Khoroushi & Kirk
[2024] FedCFamC1F 368
•30 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Khoroushi & Kirk [2024] FedCFamC1F 368
File number: SYC 6553 of 2018 Judgment of: BRASCH J Date of judgment: 30 May 2024 Catchwords: FAMILY LAW – COSTS – Where the mother sought orders that the father be liable for her costs either from the date she filed a Third Amended Initiating Application or when she filed her Case Outline for trial – Where final parenting orders were made by consent on Day Three of the trial – Where mother brings application for costs after orders made – Where no circumstances justify a departure from s 117(1) of the Family Law Act 1975 (Cth) – Each party to bear their own costs of the parenting proceedings Legislation: Family Law Act 1975 (Cth) ss 117(1), (2) and (2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13(3)
Cases cited: Anison & Anison [2019] FamCAFC 108; (2019) FLC 93–908
Caffyn & Caffyn [2018] FamCAFC 259
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Franklyn & Franklyn (No.2) [2021] FamCAFC 160
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Lenova & Lenova (Costs) [2011] FamCAFC 141
McAlpin & McAlpin (1993) FLC 92-411
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (Costs) [2014] FamCA 850
Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447
Yunghanns v Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 61 Date of last submissions: 1 May 2024 Date of hearing: On the papers Place: Sydney Counsel for the Applicant: Mr Fermanis Solicitor for the Applicant: Manning Lawyers Pty Ltd Counsel for the Respondent: Mr Scarlett Solicitor for the Respondent: All Ashfield Legal ORDERS
SYC 6553 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS KHOROUSHI
Applicant
AND: MR KIRK
Respondent
ORDER MADE BY:
BRASCH J
DATE OF ORDER:
30 MAY 2024
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed by the mother on 6 February 2024 is dismissed.
2.The parties bear their own costs of the parenting proceedings.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
INTRODUCTION
By an Application in a Proceeding filed 6 February 2024, the mother seeks orders that:
1.That the Respondent Father pays the Applicant Mother’s costs.
2.Costs.
Although it is not clear from the terms of the orders sought, order 1 must relate to the parties’ parenting dispute which settled on a final basis by consent on 17 January 2024 (“the parenting dispute”). The consent orders were proposed and made on the third day of an estimated five day trial. The mother's order 2 must relate to her costs of bringing her application for costs.
The parenting dispute concerned the parties' child, X born 2014.
The mother seeks costs on an indemnity basis either from the filing of her Third Amended Initiating Application on 25 August 2023 or, in the alternative, from the date of her Case Outline for the trial being 8 January 2024. She says, essentially, the father should have known his case would fail on the strength of either of those documents and ought have “capitulated”.
In her written submissions (but not her Application), the mother submitted at paragraphs 19 and 20:
The Applicant should pay the Respondent’s costs fixed in the amount of $156,494.00 or as agreed or assessed on the indemnity basis…
…The Mother has incurred the sum of $156,449.43 in costs since the filing of her Third Amended Initiating Application to the conclusion of the hearing…
In the alternate, the mother submitted at paragraphs 21 and 22 of her submissions:
Had the Father agreed to the Mother’s proposed orders, the Mother would have incurred substantially less than the sum outlined in paragraph 20 above. Alternatively, had the Father capitulated on receipt of the Mother’s Outline of Case Document (which he ultimately did mid-trial), the Mother would not have incurred approximately $92,000 in solicitor and counsel’s fees (being $40,040).
In the event that the Court makes the alternative order sought by the Mother, that sum sought are calculated as $80,000.
The father resisted the making of a costs order. In his Response filed 4 April 2024, he sought that “The Application in Proceedings filed 6 February 2024 be dismissed with costs” and that “The Applicant pay the Respondent's costs". The second order must relate to his costs responding to the mother’s costs application.
BACKGROUND:
The applicant mother is Ms Khoroushi, born 1973. The respondent father is Mr Kirk born 1969. The parties commenced cohabitation in 2013 and separated in September 2018. Both are retired public servants and both are on forms of income protection payments. The father has since remarried.
The parties litigated property and parenting disputes commencing in 2018 and concluding with final parenting and property consent orders on 4 April 2019.
This current round of litigation was initiated by the mother in August 2020, wherein she sought an order to change X’s last name from the father’s to hers. She subsequently abandoned that, but the parties were nevertheless then on a trajectory of acrimonious litigation.
Dr B, the Court Expert psychiatrist, provided a report in April 2022 wherein he made a provisional diagnosis for the mother of Factitious Disorder (formerly known as Munchausen by proxy) and raised concerns about the mother’s parenting capacity.
In her Third Amended Initiating Proceeding filed 25 August 2023 (the moving document by the time of trial), the mother sought orders, in summary, that: she have sole parental responsibility; the child live with her; and the child spend alternate weekends with the father (Friday to Monday) with some additional time in the school holidays and on special occasions. She sought similar orders in her Case Outline for trial.
In neither document did she propose any orders that required her to consult with the father or take his views into account for any major long-term issues for X, in particular for her future schooling and complex medical needs. It ought be uncontroversial to say the source of the parties’ main dispute was over X’s medical needs and diagnoses.
In a subsequent report of November 2023, Dr B resiled from his provisional diagnosis and concerns for the reasons stated in his report, after having benefit of a detailed history of treatment from Dr C (the child’s paediatrician at the time) and discussions with Ms D the child’s psychologist.
In his Amended Response filed 22 December 2023, the father sought orders, effectively in reverse: that he hold sole parental responsibility but he notify the mother of all such major decisions within 48 hours; the child live with him; and the child spend alternate weekends with the mother (Friday to Tuesday), half school holidays and time on special occasions.
Ultimately the parties proposed final orders that: the mother hold sole parental responsibility but with detailed provisions for the father’s involvement with respect to decisions concerning X’s health and her future schooling; her last name remain as is (that is, the father’s); the child live with the mother and spend time with the father on alternate weekends (Friday to Monday), half school holidays and special occasions; restraints on each party; orders for telephone contact; travel; passports; and parenting courses.
I made those orders by consent on a final basis as representing X’s best interests.
As is required by the Independent Children’s Lawyer (“ICL") grant of aid, his counsel applied for the ICL’s costs at the end of trial. This was opposed by both parents. Relevantly, I dismissed the application and said in part on an ex-tempore basis:
The parties have come a long way over these three days. The parties have of course, each of them, already spent a lot of money in legal fees but that is…you did that with your eyes wide open. I am alert to the fact the term of the grant for the ICL is to request costs. The costs are modest. In the circumstances though, I hope the parties will use today as the start of a new chapter. In circumstances where the parties are going to engage in separation courses (which I see is [E Organisation]) there might be costs to that.
I will not make a costs order in the ICL’s favour. I would prefer the parties to leave here with a skerrick of money that is going to be in their pockets. I accept the submission was made that ultimately money in their pockets is money that is available for [X]. So, the two of you, if there’s any question about costs for parenting courses, you’ve got the money now.
The application is dismissed.
Despite my hopes that the consent orders would “start a new chapter” for the parties, the mother – as she is entitled under r 12.13(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – has brought an application for costs.
The mother also has an outstanding application to set aside final property consent orders pursuant to s 79A of the Family Law Act 1975 (Cth) (“Act”). But that is a matter for another day and likely another judicial officer.
Material - costs
In relation to her costs application, the mother relied upon the documents listed in her Written Submissions filed 16 April 2024:
·Application in a Proceeding filed 27 February 2024 – it was actually filed 6 February 2024;
·Affidavit of Ms Khoroushi filed 27 February 2024 (she had filed an affidavit of her solicitor on 6 February 2024 to accompany the Application, but did not rely upon that in her Written Submissions); and
·The father’s Amended Response to Initiating Application filed 22 December 2023 for the trial.
Although not listed in her submissions, the mother also filed a Financial Statement on 27 February 2024 to which I have had regard.
The father relied upon:
·Response to an Application in a Proceeding filed 4 April 2024;
·Affidavit of Mr Kirk filed 4 April 2024; and
·Financial Statement filed 4 April 2024.
The father also filed Written Submissions on 1 May 2024.
On 7 February 2024, I made orders that upon the filing of material, the parties were thereafter to advise Chambers whether they wished to proceed by way of written submission or oral appearance. In the event the parties were not agreed on the mode of proceeding, I ordered the matter would be listed for oral hearing on a date to be fixed.
On 10 April 2024, each party advised the Court, via emails to Chambers, of their consent to have this application determined in Chambers by way of written submissions. On 11 April 2024, I made an order for filing written submissions.
LEGAL PRINCIPLES
Section 117(1) of the Act provides that each party will bear their own costs. That general rule is subject to s 117(2), which provides that a court may make such order for costs as it considers just if “…the court is of opinion that there are circumstances that justify it in doing so…”.
It has been held that “on a natural reading of s 117(2) of the Family Law Act, this Court’s jurisdiction to order costs is unlimited” (McAlpin & McAlpin (1993) FLC 92-411, at 80,215 per Nicholson CJ and Maxwell J).
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the Court may give such weight as it considers appropriate to any relevant factor (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]).
It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient: Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123 at [41]. Section 117(2A)(g) is “expressed in the most ample terms. It permits the Court to have regard to ‘such other matters as the Court considers relevant’” (Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44 at [37] per Kirby J).
An order for indemnity costs – as the mother seeks – is a significant departure from the normal standard and requires something exceptional (Harris & Dewell (No 2) (2018) FLC 93-863 at [23]-[25]).
In the well-settled authority of Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (“Colgate-Palmolive”) Shepherd J provided some examples of circumstances that might justify the awarding of indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision those examples:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts…
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c)Evidence of particular misconduct causing loss of time to the court and to other parties…
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…
(e) An imprudent refusal of an offer to compromise.
That said, the categories of circumstances which enliven the discretion to award indemnity costs are not closed (Yunghanns v Yunghanns (2000) FLC 93-029 at [31]).
I now turn to the s 117(2A) factors that are to be considered when contemplating whether there are justifying circumstances to make a costs order as between the mother and father.
Has the mother established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in her favour
The mother’s submissions focused on ss 117(2A)(e) and (g) of the Act. The father’s submissions looked at ss 117(2A)(a), (c) and (e). Subsections 117(2A)(b), (d) and (f) were not raised and are not relevant.
(a) the financial circumstances of each of the parties
The mother deposed to possessing $205,000 in the bank, a car worth $60,000, contents of $30,000 and a vehicle and equipment worth $15,000. She receives $1,345 per week gross in income protection insurance payments.
The father deposed to owning a home and investment property but has sold the former and moved (with his wife) to the latter. He also deposed to receiving almost $1,900 gross per week in income protection payments and Workcover. His wife earns similarly. He deposed to assets of $1,210,000, liabilities of about $250,000 and superannuation of $475,000.
The father is in a stronger financial position than the mother and is not impecunious; but indigence is no bar to making a costs order (Lenova & Lenova (Costs) [2011] FamCAFC 141).
Both parties have had the costs of litigation including this costs application and the mother still has a s 79A application outstanding which will cost the parties more. I have no idea what will be the outcome of those proceedings.
(c) the conduct of the parties
The father complains that the mother delayed the matter by getting an adversarial report which was ultimately not tendered in the 2024 trial. He also complains the trial was not heard in late 2022.
There could be all sorts of forensic reasons why the report was not tendered. Moreso, had the trial been heard in late 2022, Dr B’s provisional diagnosis of the mother would have loomed large. His updated report resiling from that in November 2023 would not have been in evidence. There was therefore a possibility that the state of the evidence back then could have rendered an injustice to all parties and ultimately X.
Nothing turns on the father’s complaints.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The mother places significant reliance on this subsection submitting the father was “wholly unsuccessful”. I do not agree.
This subsection calls for consideration of whether a party has been wholly unsuccessful in the proceedings; not whether a party has been wholly unsuccessful in prosecuting his or her particular application (Anison & Anison [2019] FamCAFC 108; (2019) FLC 93–908 at [37], [42] and [43]; Franklyn & Franklyn(No.2) [2021] FamCAFC 160 at [27]–[28]). In this matter, the “proceedings” comprised a cause of action for parenting orders under Part VII of the Act.
I do not accept the mother’s submissions that seem to be submitting to the contrary. The focus is not on the failure of the father’s response, rather upon the overall result he achieved in the proceedings.
The mother sought an order that she have sole parental responsibility with no mention of consulting the father in either her Case Outline or Third Amended Initiating Application. However, the consent order contains extensive orders about schooling and medical matters and require the mother to consult the father about such major long term issues, albeit she is the decision maker. Given the father’s complaints about medical issues, this was a significant gain for him moving from no involvement or say on the mother’s Application and Outline, to being consulted and informed.
The father now has an order about the child’s name, which will remain as his last name. True the mother abandoned her original Initiating Application to change X’s last name, but with sole parental responsibility the mother cannot now change the child’s name as she had previously wanted to do. This is another significant gain for the father.
The mother also sought orders in her Case Outline that both parents could attend sporting and extra-curricular activities irrespective of whom the child was living/spending time with. However, the father sought an order in his Amended Response to the effect that parties could only attend sporting and extra-curricular activities if X was in their care. The consent orders do not provide for the any-parent-any-time approach of the mother. Rather, the parents can only attend such events when X is in their respective care.
The mother did not seek communication orders between the child and father in her moving document or Case Outline for trial, but the consent order provides for liberal communications.
Looking at these examples, then standing back and looking at the overall result, it cannot be said that the father was wholly unsuccessful in the proceedings. Put another way, if the father had just signed the mother’s orders in her Third Amended Initiating Application or Case Outline (as the mother submits he ought), he would have little information about X’s education and medical issues and not even the opportunity to require the mother consult with him. With sole parental responsibility, the mother too could have changed the child’s last name from the father’s to hers without reference to him. On the mother’s orders, attendance at extra-curricular activities would have been a free-for-all and no provision for communications.
(g) such other matters as the Court considers relevant
The mother submitted that if I was against her on the “wholly unsuccessful” categorisation then I ought consider that the orders were “heavily” in the mother’s favour. I do not agree with that characterisation for the reasons just given.
The mother also submitted under this sub-section that the father “capitulated” on day three of trial and the father had thus wasted the Court’s time and resources and the mother’s time and money pursuing an application that “eventually went nowhere”. In that vein, it was submitted the father acted “entirely unreasonably”.
It is ironic that the very thing the mother sought to do in starting proceedings again (change the child's last name) was abandoned by her, yet she is critical of the father's conduct of litigation and not “capitulating” to her Third Amending Application or trial Case Outline.
Had the father “capitulated” to either of those documents, the overall outcome for the father (and ultimately the child) would have seen him disenfranchised from, for example, information about and input into decision making for X. My analysis of the overall outcome under the heading “wholly unsuccessful” sets out some examples of an overall result more favourable to the father (and child) than the mother’s two documents which she submitted he should have just signed. Hence, I do not consider the father wasted the Court’s time and resources or the mother’s time and money.
In her submissions, the mother rhetorically asked, “what changed” between the mother’s Third Amended Initiating Application and her Case Outline, and, the father’s asserted “capitulation”. The mother answered the question in the negative – nothing changed. I do not accept that. Cross-examination of various witnesses took place and some evidence was tested. The consent order came after the mother’s case closed and the father was in cross-examination. The parties spent a full day negotiating, with my permission for the father’s legal representatives to engage with the father at the end of day two. Proposed Consent Orders were placed before the Court for consideration about 6:30 pm on day three of trial.
I therefore do not accept the mother’s submission that the father conducted his case in an unjustified or unreasonable manner. Further, I conclude that the father did not in fact capitulate as that word is understood to mean surrender or accepting defeat.
I do not accept the mother’s reference to Caffyn & Caffyn [2018] FamCAFC 259 assists her application for costs. That was about an appeal that was discontinued. The father did not discontinue his case. Instead, both parties compromised – no doubt assisted by the ICL – and put a set of proposed final consent orders before the Court, which I determined were in X’s best interests.
Finally, under this subsection, the last thing X needs is for one party to “one-up” the other with an order for costs. The parties started litigating about X in 2018 when she was four. She is now 10 years old.
DISPOSITION
I start with the costs sought by the mother in the parenting dispute. The mother has failed to persuade me that there are circumstances that justify making an order for costs in her favour. For the reasons given, the father was not wholly unsuccessfully nor were the orders “heavily” in the mother’s favour. I also do not consider he “capitulated” to the mother’s demands or pursued an application that “eventually went nowhere”.
I now turn to the parties’ competing applications for costs of the mother’s application for costs. Neither party made any real submissions about this, if at all.
I do not consider s 117(2A)(c) (the conduct of the parties) to be relevant. However, the mother has been wholly unsuccessful in the outcome of her application for costs (s 117(2A)(e)). Yet when I look at subsection (g), I repeat what I said above - the last thing X needs is for one party to “one-up” the other with an order for costs in their favour.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 30 May 2024
0
8
2