Haykal and Krawiec (No 4)
[2012] FamCA 748
FAMILY COURT OF AUSTRALIA
| HAYKAL & KRAWIEC (NO. 4) | [2012] FamCA 748 |
| FAMILY LAW – COSTS – where the mother seeks an order that the father pay her costs on an indemnity basis – where final parenting orders had previously been made in the Federal Magistrates Court – where the father subsequently sought alternate parenting orders – where the matters agitated by the father before this Court were almost identical to those agitated in the Federal Magistrates Court – where the mother contends that the father’s conduct borders on “vexatious” – whether an order for costs should be made pursuant to s 117, Family Law Act 1975 (Cth) – where the father has filed numerous applications, affidavits and subpoenae – where an order made that the father pay the mother’s costs on an indemnity basis. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 |
| Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248 |
| APPLICANT: | Ms Krawiec |
| RESPONDENT: | Mr Haykal |
| FILE NUMBER: | SYC | 731 | of | 2009 |
| DATE DELIVERED: | 31 August 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Chambers |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | By way of written submissions: Mother on 1 June 2012 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Michael Conley Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Johnston Vaughan Solicitors (Parenting) AND Paul & Paul Lawyers (Financial) |
Orders
IT IS ORDERED THAT
Pursuant to s 117 of the Family Law Act 1975 (Cth) the father pay the mother’s costs on an indemnity basis, assessed in accordance with the costs agreement entered into between the mother and her solicitors annexed to the written submissions of the mother filed 1 June 2012 in a total amount to be agreed between the parties in writing or, failing agreement within 14 days of the date of these orders, as assessed.
In the event that agreement is not reached in respect of the amount of the costs payable pursuant to paragraph one (1) of these orders within the timeframe specified therein, and the mother’s indemnity costs are assessed as equal to or exceeding $69,202.02, the father shall, in addition, pay the mother’s costs of assessment on an indemnity basis.
The costs payable pursuant to paragraph one (1) of these orders should be paid within 21 days of the date of this order if the amount of costs is agreed, or within five (5) working days of the date of assessment as the case may be.
In the event that the costs payable pursuant to paragraph one (1) of these orders are required to be assessed, interest at the rate prescribed from time to time by the Family Law Rules 2004, shall be paid on the amount so assessed as and from a date 14 days from the date of these orders.
Pursuant to Rule 19.50 of the Family Law Rules 2004, it is certified that this was a matter in which it was reasonable for the mother to engage senior counsel.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Haykal & Krawiec 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 BRISBANE |
FILE NUMBER: SYC 731 of 2009
| Ms Krawiec |
Applicant
And
| Mr Haykal |
Respondent
REASONS FOR JUDGMENT
(COSTS)
On 18 May 2012 I made orders and delivered reasons for judgment ex tempore in respect of an application for parenting orders. The previous day I made orders by consent in respect of what might broadly be described as financial matters. The gravamen of the application for parenting orders was that an order that had been made in the Federal Magistrates Court on 11 August 2010 be altered.
Included among the orders made on 18 May 2012, were orders for the filing of written submissions in respect of any application for costs. Although it seems to me to have been self-evident in those orders that they contemplated a response if such an application was made, the position was clarified by the issuing of a chambers order on 2 July 2012 which provided for the filing of any response by way of written submissions within 21 days of that date.
On 1 June 2012, written submissions were received on behalf of the mother in support of an application for costs by her. On 26 July 2012, email correspondence was received by my associate from a solicitor “now acting” for the father. That correspondence was responded to the same day by my associate:
Dear [Practitioner],
In response to your email below, there is no indication that the other side has been copied into this correspondence with chambers, nor whether the other side have been approached in respect to the extension of time and consent to such request.
For your information, I have attached the Queensland Bar "Communication with the Court" and his Honour Justice Murphy's document "Communicating with Chambers".
For your assistance, I have copied the other side into this email.
No further communication was received from either the father or any solicitor purporting to act on his behalf until 27 July 2012. As reference to that email reveals, the submissions were not received by the Court by 23 July 2012 as the orders made on 2 July 2012 contemplated.
My associate received an email on 27 July 2012 from the solicitors for the mother referring to the email from the father’s solicitors just referred to. A letter addressed to the father’s solicitors and attached to that email says, in part: “… your request for our client’s consent to your client filing his submissions out of time was sent 1 minute prior to you forwarding this same document to the associate”. The letter goes on to say:
Notwithstanding the explanation provided to the Associate as to the reason for the request for the extension of time which is clearly without foundation, your client has had notice of our client’s cost application since 1 June 2012 and your client was given an opportunity to file submission in reply by 23 July 2012. Having regard to these matters, we are instructed that our client does not agree to the filing of your client’s submissions out of time.
…
The father’s solicitors were copied into that email. Though not specifically referring to same, the email is, as it seems to me, permissive of my reading the email initially forwarded by the solicitor for the father, which, the attachments to my Associate’s email makes clear would not have occurred otherwise.
The email from the father’s solicitors records that the father retained counsel only on 25 July 2012. Submissions were ultimately filed on behalf of the father via email on 27 July 2012 under the hand of Mr Breeze of Counsel. The written submissions were, then, compiled and filed very quickly. The father had, at the hearing on 18 – 19 May 2012, different solicitors representing him in respect of the parenting proceedings and the financial proceedings. The solicitors who were acting for him in the parenting proceedings were the subject of a significant criticism by me in the Reasons.
In light of these factors, I consider it appropriate to grant an extension so as to permit the submissions received on behalf of the father to be read and considered by me, not withstanding the objection to that course on behalf of the mother.
Costs and the Family Law Act
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”):
…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. (Penfold v Penfold (1980) 144 CLR 311 at 315).
The plurality in Penfold held (at 315 - 316):
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs, there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. … Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs. [Citations omitted]
The Court is given the power to award costs upon a finding that “…there are circumstances that justify it in doing so…” (s 117(2)). The matters that might justify that central finding are at large (s 117(2A)(g)) but regard must be had to a number of specified matters (s 117(2A)(a)-(f)).
Section 117(2A) does not prescribe that more than one factor must be present or that any one factor has more or less weight than any other. The statutory factors are each and all matters which inform the overall discretion inherent within the section (see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish & Anor (2005) 33 Fam LR 123).
The order for costs sought by the mother are that they be paid on an indemnity basis.
In outlining a number of examples where a Court might properly consider an award of indemnity costs, Sheppard J in Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248 gave as an example “…the making of allegations that ought never to have been made or the undue prolongation of the case by groundless contentions…” [citation omitted].
It is important to note, however, that the categories of cases giving rise to an indemnity costs order are not closed. See Yunghanns v Yunghanns (2000) FLC 93-029 at 87,471 where the Court said:
…All that is required is that the Court asked to exercise the discretion be satisfied that some ‘particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis’… [citing Sheppard J].
I am acutely aware that costs (including, in particular, indemnity costs) are not awarded as a punishment (Latoudis v Casey (1990) 170 CLR 534 at 543). Equally, however, conduct can be, and here plainly is, directly relevant to a consideration of indemnity costs.
By reference to the factors enumerated in s 117(2A) of the Act, the mother relies in seeking costs upon: the particular financial circumstances of the parties; the conduct of the father in relation to the proceedings; and, the fact that the father has been wholly unsuccessful in his application.
The application that costs be awarded on an indemnity basis is said to be founded on the “’special and unusual features’ of this litigation.” It is said that the proceedings were instigated by the father “…in wilful disregard of the known facts and the clearly established law in applications of the same nature”. Reference is made in that context to Colgate-Palmolive, above.
The mother has incurred substantial legal fees of approximately $187,000 which have been paid through earnings, but principally by way of drawings from a company of which she is the sole director and share-holder. Those drawings have been declared as dividends and tax is payable on them. Her financial statement sworn in May reveals significant personal liabilities totalling about $850,000.
The father asserts that he is employed as a tradesman and that he is unable to obtain full-time work as a result of orthopaedic injuries. The mother contends that he produces no medical evidence to substantiate that claim, nor any medical evidence to substantiate the claim that he is unable to obtain employment by reason of any physical or health condition.
It is submitted that the father’s conduct in and about the proceedings “…border[s] upon vexatious.” Reference is made to the fact that, in a period of slightly more than 12 months since final parenting orders were made on 11 February 2011, the father has filed nine subpoenas in relation to children’s issues, ten applications (including two Notices of Appeal) and eleven affidavits.
It is contended:
In what should otherwise have been a simple application by the Mother to take the children overseas on holiday, the Father by his conduct sought to thwart even that simple desire. He sought a review of the Orders made by Principal Registrar Filipello [sic], and when that application was dismissed by Justice Johnston, he filed a Notice of Appeal and sought a stay of those Orders which of itself necessitate two appearances on consecutive days. All such attempts by the Father failed and resulted in two Cost Orders being made against him of 12 January 2012 and 13 January 2012.
Concerns about the conduct of the father’s solicitors were raised by Federal Magistrate Sexton and orders were made on 15 July 2011 addressing, at least in part, some of those issues. The mother took issue with the father continuing to instruct that firm and wrote to those solicitors highlighting her concerns. No response was received and the firm continued to act. The point is made that it is not suggested that any conduct on the part of the solicitors was other than in accordance with the instructions given by the father and no evidence before me suggests otherwise.
I addressed “the father’s solicitor’s conduct” at paragraphs [11] and following of my reasons for judgment on 18 May 2012. Given the reliance on conduct in the course of these proceedings, it is appropriate to repeat those reasons here:
11.In June 2011, that is some four months after Walker FM delivered her reasons and made parenting orders, solicitors for the father issued subpoenae. On the return date of those subpoenae, his solicitors told the court that the mother’s solicitors had notice of same. That statement was false. A complaint was made to the Legal Services Commission. Those solicitors were censured. Sexton FM ordered that those solicitors remove themselves from the record.
12.At that time, only the application for property relief was before the court. In a move that Mr Schonell SC describes, accurately in my view, as “at best cute”, those solicitors no longer represent the father in the property proceedings. They do, however, purport to represent him in the parenting proceedings and have instructed counsel before me yesterday.
13.That led to a situation before me where Mr Paul advised the Court that he represented the father as his solicitor in the property proceedings and Mr Lucas of counsel was instructed by those solicitors to whom I have just made reference in the parenting proceedings – a somewhat unusual situation, to say the very least.
14.Mr Schonell SC did not object to that course, nor did he assert that the conduct of the solicitors, including conduct to which I will shortly refer, disentitled them from representing the father in the parenting proceedings or from instructing counsel in those proceedings. He may well have done so. Plainly enough, his client’s position was informed by the fact that the mother seeks orders dismissing the husband’s application at this preliminary stage by reference to “the rule in Rice v Asplund [(1979) FLC 90-725]”. That application and Mr Schonell’s submissions in support of it clearly indicate a consequential desire to not delay the hearing of these proceedings.
15.The complaint to the Legal Services Commission earlier referred to related to subpoenae which, if at all relevant, could only be relevant to parenting proceedings. There were no parenting proceedings on foot at the time that those subpoenae issued which, I repeat, occurred only some 16 weeks or so after final parenting orders were made.
16.At least one of the subpoenae related to [S], the then 14½ year old child who was the subject of a consent order that time with the father would be in accordance with his wishes (which were to spend no time with his father). Indeed, there were no parenting proceedings instigated by the father for a further five months after issue of the subpoenae.
17.I am told that this separate matter is or will be the subject of a further complaint to the Legal Services Commission, so I will say no more about it.
[Footnotes omitted]
In the then context of an application to re-open final parenting orders, and a responsive application to dismiss the proceedings summarily, it is also important to record that in my reasons I said:
27.… the orders sought by the father are, insofar as they apply to parenting orders in respect of the children, virtually identical to those sought by him in the proceedings before Walker FM.
…
31.The comparison of the father’s affidavit material with the reasons of the Federal Magistrate [Walker] published, it should be added, only some nine months prior to the father’s fresh application reveals, in my view, plainly and starkly that the father seeks to re-agitate issues that were determined at a trial and dealt with, in a, with respect, comprehensive and thoughtful manner by the Federal Magistrate who conducted that trial.
32.Those same comments pertain equally, in my view, to the specific alleged material changes identified by counsel for the father to which I now turn.
…
37.It might be thought particularly troubling, then, that the father now seeks to rely upon the affidavits of two “private investigators” who, upon instructions from or on behalf of him sought, to use their words, to “surveil” the wife. That surveillance, which includes being “advised by the client to return [at 8.30 pm] to work address and check if the lights remain on inside the shop” is contained in two affidavits.
…
40.It is contended that this “evidence” (of surveillance over “13 consecutive nights”) shows “…a prioritisation of [the mother’s] work interest above spending any time at all with her children during the week (and raises) clear and obvious issues about the mother’s attitude to the responsibilities of parenthood” (emphasis in original).
41.In my view, it shows no such thing.
42.More importantly, for present purposes, it is “evidence” of precisely the same nature as that which (among many other things) was raised in the proceedings before the Federal Magistrate.
Of particular relevance to the conduct of the father in and about the proceedings in respect of which a costs order, and specifically an indemnity costs order is sought, I said:
46.Even more troubling and in the context of the current application, telling, the father deposes in his own affidavit:
In these proceedings, I am determined to prove that [S] has been alienated by the respondent as well as the grandmother. I will prove to the Court that the respondent, with her mother, had been alienating [S] against me for a very long time.
47.In another passage in the same affidavit, he says, perhaps even more troublingly and tellingly:
The orders of 11 February 2011 are unworkable. I require orders addressing every issue in relation to parenting. I will not agree with an order permitting “liberal” or “as agreed time between the parties”. [Emphasis added]
48.I use the word “troubling” in respect of matters emanating from the father’s own evidence in light of the findings made by the Federal Magistrate only a few months prior to the father deposing to those matters in his affidavit and the careful, thoughtful and comprehensive analysis undertaken by Dr [Q].
49.It appears that the father has not taken on board one single, solitary word that Dr [Q] has put in her report, nor taken on board one single, solitary word contained in the Federal Magistrate’s reasons.
The reasons for finding that there was no material change in the sense in which that expression is used in Rice v Asplund (1979) FLC 90-725, are, I think, obvious. Equally obvious in my view is the attendant lack of merit in the father’s application.
Moreover, the passages from the father’s affidavit quoted in my earlier reasons gives significant foundation to the submission made on behalf of the mother that these proceedings were “…bordering upon vexatious.”
In addition, the father failed to comply with orders made by Federal Magistrate Walker on 11 February 2011 directing the parties to attend family therapy. According to the mother’s submissions, the reason given by the father was that he would not attend therapy sessions without audio recording “‘to eliminate any misunderstanding of any vocal statement [he] makes during [the] family sessions’ (refer to paragraphs 37 – 39 of the mother’s affidavit sworn and filed 25 November 2011)”. The father refused to comply with orders of Registrar McNamara made on 14 November 2011 that he attend an intake event for the Child Responsive Program. Orders for costs made on 21 March 2012 totalling $11,359.58 have only partially been discharged and it was necessary for the mother to issue a Third Party Debt Notice to the Westpac Bank in order to garnish the funds owing. An amount of $2,512.23 remains owing.
My reasons for judgment incorporated a comparative table prepared by the mother’s counsel outlining the issues sought to be relied upon by the father in the proceedings before me in comparison with those that were agitated before Walker FM and referenced in the Federal Magistrate’s Reasons. I accept the argument put on behalf of the mother that the father’s material was prolix and much of it unnecessary. As an example, an affidavit filed by the father on
31 October 2011 comprised 264 pages, 127 pages of which contained photographs of the father with the children prior to separation and following separation. On 2 April 2012 the father filed a further affidavit comprising 75 pages of which 35 pages comprised photographs of the father with the children which pre-dated the making of the final parenting orders and were, at least for the most part, prior to separation.
The written submissions on behalf of the mother set out a table outlining the ten applications (including two Notices of Appeal) filed by the father in the period between 31 October 2011 and 2 April 2012. In my view that table accurately sets out a description of those applications and the outcome of them. No costs are sought in respect of those applications per se.
In a separate component of the application for costs, the mother seeks certification as to Senior Counsel. The argument flows that the parenting proceedings ran concurrently with an application filed by the father seeking orders (for the second time) pursuant to s 79A. In those proceedings the father retained Senior Counsel to act on his behalf in respect to the mother’s application for summary dismissal. Those proceedings were settled by consent on the morning of the hearing on 17 May 2012. Senior Counsel was previously engaged in the proceedings before Walker FM. I am satisfied that it is appropriate to certify for Senior Counsel (who, I should add, appeared without a junior).
The father contends that the “…overall financial circumstances of each of the parties…” make it clear that no costs order should be made. I disagree. Modest financial circumstances (or indeed impecuniosity) cannot be an answer of itself to applications for costs. If it were, the impecunious or the financially challenged could litigate with impunity (and, in effect, immunity). (See, generally, Lenova & Lenova (Costs) [2011] FamCAFC 141.)
In addition, a party’s financial circumstance is but one of the factors that must be considered. All of the factors enumerated within s 117(2A) and, indeed, other matters relevant to the discretion at large, must be considered holistically in the exercise of the discretion afforded by s 117(2) of the Act.
The father’s written submissions indicate that, of the $750,000 paid to him pursuant to the order for settlement of property with the mother, “…he holds the sum of $295,708 in a bank account with Westpac …” He argues that an order for costs (irrespective of whether it is on an indemnity basis or a party and party basis) “…would represent a significant blow to the financial position of the father. This is particularly so in circumstances where, on the evidence, he is not in a position to work.”
The father was advised at all times; the factors he identifies ought to have been central to his decision to commence the unsuccessful litigation which put the mother to significant cost.
It is submitted in respect of conduct that “[i]t cannot be said that the father is or was responsible for any unsatisfactory professional conduct finding against any solicitor who was representing him.” Whilst that might be true as far as it goes, it is also true (and it is not suggested to the contrary anywhere in the submissions) that a solicitor is presumed to act on the basis of his client’s instructions unless there is good evidence to suggest otherwise.
In that specific respect it is contended on behalf of the father:
It is submitted by the mother that the father’s conduct in these proceedings is bordering upon vexatious. Whilst there is no doubt that the father has filed a number of subpoenas and applications and affidavits, the rules of this Honourable Court require that such applications and affidavits and subpoena be filed whenever and wherever a party to the proceedings seeks to obtain orders or evidence. The father is entitled as a matter of law to assert his rights in the proceedings.
Again, so much is true, but any litigant’s “entitlement” is subject to later scrutiny as to its utility, relevance and propriety. Costs may follow if that conduct is judged adversely to the litigant. The question is not whether the subpoenae are required to obtain evidence by reference to the rules, but rather whether the evidence required to be produced by the subpoenae is reasonable in all of the circumstances of the particular case.
It is asserted on behalf of the father that the failure to comply with the orders as earlier outlined is irrelevant to the issue of costs. It is not.
First, it is part of a broad context within which the discretion needs to be exercised. Secondly, the Act specifically provides for failure to comply with a previous order is a specific matter that should be so assessed.
Specifically in relation to the issue of indemnity costs, it is submitted that there was a “…fervent belief that there has been a significant change in the circumstances…” on the part of the father. The father’s subjective belief is not relevant; what is relevant is how, in the circumstances of this particular case, his conduct should be judged by reference to the standard of reasonableness in the pursuit of litigation that has caused significant costs to the other party.
It is specifically submitted that “…this court should tread carefully when assessing whether an indemnity costs order (or any costs order) should be made where the decision the subjects [sic] of these submissions is yet to be reviewed by a superior court.” I consider that any such consideration is irrelevant.
Any appeal against the substantive decision will be judged on its merits. Any decision made in respect of costs will be judged on its merits, and if that judgment is asserted to be erroneous it, too, can be the subject of appeal in which such challenge will, in turn, be judged on its merits. Plainly enough, if a “superior court” (as it is called in the submission) finds error in the substantive proceedings, any such finding may have an impact on any appeal with respect to costs. But the fact that a decision is subject to appeal is not in my view a relevant consideration in the exercise of the discretion.
In this particular case, by reference to all of the circumstances, I am satisfied that an order for costs should be made in favour of the mother.
Further, by reference to the conduct of the father in and about these proceedings, in all of the circumstances to which I have just referred, I am satisfied that “the normal rule” ought be departed from and that costs should be awarded on an indemnity basis.
The submissions on the part of the mother have annexed to them the matters required by the rules in support of an application for indemnity costs (rule 19.08(3)).
The submissions quantify the costs so payable at $69,202.02 and the mother seeks an order that the Court fix the sum in that amount. The submissions on behalf of the father do not specifically address the quantum. I do not, then, consider it appropriate to fix the sum. I am conscious, though, that assessment may involve further cost and delay.
I propose to order that costs be payable on an indemnity basis as agreed, or failing agreement, to be assessed. However, I will make an order that, in the event that there is any failure to agree and the assessed amount of indemnity costs equals or exceeds $69,202.02, the father shall pay the costs of any such assessment on an indemnity basis together with interest.
I order accordingly.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 31 August 2012.
Associate:
Date: 31 August 2012
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