders for parental responsibility and the time the child were to spend with each parent. An appeal against Orders 7, 14 and 18 would have been quick and relatively inexpensive. The same cannot be said of the appeal against Orders 1 and 4. The appellant also appealed against Orders 11(b) and 16 but did not prosecute the appeal against them.
I place little weight on the other offers – none reflected the outcome of the appeal and most raised matters that went beyond the issues raised in the appeal.
Was either party wholly unsuccessful?
Obviously, no party was wholly unsuccessful as the appeal was allowed in part.
As I have just discussed, the central focus of the appeal was however on Orders 1 and 4 on which the appellant was unsuccessful.
Conclusion
The conduct of the respondent in belatedly agreeing to Orders 7, 14 and 18 being set aside must be weighed against the appellant’s late withdrawal of his challenges to Orders 11(b) and 16 and complete lack of success on the major issues in the appeal. In doing so, I consider that neither these considerations nor the financial positions of the parties are circumstances that justify a costs order other than the order provided for in s 117(1). On balance, the weight to be given to the offer of 7 July 2016 also falls short of justifying a costs order.
Therefore, there will be no order as to costs and both the appellant’s and the respondent’s applications for costs will be dismissed. In that case, the issue of indemnity costs does not arise.
Belatedly, in her submissions filed pursuant to leave given on 27 July 2017, the respondent sought a certificate pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (Cth) for the re-hearing of the remitted issue as to school holiday time. Given the conduct of the parties as described herein and given the very limited nature of the re-hearing I do not regard it as appropriate for the public purse to bear part of the expense of that hearing.
I certify that the preceding forty five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 11 August 2017.
Legal associate:
Date: 11 August 2017
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