JAROS & CALDEN (No.2)
[2020] FCCA 2059
•28 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JAROS & CALDEN (No.2) | [2020] FCCA 2059 |
| Catchwords: FAMILY LAW – Costs – where father withheld the children contrary to orders – where father made allegations not reasonably capable of belief – where mother compelled to make application for recovery – where father wholly unsuccessful in opposing mother’s application – where father opposes costs – where application for indemnity costs – exceptional circumstances – order made for indemnity costs on recovery application. |
| Legislation: Family Law Act 1975 (Cth), ss.117(1) & (2) & 117(2A) Federal Circuit Court Rules 2001 (Cth), Part 1, Schedule 1 |
| Cases cited: Penfold v Penfold (1980) 144 CLR 311 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158 |
| Applicant: | MS JAROS |
| Respondent: | MR CALDEN |
| File Number: | ADC 1152 of 2018 |
| Judgment of: | Judge Heffernan |
| Hearing dates: | 8 April 2019, 1 August 2019 & 5 August 2019 |
| Date of Last Submission: | 4 December 2019 |
| Reserved from chambers: | 20 January 2020 |
| Delivered at: | Adelaide |
| Delivered on: | 28 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms M Dickson |
| Solicitors for the Applicant: | Resolve Divorce Lawyers |
| Counsel for the Respondent: | Ms Read & Mr Boehm |
| Solicitors for the Respondent: | Adelaide Hills Legal, & from 6 November 2019, Jacqui Ion Lawyers Pty Ltd |
ORDERS
The father is to pay the costs of the mother for the Application in a Case filed 26 March 2019 on an indemnity basis in the amount of SEVEN THOUSAND AND EIGHTY THREE DOLLARS ($7,083.00).
The father is to pay the costs of the mother on the costs application on a party/party basis in accordance with Part 1 of the Schedule of the Federal Circuit Court Rules 2001 (Cth) including an advocacy loading.
All extant applications are otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym is Jaros & Calden (No.2) approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1152 of 2018
| MS JAROS |
Applicant
And
| MR CALDEN |
Respondent
REASONS FOR JUDGMENT
This is the applicant mother’s claim for costs of and incidental to an Application in a Case filed on 26 March 2019 and the Response filed by the father on 29 March 2019. The mother seeks costs be paid on an indemnity basis or in the alternative on a party/party basis. The father opposes the costs order being made. I heard the mother’s Application in a Case on 4 April 2019. It was an application for delivery up or in default of such order, recovery of the children, and it put the father on notice that she sought indemnity costs. My reasons were delivered orally on 8 April 2019 and once settled from transcript were published on 9 May 2019. I made the orders sought by the mother. I made none of the orders sought by the father in his Response. I reserved costs on that occasion.
Since the Application in a Case was argued, the parties have now agreed to final consent orders with respect to all matters except the mother’s costs application. It is to be hoped that these reasons and the orders I make will be the final chapter in what has been a bitterly contested parenting dispute.
Costs
A foundational principle under the Family Law Act 1975 (Cth) (‘the Act’) is that in the ordinary course each party is to bear their own costs.[1]
[1] Section 117(1) of the Act; Penfold v Penfold (1980) 144 CLR 311.
There is however a discretion to award costs under s 117(2) of the Act:
“(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.”[2]
[2] Section 117(2) of the Act.
The applicant for costs bears the onus of establishing that an order for costs would be ‘just’. In considering whether to make an order, I must have regard to the following matters set out in s 117(2A):
“(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.”
It is well-established that the Court is not prevented from finding that a single factor identified in s 117(2A) is an adequate foundation for an order for costs.[3] I must however, take all of the matters identified in that subsection into account.
[3] PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158; Brown v Brown [1998] FLC 92-822.
I have discretion to award costs on an indemnity basis in an appropriate case.[4] Such an order involves a very significant departure from the ordinary course and should only be made in exceptional circumstances.[5] I remind myself that the purpose of costs is to compensate a successful party to litigation and they are not a form of punishment or damages for aggravation or distress. The exact limits of the term ‘exceptional circumstances’ have not been identified by the case law for obvious reasons. It is a term which is also commonly used to describe the precondition for the exercise of a discretion in Commonwealth and State legislation and as such has been the subject of considerable judicial discussion. It is incapable of precise definition but imports something that is not commonplace or routine. A fact or circumstance need not be unique or unprecedented or very rare to make it exceptional.[6] Over the years, the authorities have identified a variety of circumstances which might enliven the discretion to award indemnity costs, but there are no definitive criteria and the categories of circumstance in which the discretion is enlivened are not closed.[7]
[4] In the Marriage of Kohan (1992) 112 FLR 151.
[5] Ibid, Kohan; Muldoon & Carlyle [2012] FLC 93-513.
[6] Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 353 ALR 600 [30], city R v Kelly [2000] 1 QB 198 [51].
[7] Yunghanns v Rentiers Machinery Pty Ltd (2000) FLC 93-029.
Some categories of matter in which it has been held appropriate to make an order for indemnity costs have been: where a party makes allegations of fraud knowing them to be false; or a party makes irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that proceedings had been instituted and maintained for an ulterior motive; where proceedings have been commenced in disregard of known facts, or clearly established law; and, the making of allegations which ought never to have been made or a case based on groundless contentions.[8]
[8] Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at [257].
Notwithstanding the above, it has been held that it is not a ‘condition precedent’ to the exercise of the discretion that a collateral purpose or fraud be established on the part of the party against whom indemnity costs are sought.[9]
[9] D & D (Costs) (No.2) [2010] FamCAFC 64 at [28].
Background
I will consider the background to this matter with respect to identifying the matters which might justify an order for costs. I will not repeat all the matters referred to in my published reasons. However, it is necessary for me to set out a few matters of chronology. On 5 December 2018, all parenting issues were resolved by way of final orders with the exception of the children’s living arrangements during school terms. During the course of the proceedings the father had a history of retaining the children contrary to Court orders. On 22 January 2019, the mother filed an Application in a Case which she sought to have determined before the commencement of the school year. The Application sought that order one of the interim orders which had been made on 8 June 2018 be discharged and that the children should live with her during school terms and spend alternative Thursdays until Mondays with the father. Order one of the orders of 8 June 2018 provided for the children to live with each of their parents on a week-about basis. It can be seen that the change sought by the mother was significant. Her reasons for making that Application were set out in a supporting affidavit. The mother’s Application was made on the basis of the recommendations made by Ms B in a privately obtained Family Assessment Report. Ms B had specifically recommended that the children reside in the care of the mother and spend four days on alternative weekends with the father. The father did not agree with that recommendation. He continued to press for an equal time arrangement during school terms. The matter was listed for final hearing. The mother asserted in her affidavit that the children had indicated that they did not want an equal time arrangement to continue and her concerns that they were not coping emotionally or physically with that arrangement. As her relationship with the father was characterised by family violence, this had impacted on the way they co-parented and she believed, inhibited her capacity to parent the children. Her position in these proceedings had always been that the father had been physically and emotionally abusive towards her. The mother also alleged that the father did not provide suitable arrangements for the children when they were in his care and that there was a limited ability to co-parent. The father’s Response to that Application in a Case sought that it be dismissed with costs on an indemnity basis. His supporting affidavit made the point that the mother was seeking to raise a trial issue on an interim basis. He alleged that a number of concerning incidents had occurred involving the children and the mother since the report was published. He asserted that the mother’s relationship with one of the children had broken down; that she was in the habit of driving the children in a car whilst under the influence of alcohol; that the children required counselling for stress issues; and that the child X, in particular, was having nightmares and expressed serious suicidal ideations. He obtained a Mental Health Plan for X from a GP, Dr C. He claimed to have concerns about the mother’s parenting capacity.
Pursuant to the orders of 8 June 2018, the children were scheduled to return to the mother’s care at 9.00am on Monday 25 March 2019 at which time the father should have delivered them to school. The mother received a phone call from the children’s school advising that they were absent. The mother was unable to contact the father and arranged for the police to perform a safety check. The father sent a text message to her advising that X had made very serious threats of self-harm and that he would not be returning the children until the issue was resolved. It was against that background that the mother filed her Application in a Case on 26 March 2019. Her supporting affidavit responded at length and in detail to the father’s allegations with respect to X. The father’s Response to the Application in a Case sought that the mother’s previously ordered time be suspended and that the children live with him until further order, with the mother having supervised time only. He also sought an order for a section 62G Family Assessment Report with a different consultant and he sought his costs.
As I have noted above, I made none of the orders sought by the father in his Response. In my reasons I detailed a series of matters which caused me to place no weight on the father’s affidavit material.[10] It should be borne in mind that the allegations made in the father’s affidavits were extremely serious and if true raised a real prospect that X was in imminent danger of self-harm if she remained in the mother’s care. I concluded that I was not satisfied that there was sufficient evidence reasonably capable of belief that gave rise to a concern that the child was at either at immediate or long-term risk if she spent time in the care of the mother. I also concluded that it appeared that the father had been trying to influence the children, and in particular X, in order to obtain a forensic advantage in the proceedings. Ultimately, the father consented to final orders which provided that the children would live with the parents on a week-about basis during term time.
[10] Jaros & Calden [2019] FCCA 1221 [14]-[34].
The father was wholly unsuccessful with respect to the subject Application in a Case.
Nothing has occurred since I gave my reasons on the Application to cause me to alter the views I expressed on that occasion. I am satisfied that the circumstances justify an order for costs being made against the father.
The mother seeks an amount of $4,956.50 inclusive of GST for her solicitor’s fees for the interim March 2019 applications. She seeks a further $2,117.50 inclusive of GST for counsel fees. The total amount sought in that regard is $7,083 inclusive of GST. In addition, she seeks her costs in relation to the contested application for costs on an indemnity basis.
I turn to consider the relevant matters pursuant to s 117(2) of the Act.
Section 117(2) considerations
(a) the financial circumstances of each of the parties to the proceedings
In her affidavit supporting the costs application the mother indicates that she earns on average $600 per week after tax as a casually employed customer service officer. Her only qualification is as a tradesperson and she does not believe that she will be able to obtain work which is better remunerated than that which she currently has. The equal shared care arrangement impacts upon her ability to earn an income. She rents the property in which she resides and has no savings. During the course of these proceedings she was only able to pay for her legal fees through the generosity of her family members who extended loans to her. She still owes significant amounts to her family.
On 5 August 2019, having heard submissions on costs, I made an order, with which the father did not comply in a timely fashion, that he was to file and serve and affidavit within 21 days setting out his relevant financial circumstances for the purpose of the costs application. He filed a Financial Statement on 4 December 2019. His financial summary was as follows:
a)total average weekly income $490;
b)total personal expenditure $622;
c)total value of property owned $789,500;
d)total gross value of superannuation $29,590;
e)total of liabilities $92,000; and
f)total of financial resources NIL
As can be seen from the above, whilst the father claims to have income which is significantly exceeded by his expenditure, he also has significant assets with minimal liabilities. It is within the father’s means to meet an order for costs on either a party/party or indemnity basis.
(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
As far as I have been advised, neither party was in receipt of assistance by way of legal aid.
(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
The father opposed the Application and was wholly unsuccessful with respect to the orders sought in his Response. The mother was wholly successful on her Application. The parties were required to attend for lengthy submissions on 4 April 2019 and again when I delivered my oral reasons on 8 April and heard further submissions. As I have indicated above, I found that the matters alleged by the father were not reasonably capable of belief for the purpose of the risk assessment task I was required to perform at an interim stage. His withholding of the children and subsequent allegations were, on balance, a tactical manoeuvre in response to what he perceived to be an unfavourable Family Assessment Report and the mother’s interim application to change the living arrangements for the children on the basis of that Report. As a result, the mother was put to significant unnecessary expense; the children were withheld from school for a short period; their routine and relationship with their mother was compromised for a period of time; and the entire exercise caused considerable upset to her. His opposition to the Application also resulted in a significant waste of the Court’s time in a jurisdiction which was already overburdened with the demands of parenting disputes. I take into account the fact that the father’s conduct in that regard is not typical of the manner in which the majority of parties approach parenting proceedings. It is out of the ordinary to conclude that such serious allegations do not factor into an interim risk assessment on the basis that they are not even reasonably capable of belief. I take into account the fact that this was not the first occasion on which the father had withheld the children contrary to orders of the Court.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
I refer to my remarks above. The mother’s Application was necessitated by the father’s failure to comply with court orders.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
I refer to my remarks above.
(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
This consideration is not relevant to the current application.
(g) such other matters as the court considers relevant
The father’s withholding of the children was unnecessary and based on what I found to be essentially groundless contentions. It is also relevant to my consideration of costs in this matter that the father appeared to have been trying to influence the children for the purpose of his own forensic advantage in the proceedings. Given the unambiguous terms in which I expressed my reasons for granting the wife’s interim Application and dismissing the father’s Response, it could have been reasonably apprehended by the father, when I reserved the mother’s costs, that at least some portion of her costs would be ordered against him. He was opposed to an order for costs in any terms. I am satisfied that the matters I have referred to at (a), (b), (c), (e) and (g) above all weigh in favour of my making an order for costs against the father.
I note that the mother’s affidavit in support of her Application for costs annexed a copy of the terms of engagement and retainer she signed with her solicitors together with copies of invoices from both them and counsel.[11]
[11] Op cit, Kohan.
I have once again reminded myself of the exceptional nature of an order for costs on an indemnity basis. I am satisfied by virtue of the matters I have referred to above, and in particular the conduct of the father in the proceedings, his making of allegations which were not reasonably capable of belief, his deliberate non-compliance with orders of the Court; and what he must have well known to be the hardship caused to the wife in having to make the Application by reason of her difficult financial circumstances, that an order for costs on an indemnity basis is justified in this case with respect to the Application in a Case. Parties must be dissuaded from making baseless allegations, disobeying Court orders for tactical reasons, using children as weapons in a litigious war of attrition and wasting Court time. When all of those features are present, as they are here, they are matters which can tip the balance in favour of an exercise of the Court’s discretion to make an exceptional order for indemnity costs. They have done so on this occasion. In taking the above matters into account, I have not determined to make such an order as a means of punishing the father. I have done so to compensate the mother for the unnecessary expense she has incurred in legal fees. As to her Application for attending to make the costs application itself, the circumstances justify the father being ordered to pay her costs on a party/party basis, with an advocacy loading, in accordance with Part 1 of Schedule 1 of the Federal Circuit Court Rules2001 (Cth).
I make the orders to be found at the beginning of these reasons.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Heffernan
Associate:
Date: 28 July 2020
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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Procedural Fairness
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