Kavanagh & Madgwick (No. 3)
[2008] FMCAfam 287
•1 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KAVANAGH & MADGWICK (No. 3) | [2008] FMCAfam 287 |
| CHILD SUPPORT – Application for departure order – administrative assessment. COSTS – Consideration of factors – financial circumstances – effect of Legal Aid grant – conduct of proceedings – applicant wholly unsuccessful – injunctive and final proceedings against Cross Respondent – Respondent successful in interim injunctive proceedings against Cross Respondent – Respondent unsuccessful in final proceedings against Cross Respondent – consideration of factors relevant to applications concerning Cross Respondent – Applicants conduct of proceedings resulting in applicant paying costs of Respondent and costs Cross-Respondent – Counsel’s costs not disbursements. |
| Child Support (Assessment) Act 1989 (Cth), s.100 Family Law Act 1975 (Cth), s.117(1), (2) & (2A) Federal Magistrates Court Rules, 2001 (Cth) rr. 21.02(a), 21.15, 21.16 and Schedule 1 |
| RNL & RHB [2005] FMCAfam 520 Barker v Barker & Wade (1976) 13 ALR 123 Penfold v Penfold (1980) 144 CLR 311 Re JJT & Ors, Ex parte Victoria Legal Aid (1998) 195 CLR 184; [1998] HCA 44 K & M (No 2) [2007] FMCAfam 920 In the Marriage of I and I (No 2) (1995) 22 Fam LR 557 In the Marriage of SH and P Brown (1998) 23 Fam LR 349 C & C (No 2) [2007] FMCAfam 54 K & M (No 1) [2007] FMCAfam 524 PAK v GDK [2004] FMCAfam 92 In the Marriage of AR & DJ Telfer (1996) 20 Fam LR 619 Colan Products Pty Ltd v Luxton Pty Ltd & Anor (No 2) [2002] FMCA 90 |
| Applicant: | MR KAVANAGH |
| Respondent: | MS MADGWICK |
| Cross Respondent: | MS KAVANAGH |
| File Number: | MLC 1038 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | Written submissions |
| Date of Last Submission: | 3 December 2007 |
| Delivered at: | Sydney via telephone by Scarlett FM |
| Delivered on: | 1 April 2008 |
REPRESENTATION
| Applicant: | In person |
| Solicitors for the Respondent: | Hardys |
| Solicitors for the Cross -Respondent: | Bradley Lawyers |
ORDERS
The Applicant pay to the Respondent the sum of $29,454.55 within 90 days; and
The Applicant pay to the Cross-Respondent the sum of $8,015.00 within 90 days.
IT IS NOTED that publication of this judgment under the pseudonym Kavanagh & Madgwick is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
MLC 1038 OF 2007
| MR KAVANAGH |
Applicant
And
| MS MADGWICK |
Respondent
| MS KAVANAGH |
Cross Respondent
REASONS FOR JUDGMENT
Application
This is an application for costs arising from an application by the Applicant Father[1] for a departure order in relation to an administrative assessment of child support.
[1] “Husband”.
Costs are sought:
a)by the Respondent Mother[2] against the Husband for all of the proceedings (since 5 June 2007, which appears to be the date at which her current solicitors became involved in the matter); and
b)by the Cross Respondent[3] against the Former Wife for that part of the proceedings involving the Current Wife.
[2] “Former Wife”.
[3] “Current Wife”.
The Former Wife says that if the Current Wife is successful in any costs application against her then those costs should be paid by the Husband.
The Husband seeks no costs order, and has made no submissions in relation to the costs applications which have been brought by the Former Wife and the Current Wife.
Costs in child support proceedings
By virtue of s.100 of the Child Support (Assessment) Act the issue of costs in child support proceedings is dealt with by the application of s.117 of the Family Law Act, 1975(Cth).
The law concerning costs in family law proceedings was succinctly summarised in RNL & RHB,[4] as follows:
“The question of costs in family law proceedings is dealt with in s.117 of the Family Law Act. A judicial officer has a broad discretion in costs matters, and the Full Court has indicated that it will not ordinarily intervene unless the order is plainly unreasonable. Indeed, it has been held that the Court has an almost unlimited jurisdiction in relation to costs, although any costs orders must be just.
It is not the law that a costs order can only be made in “a clear case”. Thus, although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. Although the general rule is that each party shall bear his or her own costs, that general rule is expressed to be subject to s.117(2) and must yield whenever the judicial officer finds that there are circumstances justifying the making of the costs order.”[5]
[4] [2005] FMCAfam 520 (“RNL”).
[5] RNL at paras 169 and 170 per Walters FM. See also Barker v Barker & Wade (1976) 13 ALR 123 at 131 per Crawford J: “the court’s power to grant costs exists when it is of opinion in a case that there are circumstances that justify it in doing so.”
The view of s.117(1) and (2) set out in RNL is in large part drawn from the discussion in the majority judgment in Penfold v Penfold.[6]
[6] (1980) 144 CLR 311 at 315 per Stephen, Mason, Aickin and Wilson JJ; with Murphy J expressing a similar view at 317 (“Penfold”); and followed in Re JJT & Ors; Ex parte Victoria Legal Aid (1998) 195 CLR 184, [1998] HCA 44, CLR at 191 per Gummow J, HCA at para 11 per Gummow J; and whilst not expressly followed, certainly expressed in similar terms in CLR at 219 per Hayne J and 225 per Callinan J, HCA at paras 91-92 per Hayne J and para 125 per Callinan J (“JJT”).
In JJT s.117(2A) was commented on by a number of the Justices of the High Court. Kirby J (albeit in dissent) said that s.117(2A):
“express[ed] criteria to which the Court must have regard in considering what order (if any) it should make under s.117(2). All but one of the paragraphs of sub-s. (2A) relate to the circumstances of a party. However, the closing paragraph, par. (g) is expressed in the most ample terms”[7]
while Hayne J said that:
“The list of matters set out in sub-s. (2A) to which the Family Court is directed to have regard in making orders under s.117(2) indicates clearly that the subject matter of the orders to be made under s.117(2) is the costs which a person may be ordered to pay another as indemnity for that other’s liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, “costs” as that expression is ordinarily understood in the law”[8]
and Callinan J said that:
“Subsection 117(2A) provides a catalogue of the matters to which the Family Court may have regard if an order different from that contemplated by s.117(1) is to be made. All of these matters, except for the last, are matters expressly concerned with the conduct and circumstances of the parties. The last could hardly however, be expressed in wider terms”.[9]
[7] JJT CLR at 198 per Kirby J, HCA at para 37 per Kirby J.
[8] JJT CLR at 220 per Hayne J, HCA at para 98 per Hayne J.
[9] JJT CLR at 225 per Callinan J, HCA at para 126 per Callinan J.
Costs – consideration of factors
In determining whether to order costs the Court must consider the relevant s.117(2A) factors.[10] In so doing, the Court may make an order on the basis of one or a combination of factors.[11] Each of the factors is dealt with hereunder.
[10] In the Marriage of I and I (No 2) (1995) 22 Fam LR 557 at 558 per Nicholson CJ, Ellis and Buckley JJ.
[11] In the Marriage of SH and P Brown (1998) 23 Fam LR 349 at 353 per Kay J, referred to in C & C (No 2) [2007] FMCAfam 54 at para 12 per Pascoe CFM (“C & C (No 2)”).
Financial circumstances of each party
The Husband’s financial position was summarised in K & M (No. 2) as follows:
“In any event it is clear that the Husband has had access to substantial sums of money since 1 June 2005 that he has failed to disclose. The Court cannot, because of the failure to disclose, draw firm conclusions about precisely how much money he has accessed. On the available incomplete disclosure made by him it is a minimum of $127,000 in addition to his $20,000 per annum wage from P Logistics and Centrelink payments. When regard is also had to the unspecified value to him of a leased vehicle or vehicles, and the amount drawn down from RAMS, the Court considers that he has probably had access to monies exceeding $200,000 over about a two year period since 1 June 2005. Because of his failure to fully and frankly disclose the Court cannot accurately assess when various sums of money were received, and in all the circumstances considers it appropriate to draw the inference that since 1 June 2005 the Husband’s child support income has not fall below the $105,500 per annum assessed by the Child Support Agency. It follows that the assessment was not unjust or inequitable. Further, the Court does not, in all the circumstances, consider it to be otherwise proper to vary the existing assessment.”[12]
[12] K & M (No 2) [2007] FMCAfam 920 at para 18 per Lucev FM.
Further, the Husband has since May 2007 been earning approximately $100,000 a year in employment with a firm in Adelaide.[13]
[13] The fact of the employment was not disclosed at the hearing on 22 June 2007 which led to the judgment in K & M (No 1), and was disclosed, at best, reluctantly during the course of subsequent proceedings: see K & M (No 2) at para 7(a) per Lucev FM.
The Former Wife’s current financial position is relatively comfortable, and she is not in straitened financial circumstances.
The Current Wife is a school teacher whose income for the 2005-2006 financial year was $56,000. Her evidence was that she lived frugally, and that her focus was upon her work and her child. Of all the parties, her financial position was the poorest.
Grant of Legal Aid
None of the parties was legally aided in these proceedings.
The conduct of the parties to the proceedings
In considering the conduct of the parties to “the proceedings” the Court is limited to their conduct in these proceedings. The Mother’s submissions pressed various issues associated with the Father’s conduct in other related but separate proceedings in which the parties were or are involved. However, the limitation of this factor to “the proceedings” means that the parties conduct in other proceedings cannot be considered under s.117(2A)(c). Consideration of the parties conduct in other proceedings is discussed below in relation to s.117(2A)(g).
In its judgment in K and M (No. 1)[14] the Court made manifest its view that the Husband had not complied with the requirement to provide full and frank disclosure in respect of relevant matters, and therefore made orders for discovery. Although those orders were based on the conclusion that the Husband “may not have provided full and frank disclosure in respect of relevant matters”[15] subsequent proceedings made it apparent that full and frank disclosure had not been provided.
[14] [2007] FMCAfam 524.
[15] K and M (No. 1) at para 49 per Lucev FM.
An accurate summary of the manner of the Husband’s conduct of the proceedings appears in K & M (No 2):
“The Court simply has no confidence that if there is a future change in the circumstances of the Husband that he will not endeavour to use that change in circumstances opportunistically,[16] and that administrative and judicial resources would not be wasted in the same manner that they have been wasted in this case. This is a case which, with proper disclosure, ought to have been disposed of by this Court in one day. In the end, it took up five sitting days. The failure of the Husband to make proper disclosure, and his subsequent “drip feed” disclosures under cross-examination, together with his failure to make proper disclosure (on his own materials) to the Child Support Registrar make it desirable that the Husband not be allowed to waste precious administrative and judicial resources in like manner in the future. The Court also notes that in prior proceedings in PAK 2004 this Court was critical of the Husband’s then evidence of his own financial affairs and the financial affairs of P L, and described his evidence as vacillating in “an opportunistic way”.[17] It is clear that notwithstanding prior criticism, on three separate occasions, of the manner in which the Husband has given evidence and failed to fully disclose, that he has conducted himself in the same manner in this case, right to the end. In those circumstances the Court believes it is appropriate to restrain him from making him future applications for review or departure orders without the leave of the Court.”[18]
[16] See PAK v GDK [2004] FMCAfam 92 at para. 32 per Bryant CFM (“PAK 2004”) (footnote in original quote).
[17] PAK 2004 at para. 32 per Bryant CFM (footnote in original quote).
[18] K & M (No 2) at para 21 per Lucev FM.
In K and M (No. 2)[19] the Court dismissed the Husband’s application and restrained him from filing any further review or departure order applications with any Court having jurisdiction under the Child Support (Assessment) Act 1989 (Cth) without first obtaining leave of this Court. Further, the Court ordered that monies held by him in a cheque account be paid to the Child Support Agency in reduction of arrears of child support. Those orders reflected not only the Husband’s culpability but the nature of his conduct in these proceedings.
[19] [2007] FMCAfam920.
In the circumstances it is appropriate to conclude that, absent some other compelling factor, the Husband’s conduct alone warrants an order for the Former Wife’s costs of the entire proceedings to be paid by the Husband.
In K and M (No. 2)[20] the Court also ordered that an injunction restraining the sale, disposal, encumbrance or further encumbrance of the property held by the Current Wife be discharged. That injunction had been imposed by the Court earlier in proceedings to prevent the possible dissipation of assets. The Court had concluded that it was necessary to protect the asset concerned (a residential unit property) from possible dissipation at the hands of the Current Wife. Ultimately, in K & M (No.2) the Court concluded that the Current Wife had had not benefited from the receipt of funds and property from the Husband in such a way as to warrant the sale of the residential unit property.
[20] [2007] FMCAfam920.
In the Court’s view, the steps taken by the Former Wife were, in the context of the failure to disclose by the Husband, ordinary and appropriate steps to initially prevent the dissipation of an asset, and then to argue that it ought to be sold to recoup benefits provided to the Current Wife by the Husband’s dissipation of assets (instead of paying child support). The nature of the proceedings, and the way in which the information emerged (or did not emerge as the case may be) was such that this was not a case where it was appropriate to issue subpoenas and obtain discovery in the normal course from the Current Wife. The Court will therefore not draw any conclusion adverse to the Former Wife in relation to her conduct of the proceedings, which were, in the Court’s view, robust but fair and appropriate in all the circumstances.
The Current Wife’s conduct in the proceedings was, in the Court’s view, beyond criticism. She cooperated fully with the Court, often at short notice, and provided most of the financial information which ought to have been provided by the Husband. Her “candour was refreshing, and made her evidence believable”.[21] In those circumstances, the Current Wife’s conduct of the proceedings was such that no costs order ought to issue against her.
[21] K & M (No 2) at para 35 per Lucev FM.
The conduct of the proceedings by the Former and Current Wives in the manner that it is was conducted, was made necessary only, and entirely, by the Husband’s failure to provide full and frank disclosure throughout the proceedings. The Court has already expressed the view that, absent some other compelling factor, the Husband ought to pay the Former Wife’s costs of theses proceedings. That leaves the costs of the Current Wife. In the Court’s view the Current Wife would not have been drawn into these proceedings, or if so only to a relatively minor degree, if the Husband had provided full and frank disclosure. In those circumstances, the costs incurred by the Current Wife were incurred as a consequence of the conduct of the Husband in the proceedings. In the circumstances it is appropriate to conclude that, again absent some other compelling factor, that the Husband’s conduct warrants an order for the Current Wife’s costs in these proceedings be paid by the Husband.
Failure to comply with previous orders
The only failure to comply with previous orders in these proceedings was by the Husband who failed to fully and frankly disclose in accordance with the Courts orders of 26 July 2007. As noted above, the proceedings ought have been concluded in one day, but because of the failure of the Husband to fully and frankly disclose, both initially and subsequently (that is, by failing to comply with the order of 26 July 2007) these proceedings extended over a period of five days.
The failure to comply with previous orders is a fact which weighs in favour of a costs order against the Husband.
Whether any party wholly unsuccessful in the proceedings.
The Husband has been wholly unsuccessful in these proceedings.
The Former Wife was wholly successful in relation to those matters on which the Husband was wholly unsuccessful.
The Former Wife was initially successful in obtaining injunctive relief against the Current Wife, but ultimately the Current Wife had the interim injunction discharged, and defeated the application for sale of the residential unit property.
The Former Wife was also unsuccessful in relation to an application for lump sum child support.
As indicated above there is nothing in the proceedings as between the Former Wife and the Current Wife that warrants a conclusion that because of the relative success, or lack of it, of one of those parties or the other, that costs ought to be awarded against one or other of them. As between these parties the general rule that parties meet their own costs ought to pertain.
Once again, the Husband’s lack of success in these proceedings, and the reasons for that lack of success, weigh heavily in favour of a costs against the Husband in relation to these proceedings.
Offers
This is not a relevant factor in the present circumstances.
Other matters
Section 117(2A)(g) has been variously described as being:
a)“all encompassing” and an “independent source of discretion and its effect is not limited by the particular matters set out in the previous paragraphs”;[22] and
b)a provision which “could hardly … be expressed in wider terms”.[23]
[22] In the Marriage of AR & DJ Telfer (1996) 20 FamLR 619 at 621 per Lindenmeyer J, relied upon (but slightly, but not materially, misquoted) in C & C (No 2) at para 58 per Pascoe CFM.
[23] JJT CLR at 225 per Callinan J, HCA at para 126 per Callinan J.
Because paragraph (g) of s.117(2A) is not limited to “the proceedings” as paragraphs (a)-(f) are, and because of the width of its expression, it follows that, in an appropriate case, this Court might be able to consider the conduct of the parties in other related proceedings in determining whether to make a costs order.
The Husband has a history of failing to fully and frankly disclose to this Court and the Child Support Registrar in relation to child support proceedings. Again, those matters are adverted to above. In the circumstances, they are matters which weigh in favour of a costs order being made against the Husband in these proceedings.
There are no other matters which need to be considered in relation to the Former Wife and the Current Wife under this factor.
Costs – final consideration and quantum
The costs incurred by the Former Wife and the Current Wife in these proceedings were essentially incurred by reason of the Husband instituting and conducting the proceedings in a matter which resulted in him being wholly unsuccessful, and in circumstances where he failed to provide, notwithstanding orders of the Court (and previous criticism of him in previous proceedings by this Court) full and frank disclosure. Having considered all of s.117(2A) set out above, and having particular regard to the matters set out in relation to paragraphs (c), (e) and (g) of that sub-section, the Court considers that the circumstances justify the making of a costs order against the Husband in relation to the costs incurred by the Former Wife and the Current Wife in these proceedings.
Costs are to be assessed in accordance with Schedule 1 of the Federal Magistrates Court Rules 2001 which provide for the payment of professional expenses incurred and disbursements reasonably incurred.
The Court certifies under r.21.15 of the FMC Rules that it was reasonable to employ an advocate to appear for the hearings on 22 June 2007, 30-31 August 2007, 4 September 2007 and 1 October 2007.[24] The Court notes that the Husband was self-represented after the
22 June 2007hearing and that the Current Wife was only represented at the 1 October 2007 hearing. The Court notes that because of the manner in which the proceedings developed each of these hearings was essentially a separate hearing on discrete aspects of the matter, and will be treated as such for costs purposes.
[24] FMC Rules, r.21.16.
The Former Wife is entitled to:
a)Stage 5 amounts of $13,490.00 for preparation of a one day matter (22 June 2007 -$3195.00 but the hearing lasted for less than half a day), a two day matter (30-31 August 2007 - $3,905.00), a one day matter (4 September 2007 - $3195.00 – noting that the hearing was only listed for a half day and lasted less than two hours), and for a further one day matter (1 October 2007 -$3195.00);[25]
b)Stage 6 amounts of $6000.00 for solicitor’s attendance at the above hearings;[26]
c)Stage 6 amounts of $9000.00 for Counsel’s attendance at the above hearings; and
d)a further Stage 6 amount of $205.00 for the taking of judgment on 2 November 2007 and the explanation of orders,
being a total of $28,695.00.
[25] Costs for Stage 5 are based on the length of hearing prepared for: Pratt v Latta (No 2) [2002] FMCA 43 at para 8 per Driver FM; Ogawa v University of Melbourne (No 2) [2005] FMCA 1216.
[26] Costs for Stage 6 are based on the actual length of hearing: Pratt v Latta (No 2) [2002] FMCA 43 at para 9 per Driver FM.
The Current Wife is entitled to:
a)a Stage 5 amount of $3195.00 for preparation of a one day matter (1 October 2007);
b)a Stage 6 amount of $1500.00 for solicitor’s attendance at a one day hearing on 1 October 2007;
c)a Stage 6 amount of $2250.00 for Counsel’s attendance at a one day hearing on 1 October 2007; and
d)a further Stage 6 amount of $205.00 for the taking of judgment on 2 November 2007 and the explanation of orders,
being a total of $7150.00.
There was an application for payment of disbursements by the Former Wife. The Court will grant the application for the costs of various searches ($254.55) as being disbursements reasonably incurred. Counsel’s fees were claimed as disbursements. Counsel’s fees are dealt with by r.21.16 and Schedule 1 of the FMC Rules, and are therefore not claimable as disbursements.[27]
[27] Colan Products Pty Ltd v Luxton Pty Ltd & Anor (No 2) [2002] FMCA 90 at para 13 per Raphael FM.
There was an application for payment of disbursements by the Current Wife. The Court will grant the application for the costs of various searches and photocopying ($360.00) as being disbursements reasonably incurred. Otherwise, the disbursements claimed (including the Current Wife’s forgone wages) are not claimable as disbursements, or otherwise.
Both the Former Wife and the Current Wife will also be entitled to costs for their successful costs applications. A sum will be set under Rule 21.02(a) of the Federal Magistrates Court Rules 2001 for the preparation of written submissions on costs. In these circumstances the Court will set a sum of $300.00 as appropriate for the preparation of the written submissions on costs, which were quite detailed in both instances. Both the Former Wife and the Current Wife are entitled to an additional further Stage 6 amount of $205.00 for the taking of this judgment and the explanation of orders. Therefore, costs in the sum of $505.00 for the written submissions on costs and taking of the costs judgment will also be ordered for each of them.
Therefore, total costs in the sum of:
(a)$29,454.55 will be ordered to be paid by the Husband to the Former Wife; and
(b)$8015.00 will be ordered to be paid by the Husband to the Current Wife.
The Husband will be given 90 days to pay.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Lucev FM
Deputy Associate:
Date: 1 April 2008
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