KARALIS & BELLA (No.2)
[2010] FMCAfam 1476
•24 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KARALIS & BELLA (No.2) | [2010] FMCAfam 1476 |
| FAMILY LAW – Parenting – costs. |
| Child Support Registration and Collection Act 1988, s.116 Family Law Act 1975, ss.117, 123 Family Law Rules 2004, Chapter 19 Federal Magistrates Court Rules 2001, reg.21.02, Schedule 1 |
| Arman & Arman [2009] FamCA 8 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Fennessy & Gregorian [2009] FamCAFC 44 Jones & Dunkel (1959) 101 CLR 298 Kohan and Kohan (1993) FLC 92-340 Karalis & Bella (No.1) [2010] FMCAfam 798 Limousin & Limousin (Costs) (2008) 38 Fam LR 478 Rice & Asplund [1979] FLC 90-725 Sindall & Taryn (2009) FamCAFC 108 Yunghanns & Ors v Yunghanns & Ors (2000) FLC 93-029 |
| Applicant: | MS KARALIS |
| Respondent: | MR BELLA |
| File Number: | SYC 3391 of 2010 |
| Judgment of: | Monahan FM |
| Hearing date: | 10 September 2010 |
| Date of Last Submission: | 10 September 2010 |
| Delivered at: | Sydney |
| Delivered on: | 24 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Jackson |
| Solicitors for the Applicant: | Konstan Lawyers |
| Counsel for the Respondent: | Mr Maurice |
| Solicitors for the Respondent: | Greg Morahan & Co |
ORDERS
The applicant mother, MS KARALIS, pay the respondent father,
MR BELLA, costs fixed in the amount of $9,192.00, such sum to be paid within three (3) months of today’s date.
All extant applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Karalis & Bella is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 3391 of 2010
| MS KARALIS |
Applicant
And
| MR BELLA |
Respondent
REASONS FOR JUDGMENT
Background
This is an application by the respondent, MR BELLA (“the father”), for costs against the applicant, MS KARALIS (“the mother”), arising out of this Court’s decision delivered 30 July 2010 and reported in [2010] FMCAfam 798. The reasons for that decision outline the relevant background of the parties and the proceedings as well as the reasons for the Court’s decision.
On 30 July 2010, when the Court’s decision was released, the following orders were made, namely that:
“1. The Applicant’s Initiating Application filed 31 May 2010 be dismissed.
2. Paragraphs 7 and 8 of the Orders made 10 June 2010 be discharged.
3. The Respondent’s Application seeking costs be adjourned to this Court on 9 September 2010 at 9:30am for mention.”
The costs hearing came before this Court on 9 September 2010 in a duty list, but as it was not reached in the list, it was adjourned for hearing the following day.
Should a Costs Order Be Made?
Broadly speaking, in costs applications, the Court is required to consider two matters:
·firstly, whether a costs order should be made; and
·secondly, if so, the amount for which the costs order should be made.
Law
Pursuant to regulation 21.02 of the Federal Magistrates Court Rules 2001 (“the Rules”), the Federal Magistrates Court has the power to make an order for costs at any stage in a proceeding.
In family law matters, the Court also needs to consider s.117(1) of the Family Law Act 1975 (“the Act”), which states the principle that each party shall pay their own costs. The exception to that rule is contained in s.117(2) of the Act, which relates to circumstances where the Court finds there is justification for departing from the principle. This exception is subject to the matters referred to in s.117(2A) of the Act.
Before going any further, it is important to point out, using the words of Cronin J in the case of Arman & Arman [2009] FamCA 8, a decision of his Honour’s from 19 January 2009, where he stated at paragraph 16 that:
“…costs are not intended as some form of punishment for litigating but rather to act as a compensation for the party who has had to participate when they probably ought not to have been there.”
Now, returning to s.117(2A), it states:
“In considering what order, if any, should be made under subsection (2), the Court will have regard to:
(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 the pleadings, particulars, discovery, inspection, directions to answer questions, admission of the facts, production of documents and similar matters;
(d) Whether the proceedings were necessitated by a failure of a party to the proceedings to comply with the 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) Any such other matters as the Court considers relevant.
Submissions
In his submissions to the Court on behalf of the father, Mr Maurice argues that in respect of s.117(2A), paragraphs (a), (d) and (e) are relevant in the present case and would otherwise justify the Court in making a costs order against the mother.
Mr Jackson, for the mother, argued that paragraphs (c) and (g) of s.117(2A) were also relevant in the exercise of the Court’s discretion whether to make or not to make, as the case may be, an order for costs.
Prior to commencing their respective submissions, Mr Maurice and Mr Jackson tendered various documents without objection. They were:
a)A document entitled “Known Assets of the Mother”, which attached, inter alia, a New South Wales Land Titles Office search of properties listed under the mother’s name. That became Exhibit “RF1”.
b)An unfiled financial statement of the father, sworn on 8 September 2010, which became Exhibit “RF2”.
c)A document entitled “Standard Costs Disclosure”, dated 3 June 2010, for the father, with attached tax invoices for the father’s solicitor totalling $14,666.32 as at 3 September 2010 and a tax invoice for the father’s barrister totalling $6,250.00 as at 30 June 2010. That became Exhibit “RF3”.
d)A NSW Land & Property Management Authority title search, listing the father as the joint tenant with two other family members, of a property situated in [L] NSW, being Lot [omitted], which became Exhibit “AM1”.
e)A copy of the mother’s Westpac banking statement for her equity access loan, for the period 7 April 2010 to 27 August 2010 indicating a loan balance of $932,177.43, which became Exhibit “AM2”.
f)A copy of the mother’s Westpac banking statement for what was described as her personal account (the account name being blacked out) for the period of 5 August 2010 to 3 September 2010, which indicated an account balance of $8,709.72, which became Exhibit “AM3”.
g)
A copy of a certificate under s.116(2) of the Child Support Registration and Collection Act 1988 stating that, as at
1 September 2010, there was a child support debt of $5,384.45 owing to the mother by the father, and that became Exhibit “AM4”.
Mr Maurice also provided the Court with a case outline document in support of the father’s request for costs.
The Court will now consider the submissions in light of the relevant paragraphs of s.117(2A) of the Act.
Discussion
Section 117(2A)(a): the financial circumstances of the parties
The tendered documents clearly relate to the parties’ respective financial circumstances. Mr Maurice submitted that the mother was in a position to meet the costs order because, in Mr Maurice’s words:
“She has more wealth than him.”
Mr Maurice asked the Court to note that the mother has chosen not to provide a financial statement and that, despite her own tendered bank statements, she “has not provided a complete picture” of her financial circumstances. Mr Maurice acknowledged that it appears the father has an interest in a further property at [L] and there appears to be a child support liability owing. However, the Court had no specific evidence before it as to the relevant child support circumstances, apart from the evidence that the parties have had, and continue to have, a child support dispute between them.
Mr Jackson disputed that there was a requirement under s.117(2A) for either party to be under an obligation to provide full and frank financial disclosure. That said, he acknowledged that it may be open to the Court to make an inference pursuant to the principles outlined by the High Court in the case of Jones & Dunkel (1959) 101 CLR 298. Mr Jackson also asked the Court to consider whether the father had been entirely forthcoming with his own financial disclosure, given the evidence contained in Exhibit “AM1”.
Section 117(2A)(b): whether any of the parties are in receipt of legal aid
That is not applicable to these proceedings.
Section 117(2A)(c): the conduct of the parties in relation to the proceedings
As stated, Mr Jackson submitted that this provision was relevant to the Court’s consideration of a costs order. He pointed to numerous paragraphs in the mother’s affidavit filed on 31 May 2010 that accompanied her Initiating Application, to assert that she had been genuine in her concerns and actions in commencing the matters in these proceedings.
Mr Jackson asked the Court to note that, when the mother acted to stop the father’s time with the relevant child because of her concerns, she was not met by way of a contravention application by the father and in the event that she had been, it was submitted that it was highly probable that she would have been reasonably excused by her actions.
Section 117(2A)(d): whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous Court orders
Mr Maurice asked the Court to accept that the mother had not complied with the Court orders made by Cohen J in 2006. This was not just by her unilaterally disallowing the child from spending time with the father, but in taking the child to see a psychologist, which was a clear breach of the orders.
Section 117(2A)(e): whether any party to the proceedings has been wholly unsuccessful in these proceedings
In light of the Court’s decision delivered on 30 July 2010 (“the decision”), s.117(2A)(e) featured strongly in Mr Maurice’s written and oral submissions to the Court.
Mr Maurice argued that the mother’s application was dismissed at a preliminary stage because:
·firstly, the mother had failed to establish a significant change in circumstances; and
·secondly, re-opening the issue would be further damaging to a child who was already vulnerable because of her medical condition and the continuing hostility between the parents.
Mr Maurice submitted that the basis for the decision included:
·firstly, that none of the complaints of the mother that she had relied upon to establish the significant change of circumstances were new, save for the issue of the child’s views, which the Court found resulted after the mother repeatedly questioned the child with questions that had a forensic quality;
·secondly, that the mother raised complaints that obviously had nothing to do with the child’s relationship with the father, for example, the heart murmur complaint; and
·thirdly, that the mother sought final orders that she must have known would result in the child not spending time with the father.
Mr Maurice also submitted that the mother must have known that the orders that she was seeking would be unworkable. He also stated that the interim and final orders sought by her were, in his words, “disingenuous”, intending only to convey the impression that the mother wanted to promote the child’s relationship with the father and, moreover, that the mother had sought interim orders for professional supervision without offering evidence as to their availability. In addition, the mother had alleged a breach of the interim orders for supervision, without any corroborating evidence, such breach being found to be inherently improbable. The mother had further alleged that the father had been violent, although her allegations were largely not corroborated.
The Court had found that there was no reasonable grounds to conclude that there had been an abuse of the child or any family violence. There was also the real potential for the child to be harmed by further litigation itself; something the mother, in Mr Maurice’s words, “had apparently not considered”.
According to Mr Maurice, the mother had brought the application before the Court without merit. This, he said, was apparent when one analysed the components of the application both individually and as a whole.
Section 117(2A)(f): whether either party has made an offer in writing
This is not applicable to the present case.
Section 117(2A)(g): any other relevant matter
Mr Jackson referred to this additional provision when he made submissions in respect of s.117(2A)(c).
Decision regarding costs order
Having regard to the relevant paragraphs of s.117(2A) and in light of the submissions and available evidence, the Court finds it appropriate, in the circumstances, to make an order for costs in favour of the father. Clearly, the next question which then needs to be considered is: what should the quantum of costs be?
Quantum of Costs
As stated previously, s.117(2) of the Act empowers the Court to make such an order for costs as the Court considers just. Unless the Court otherwise signifies, costs are to be paid on a party/party basis. The father has asked for costs to be awarded on an indemnity basis, and this is opposed by the mother.
Law
Party/party costs are costs necessarily incurred, paid at a reasonable rate. The Rules incorporate a Schedule of costs as a guide to party/party costs in family law proceedings. Party/party costs would not ordinarily cover all the legal costs of a party in any proceedings.
By contrast, solicitor/client costs are ordered when a Court intends the costs to cover all the legal costs reasonably incurred by that party. When a costs agreement is involved, the charges to be imposed on the other party are subject to the requirements of reasonableness.
Rule 21.02 of the Rules allows the Court to refer the matter for taxation of costs under Chapter 19 of the Family Law Rules 2004 (“the Family Law Rules”). The taxing officer can exercise discretion in determining whether all or only some of the work completed by the lawyer should be included in the final bill of costs. As indicated, the test is: ‘necessary and reasonable’.
Indemnity costs, interestingly, are not defined in the Rules. However, indemnity costs are defined in the explanatory guide to the Family Law Rules, as:
“An entitlement to costs, including costs under a cost agreement, for all costs, other than the costs that are unreasonable in amount or have been incurred unreasonably.”
In the case of Sindall & Taryn (2009) FamCAFC 108 (“Sindall”), his Honour O’Ryan J, in dealing with an indemnity costs application, stated, at paragraphs 148 and 149, that:
“It has been established the Court ‘should not depart lightly from ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. ’
“In Colgate-Palmolive Co v Cousins Pty Ltd [sic (“Colgate-Palmolive”)][2] Sheppard J stated that there should be some ‘special or unusual feature in the case to justify the Court departing from the ordinary practice’[3]… [T]he mere evidence of facts and circumstances capable of warranting an order for costs on an indemnity basis does not mean that the Court is obliged to exercise the discretion to make such an order as costs ultimately remained to be exercised in the discretion of the Court, having regard to the factors in s.117(2A) of the Act.” [Footnotes added.]
[2] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
[3] Ibid, at 233 per Sheppard J.
The authorities in family law cases are very clear that indemnity costs orders will only be made in exceptional circumstances. The Full Court of the Family Court of Australia, (Coleman, Boland and Thackray JJ) in the case of Fennessy & Gregorian [2009] FamCAFC 44; (2009) FLC 93-399 (“Fennessy”), stated at paragraph 59:
“Amongst other places, indemnity costs were discussed by the Full Court in Limousin & Limousin (Costs) (2008) 38 Fam LR 478; [2007] FamCA 1178 [(“Limousin”)] in the following terms:
‘41. The decision of the Full Court of the Family Court (Strauss, Lindenmayer and Bulley JJ) in Kohan and Kohan (1993) FLC 92-340; (1992) 16 Fam LR 245 held that nothing in s 117 or 123 of the Family Law Act 1975 (“the Act”) prevents the Court making an order for costs on an indemnity basis. It was recorded at FLC 79,614; Fam LR 258 (citations omitted):
“The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges…Order 38 rule 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind…
“Indemnity costs orders are still an exception in this and other jurisdictions.”’”
Their Honours (in Fennessy) then went on to quote the Full Court’s references in Limousin to the decision of Sheppard J in Colgate-Palmolive and to the Full Court’s decision in Yunghanns.
In further discussing these cases, their Honours said at [60], quoting from Sheppard J in Colgate-Palmolive:
“…it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes[:] evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata).” [Citations omitted in original.]
Submissions
The Court notes that both counsel gave brief submissions in respect of this issue.
Decision
Having considered the submissions and the evidence available, the Court is not persuaded that the circumstances of this case fall into the exceptional category which would justify costs being awarded on a basis other than party/party. Consequently, the father’s costs are to be calculated in accordance with Schedule 1 of the Rules.
Utilising Stages 1A, 2 and 6 of the Schedule, and allowing for an advocacy loading in the daily hearing fee when Counsel was utilised, the filing fee and an allowance for photocopies. I fix costs in the sum of $9,192.00.
The Court is happy to hear submissions with respect to the time to pay, but at this stage proposes to give the mother three months to pay.
There will be orders of the Court reflecting the reasons for this decision. The Court reserves the right to settle these reasons.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Monahan FM
Associate:
Date: 20 January 2011
[1] Kohan and Kohan (1993) FLC 92-340, at 79,614 per Strauss, Lindenmayer & Bulley JJ; Yunghanns & Ors v Yunghanns & Ors (2000) FLC 93-029.
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