Lazzari & Lazzari (No 2)
[2023] FedCFamC1F 585
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lazzari & Lazzari (No 2) [2023] FedCFamC1F 585
File number(s): PAC 3217 of 2019 Judgment of: HANNAM J Date of judgment: 28 July 2023 Catchwords: FAMILY LAW – COSTS – Where the mother seeks that the father pay her costs on an indemnity basis – Consideration of applicable principles – Where the father misled the Court whilst conducting his case – Where the father was wholly unsuccessful in his parenting application – Where no costs agreement was provided pursuant to the Rules – Where r 12.13(4) dispensed with – Where a portion of costs sought awarded on an indemnity basis. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.08, 12.13, 12.17, 12.28
Cases cited: Albert v Plowman [2022] FedCFamC1F 243
Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No. 2) (2010) FLC 93-435
Gabaldon & Gabaldon [2015] FamCAFC 59
Gaber & Akhtar (No 2) [2021] FamCA 147
Hawkins & Roe (2012) [2012] FamCAFC 77
Joyce & Fante [2013] FamCAFC 141
Legal Aid ACT v Westwell (2021) 62 Fam LR 54
Mansfield and Ors & Mansfield and Anor (2019) FLC 93‑920
PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311
SCVG & KLD [2017] FamCAFC 95
Senfl & Blee [2017] FamCA 901
Yanez & Yanez [2021] FamCA 148
Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 92 Date of last submission/s: 2 May 2023 Date of hearing: In chambers Place: Parramatta Counsel for the Applicant: Mr Zmood Solicitor for the Applicant: Ark Law Lawyers Counsel for the Respondent: Mr Roberts Solicitor for the Respondent: Barkus Doolan Winning Counsel for the Independent Children's Lawyer: Mr Maddox Solicitor for the Independent Children's Lawyer: Legal Aid NSW Parramatta Family Law ORDERS
PAC 3217 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LAZZARI
Applicant
AND: MS LAZZARI
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
HANNAM J
DATE OF ORDER:
28 July 2023
THE COURT ORDERS THAT:
1.The father pay 60 percent of the costs of the mother on an indemnity basis fixed in the sum of $164,662.34, with such costs to be paid within 28 days of the date of these orders or as otherwise agreed between the parties.
2.With the consent of the mother, the mother shall pay the balance of her share of the Independent Children’s Lawyers’ costs being $5,122.25.
3.All outstanding applications are hereby finalised.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Lazzari & Lazzari has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HANNAM J:
INTRODUCTION
At the completion of parenting proceedings, the respondent mother (“the mother”) made an application that the applicant father (“the father”) pay her costs of those proceedings on an indemnity basis. In the alternative, the mother seeks an order that the father pay her costs on a party/party basis. The father opposes the mother’s application and seeks that it be dismissed.
The Independent Children’s Lawyer (“ICL”) also made an application that the mother pay a half-share of the ICL’s costs in the proceedings, noting no application was made that the father share the ICL’s costs as he had received a grant of legal aid. The mother initially indicated that she opposed such application, but later indicated that she consents to such an order being made.
The question for me to determine is whether there are circumstances that justify departing from the usual rule that each party shall bear his or her own costs, and if so, whether these circumstances are so exceptional to justify that an order be made that the father pay the mother’s costs on an indemnity basis.
BACKGROUND
The parenting proceedings concerned the parties’ three children (“the children”), being a son (now aged seven) and twin daughters (now aged six).
The parties separated on 16 June 2019 when the mother left the family home with the children after becoming aware through the discovery of a second phone that the father was participating in extra-marital sexual activity and drug use.
The following month on 9 July 2019, the father commenced these proceedings seeking both parenting and property orders.
On 8 August 2019 orders were made by consent for the father to be restrained from consuming non-prescription or prescription drugs within 24 hours of the children spending time with him and that he undergo hair testing every three months and weekly urinalysis to monitor his substance misuse. Pursuant to those orders, the children initially spent time with the father under professional supervision which subsequently became supervised by paternal family members.
On 20 December 2019 orders were made with the parties’ consent to finalise the property proceedings and as a result, the mother retained the former family home.
The father conceded in his trial affidavit filed shortly before the final hearing that he recommenced using illicit substances in December 2019 or March 2020. The mother was unaware at the time that the father had recommenced his illicit drug use as the father purported to have been complying with orders for monitoring his substance use and had provided to the mother drug test results which indicated he was drug free. The father continued to maintain throughout 2020 that he remained drug free and throughout this period continued to provide test results to the mother in January, April, July and October 2020 which all indicated that he was negative for any drugs.
On 18 January 2021 orders were made with the consent of the parties for the appointment of a Court Appointed Expert (“the expert”) and an ICL, and the requirement that the children’s time with the father be supervised was removed. At the time, it was the understanding of the mother, the ICL, and the Court that the results of the purported drug tests provided by the father over the previous 12 months accurately reflected that he was not engaging in substance misuse during this period. Although supervision was dispensed with pursuant to the 18 January 2021 orders, the father continued to undergo hair testing for the purposes of monitoring his illicit and prescription drug use every three months as he remained bound by earlier orders.
After records of a sexual health centre attended by the father (“the sexual health centre”) were produced on subpoena, the father made arrangements with the sexual health centre that his name be changed so that he could undergo testing (for sexually transmitted infections) and provide information about his sexual activities and drug use anonymously in the future. The father provided further identity details and started a new medical record at the centre under a new name and requested that the records under his correct name and the new name not be linked. As a result of changing his name for these purposes and not advising the mother or ICL of the changed name at any time, complete records from that centre were unable to be obtained.
In May 2021 the family attended upon the expert for the purposes of assessment and the expert’s report was released at the end of June 2021.
Orders were made on 23 December 2021 (“the December 2021 orders”) following the expert’s recommendation that the children commence spending one night per month with the father from 3 January 2022 which was to increase to one night per fortnight from July 2022.
The father continued to provide the mother results of purported hair follicle tests. However, around this time the mother was concerned about some of the father’s conduct and as he had failed to avail himself on numerous occasions of the children’s time with him due to claimed health difficulties. As a result, the mother raised concerns through her solicitors about the father’s compliance with court orders and his general reliability with respect to the children, but she was reassured by the father’s solicitor that the father was drug free, and that he relied upon his ongoing drug testing in this regard.
On 23 February 2022 trial directions were made to ready the proceedings for final hearing.
On 29 April 2022, the father’s solicitor provided to the mother’s solicitor the results of a urinalysis test which indicated the presence of an adulterant. On 2 May 2022 the mother’s solicitor sent a letter to the father’s solicitor advising of the mother’s concerns regarding the veracity of this test.
On 10 May 2022 the day before the parties were due to appear for a compliance check, the father filed an Application in a Proceeding seeking a certificate pursuant to s 128 of the Evidence Act1995 (NSW) (“the Evidence Act”)[1] in relation to proposed evidence concerning his compliance with orders for monitoring his drug use. At this stage, the father had not filed his trial affidavit in accordance with trial directions.
[1] The Court may issue a certificate pursuant to s 128 of the Evidence Act 1995 (NSW) and any evidence given by a person in respect of which a certificate issued under this section has been given cannot be used against the person.
At the compliance hearing on 11 May 2022, the matter was listed for a one day final hearing on 22 August 2022 to be heard undefended against the father due to his non-compliance with trial directions orders. The dates of 5-7 September 2022 were also set aside in the event that the hearing did not proceed undefended on 22 August 2022. The father’s application for a certificate under s 128 of the Evidence Act was also adjourned to the hearing date on 22 August 2022.
On 27 May 2022 leave was granted to the parties to inspect the documents produced on subpoena by the various pathology laboratories that the father had purported to have attended since September 2019. It became apparent that the father had not undertaken drug testing as he represented to the mother, and that he had in fact only undertaken a single hair follicle test pursuant to the August 2019 orders in September 2019.
On 22 August 2022 the proceedings came before me for final hearing. On the father’s application, for Reasons given ex tempore, the order that the proceedings be heard undefended was discharged and the final hearing was adjourned to 5-7 September 2022, the dates which had previously been reserved for that purpose. At this court event, the father’s application for a certificate pursuant to s 128 of the Evidence Act was also withdrawn and dismissed. With the consent of the parties, orders were made on a final basis that the mother have sole parental responsibility for the children and the children live with her. On the mother’s application, for Reasons given ex tempore, an order was also made suspending all interim orders with respect to the children’s time with the father.
The matter was listed for a defended final hearing before me on 5-7 September 2022 in relation to parenting matters only.
Final orders were made and Reasons for Judgment (“the final judgment”) was delivered on 18 April 2023.[2] In summary, the mother was wholly successful in her application as orders were made as she proposed including that the children spend no time with the father and have no contact with him, other than through the receipt of cards, letters and/or gifts on the children’s birthdays and Christmas. Injunctions under s 68B of the Family Law Act 1975 (Cth) (“the Act”) were also made as proposed by the mother restraining the father from approaching the children at various locations including school and extra-curricular activities.
[2] Lazzari & Lazzari [2023] FedCFamC1F 286.
THE COSTS APPLICATION
Upon the delivery of the final judgment and final orders on 18 April 2023, it was noted that both the mother, who had made an application for the father to pay for her costs in these proceedings, and the father consented to the mother’s application for costs to be dealt with in chambers upon the receipt of written submissions.
The mother seeks in her application, an order that the father pay her costs for the proceedings on an indemnity basis and this sum be paid within 28 days in a fixed sum to avoid any further wastage of time and expense in having the costs assessed and in enforcing any such order.
In relation to the quantification of her costs, the mother relies upon a Notice as to Costs filed on 24 October 2022 pursuant to Rule 12.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). That Notice provided an estimate of total costs and disbursements of $320,241.53. In submissions made on the mother’s behalf, it is stated that the total legal costs including counsel’s fees incurred by the mother throughout the proceedings was $323,973.23. It is also noted in the submissions that as the mother incurred $49,536 prior to the finalisation of the financial proceedings, she is only seeking an order in respect of her costs incurred after the financial proceedings were finalised being $274,437.23.
In the event that the Court does not make an order that the father pay the mother’s costs on an indemnity basis, the mother seeks the sum of $91,479.08 to be paid which I understand to be her party/party costs. She seeks an order that this sum be paid in monthly instalments of $1,905.81 over a period of 48 months.
The father resists the mother’s costs application on the basis that such an order if made will cause a significant impact on his financial circumstances and will consequently impact his ability to support himself. The father further submits that there will be no significant disadvantage to the mother if she is required to bear her costs of the proceedings.
THE LAW AND DISCUSSION
The Rules
Chapter 12 of the Rules sets out the rules with respect to costs. They are summarised as follows:
(a)Legal costs must be incurred fairly, reasonably and proportionately and must be fair, reasonable and proportionate in amount.[3]
(b)To seek indemnity costs, a party is required to inform the court if the party is bound by a costs agreement, and if so, the terms of such agreement.[4]
(c)The method of calculation is governed by the Rules.[5]
(d)The Court may certify that it was reasonable to engage Senior Counsel.[6]
[3] Rule 12.08.
[4] Rule 12.13.
[5] Rule 12.17.
[6] Rule 12.28.
The Law
Applications for costs in this Court are the exception to the rule. Section 117(1) of the Act sets out the general rule as being that each party is to bear his or her own costs. That principle is, however, subject to subsection (2) which gives the Court the discretion to make an order for costs if there are circumstances that if in the opinion of the Court, justify such an order. Any such order for costs is to be pursuant to s 117(2) “as the Court considers just”.
The High Court in Penfold v Penfold[7] indicated that the circumstances justifying an order for costs need not be exceptional but they must, of themselves, be sufficient to justify the making of such an order. Therefore, there is no additional or special onus on an applicant seeking an order for costs other than the Court finding justifiable circumstances to make such an order.
[7] (1980) 144 CLR 311.
Section 117(2A) of the Act sets out the relevant matters, if any are applicable, to which the Court is to have regard in considering an order for costs. The matters relevant in this case are considered below.
The financial position of each of the parties to the proceedings
The father’s financial position
The father contends that he is under significant ongoing financial strain due to the cessation of his employment in 2022. He submits that he has received Centrelink benefits, has meagre savings, does not own a house and currently lives in rental accommodation. In his written submissions, the father submits that he has incurred legal costs in excess of $100,000 as at 11 May 2022, after which he subsequently became unrepresented. The father files no evidence in respect to his current financial circumstances and his alleged inability to pay the mother’s costs in the proceedings if such an order were made.
Although the father annexes to his written submissions a statement from Centrelink which indicates that he received payments from that agency between July and September 2022, these records are not current. He also annexes a bank statement indicating a balance of $2,318.98 in that account as at 5 April 2022. As noted by the mother in submissions made on her behalf, a single bank statement for a period of a few days in April 2022 is of little evidentiary value.
In his Financial Statement filed on 19 April 2022 for the purposes of these proceedings, the father deposes that he owned the following property:
·Funds in a bank account of $11,261;
·Shares in a managed share fund to the value of $190,220;
·Household contents to the value of $10,000;
·A car valued at $26,000; and
·A superannuation interest valued at $437,696.
It is submitted on the mother’s behalf that the father has not filed tax returns as required for the last two tax years and that he is currently employed. She asserts that she is aware of the father’s employment in a public service role and the father’s social media account. Her contention that the father is now employed is consistent with the father’s evidence under cross-examination in the proceedings that as at September 2022, he was expecting to soon secure employment, and his evidence under further examination-in-chief during the final day of the hearing in October 2022 that his employment status had changed and that he was then employed. The father agreed that as his employment status had changed, he intended to pay the outstanding amounts owed to the mother in child support.
Under cross-examination, the mother gave evidence that the father was in arrears of child support in the amount of $5,500.00 at that time, and the father also agreed in oral evidence that he was in arrears for child support.
The mother submits that as at 1 May 2023, the father was in arrears of $680.26. The mother’s assertion in her submission that the father’s arrears were $680.26 as at 1 May 2023 (that is reduced from $5,500 at final hearing) is consistent with the father’s evidence that he had the intention to, and would have the capacity to, make the necessary payments to eliminate his arrears. As it is likely that there are little, if any, arrears outstanding then the father is also likely to have funds available that can be applied to a costs order if made. The father has been well paid in previous similar positions to the one he now holds.
In summary, although the father does not rely on any evidence concerning his current financial position, evidence filed previously and given orally in September 2022 and the foregoing submissions from the mother, lead me to be satisfied that the father is not impecunious and does have some capacity to pay and satisfy an order for costs should such an order be made.
The mother’s financial position
It is submitted on the mother’s behalf that as at 1 May 2023, the mother’s average weekly gross income is $1,297.65, and she receives $98.97 gross per fortnight from the single parenting payment and Family Tax Benefit. Her Financial Statement filed on 16 March 2022 states that she earns $1,712 as her average weekly gross income including $111 and $74 from the single parenting payment and Family Tax Benefit. In her Financial Statement she also deposed that the father is to pay $680 per week for child support.
The mother provides submissions as to the current balance of bank accounts held by her, although she did not provide any evidence to support those submissions. On the basis of her Financial Statement, the balance of bank accounts held by the mother at that time was $25,954, she held shares in the amount of $21,897 and owned a car valued at $30,000.
It is submitted on behalf of the father that the mother is in a superior financial position to him as a result of the property settlement orders.
The mother notes in her written submissions that pursuant to the 20 December 2019 orders made by consent, she was directed to pay the father an amount of $190,000. She submits also that although she retained the former family home as part of the property settlement, she was only able to do so by entering a loan agreement with her parents in the amount of $520,000 in order to discharge the loan secured against the property. The mother further submits that she was forced to borrow funds from family members to pay the entirety of her legal fees, being the amount of $323,973.23.
On the basis of the available evidence which is somewhat dated, I am satisfied that the mother is not in a superior financial position to the father as he contends and accepts that she was required to borrow funds from her family members to meet her legal expenses which are significant.
I consider for all of the reasons set out in this judgment, that the circumstances justify the making of a costs order against the father. As indicated, I am not satisfied that he is currently impecunious or in such strained financial circumstances that he cannot bear an order that he pay the mother’s costs in the proceedings. In any event, impecuniosity is no bar to the making of an order for costs where other circumstances together render it appropriate,[8] which in my view is the case in these circumstances.
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
[8] D & D (Costs)(No. 2) (2010) FLC 93-435.
The father has been in receipt of assistance from legal aid at some stage in these proceedings. The father annexed to his submissions a letter from the Grants Division of Legal Aid NSW which provides that his grant commenced on 28 September 2021.
On 18 July 2022 the father filed a Notice of Address for Service indicating that he had become unrepresented. No Notice of Intention to Withdraw or Notice of Ceasing to Act was filed. On 8 August 2022 the father’s new legal representative filed a Notice of Address for Service and this firm represented him at final hearing. The letter annexed to the father’s submissions is dated 5 October 2022 and addressed to the new legal representatives, so it can be inferred that the father was represented pursuant to a grant of legal aid.
At final hearing, there was some debate about whether the father was in fact in receipt of a grant of legal aid and the ICL suggested in submissions that the father was assigned legal representation pursuant the Family Violence & Cross-Examination scheme provided by Legal Aid NSW for litigants who are prevented from personally cross-examining the other party as a result of an order made under s 102NA of the Act.[9] However, no order was made banning the father from personally cross-examining the mother and it must be assumed that the father was represented at the final hearing through a grant of legal aid under the general scheme.
[9] Such an assignment does not fall with the definition of “legal aid”. See Legal Aid ACT v Westwell (2021) 62 Fam LR 54.
The mother has been privately represented throughout the proceedings.
To the extent that the father’s receipt of legal aid (while the mother was privately represented) may indicate his limited financial circumstances, I do not consider it a weighty matter in this application. The father had secured employment at the end of the final hearing and on the basis of his qualifications and past employment, it may be assumed that he is currently well remunerated as he has been in past similar positions.
The conduct of the parties to the proceedings in relation to the proceedings
It is submitted on behalf of the mother that the father engaged in deceptive and dishonest conduct in relation to the proceedings through falsifying drug tests and lying to the Court, her solicitors, the expert, and his treating psychologist about his misuse of substances. For the purposes of the parenting proceedings, I was satisfied as the mother contended that these actions placed the children at a risk of harm in the care of the father. For the purposes of this costs application, the mother also contends that it resulted in her incurring significant legal costs.
Although it is submitted on the father’s behalf that he made all reasonable efforts to comply with procedural orders and directions this is not correct as the father failed to file his trial affidavit in accordance with trial directions. Moreover, there was no dispute at the final hearing that he had not complied with particularly significant orders in relation to monitoring his drug use, but rather engaged in deceptive and dishonest conduct in relation to those orders for virtually the entire time they were in place.
Pursuant to orders made by consent on 8 August 2019, the father was required to undertake hair follicle tests for illicit and prescribed drugs at three monthly intervals and to undertake random supervised urinalysis at other particularised times during the proceedings. Although the father provided the mother test results that indicated he was drug free since September 2019, it subsequently came to light that all of these test results had been falsified and that he had not undergone any testing in accordance with court orders as required. The father ultimately admitted to some drug use following August 2019 and I was satisfied for reasons given in my final judgment that he had engaged in significant drug use for most of the time that the proceedings were on foot.
The recommendations made by the expert in these proceedings and the opinions expressed by the father’s treating psychologist were made on the basis of the father’s self-reported sobriety which was supported by his purported test results that were consistently negative. In the course of the proceedings, the mother, the ICL and the Court were misled in relation to the father’s drug use by the false test results. As a result, the mother and ICL consented to orders over time for a progressive increase in the children’s time with the father and that supervision be dispensed with.
Both the mother and the father had run their cases up until final hearing on the basis that the father had been abstinent from drug use after the parties’ separation in 2019 relying upon the drug test certificates produced by the father. The father did not however file his trial affidavit in accordance with trial directions and at about the time this affidavit was to have been filed, the mother issued four subpoenas to the drug testing service providers which revealed that he had not undergone the tests as he had purported.
Although the father’s trial affidavit was silent as to his falsification of the drug test results, under cross-examination he admitted that he had created the false test results and provided them to the mother knowing she would rely on those results to be reassured that he was not taking drugs.
It is clear that the father knowingly ran his case on a false premise and that it was not until cross-examination at final hearing that he agreed that he manipulated the expert and his treating psychologists into believing he was drug free.
The father also made arrangements with the sexual health centre from which he received treatment, for his name be changed so that he was able to receive treatment under a different name which was unknown to the mother or the ICL. He also requested that his new records not be linked to his correct name. These matters were only revealed under cross-examination of the father at final hearing. As a result of the father’s actions, subpoena directed to the sexual health clinic did not result in records being produced under his additional name. Documents produced by the sexual health centre include information given by the father (earlier in proceedings) concerning his drug use and sexual activity, both matters relevant to the Court in the parenting proceedings. I was satisfied in the substantive proceedings that the father had deliberately made the arrangement for his name to be changed to prohibit the mother and the Court from receiving all relevant information in relation to his conduct related to risks that he poses to the children.
I accept the mother’s submission that through his engagement in the foregoing conduct, the father prohibited her and the Court from finding relevant information in relation to his drug use during the proceedings, despite the risks that this conduct poses to the children.
The father does not address these matters at all in submissions made on his behalf.
In my view it is clear that the father actively sought to deceive the mother and the Court in these proceedings, and showed a blatant and wilful disregard for known facts concerning his drug taking and sexual behaviours in order to obtain a favourable outcome in the parenting proceedings. The significance of this deception is exacerbated by the fact that it was the mother who brought the father’s deception to light and it was not until the final hearing in September 2022 that the father first admitted he had been actively misleading the parties, the experts and the Court for over two and a half years.
Although the mother’s application for costs is not framed in this way, I am satisfied that the father’s deception caused her to incur additional costs related to his various applications for the children’s time with him to increase which each resulted in court events albeit that they were resolved by orders made with the parties’ consent. Had it been known that the father continued to use illicit drugs and pose a risk of harm to the children following separation, it is highly unlikely that recommendations would have been made for the children’s time with him to increase. If these facts were revealed earlier it is also likely that a parenting arrangement in which the mother holds sole parental responsibility for the children and that they spend no time with the father would have been agreed to at a much earlier stage in the proceedings without the necessity for the mother to prepare her case for final hearing, including by engaging counsel.
Further, it was the mother’s actions and expenses incurred by her that brought the father’s dishonesty to light. At around the time that the father was required to file his trial affidavit in accordance with trial directions, the mother became suspicious about the veracity of the drug tests that he had produced and issued four subpoenas to the drug testing service providers which revealed that the father had not undertaken the testing as he purported. The father’s affidavit, which was filed shortly before the commencement of the trial was silent in relation to his fabrication of test results and this was ultimately only admitted under cross-examination.
Had the father not engaged in the deceptive conduct for a lengthy period of time or admitted his falsification of the drug test results at a much earlier stage than under cross examination at final hearing, the hearing itself would inevitably have focused on very limited genuine matters of dispute between the parties or there may not have been any need for a final hearing at all. As ultimately admitted by the father under cross-examination, as a result of creating false drug testing results he manipulated the expert, his treating psychologist, the mother and the Court for a lengthy period of time and suggested that the mother had been unreasonable or had exaggerated her concerns about the risks he posed to the children. As a result, the mother was required to incur additional costs to meet a case that the father ultimately was unable to maintain. On this basis, I am satisfied that the father’s conduct and failure to comply with orders of the Court caused the mother to incur additional and unnecessary costs.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
In addition to the father’s failure to comply with the orders for monitoring of his drug use, it is also submitted on the mother’s behalf that he failed to comply with various other orders including his ongoing requirement to attend upon his treating psychologist, orders in relation to changeover on at least one occasion, orders in relation to his communication with the mother and the use of social media. However, it is not submitted on the mother’s behalf that these actions of the father led to any other proceedings or are otherwise relevant to this costs application.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The mother submits that considerable weight in this costs application should be attached to the fact that final orders were made as she sought in the parenting proceedings. The father does not address this matter in submissions made on his behalf.
At final hearing, the mother proposed orders that she have sole parental responsibility for the children and that the children live with her and have no contact with the father except by way of receiving cards, letters and gifts on birthdays and Christmas. The father at final hearing sought orders for a graduated increase in the children’s time with him commencing with supervised time with his family members for a period of three months with an endpoint of unsupervised time. Ultimately orders were made as sought by the mother, which were in similar terms to the orders sought by the ICL. The mother has been wholly successful in these proceedings and the father has been wholly unsuccessful, which I consider as a weighty matter in determining this application.
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
It is submitted on behalf of the mother that the parties attended three mediations throughout the proceedings. Firstly on 21 November 2019 where interim parenting arrangements were agreed, again on 2 November 2020, and finally on 1 October 2021 where no agreement was reached in circumstances where the father sought orders for the children to spent three nights per fortnight with him.
The Court is aware of formal offers made by the mother to resolve the proceedings that can be summarised as follows:
·On 5 August 2019 the mother offered that the children spend supervised time with the father in accordance with her interim application; and
·On 30 July 2021 it was the mother’s proposal that the children live with her and spend defined time with the father as recommended by the expert, including some after school and weekend time progressively increasing to each alternate weekend and on one midweek afternoon in the alternate week.
On 12 April 2022, the father made an offer to the mother for the children to spend time with him in a progressive arrangement culminating in three nights per fortnight in his care.
In summary, it appears that the mother was prepared to resolve these proceedings by consenting to orders that would have seen the children spend some significant defined time with the father which is more favourable to the father than the orders ultimately made. It may be considered fortunate that the dispute was not resolved by the father accepting one of these offers as when they were made by the mother, she was unable to accurately assess the central matter in dispute (being the risk the father poses to the children in relation to his drug use) due to the father’s deception at that time. The father must have been aware that the mother was making these offers based on false premises and must have known that in rejecting them he was making it inevitable that there be a final defended hearing which could only have led to an increase in the mother’s costs.
However, I cannot consider this to be a weighty factor in circumstances where the offers, if accepted, would have produced outcomes that placed the children at an unacceptable risk of harm. The resolution of these proceedings required a determination of the best interests of the children and in particular, the question of any risk posed by the father based on a correct understanding of the evidence.
Such other matters as the court considers relevant
Although the mother submits that the extent of the father’s deception is an additional matter to be taken into account in considering this costs application, I am satisfied that the deception has been sufficiently taken into account when considering other matters.
Indemnity costs
The mother is seeking that her costs for the parenting proceedings be paid on an indemnity basis. She seeks that her costs be fixed in a definite sum to avoid any further wastage and expense that may arise from the assessment process and enforcement of orders.
The law in respect of indemnity costs is well settled and the relevant principles are those set out in the Federal Court case of Colgate-Palmolive Company v Cussons Pty Limited[10] (“Colgate-Palmolive”). Sheppard J refers to the need for there to be “some special or unusual feature in the case to justify the court departing from ordinary practice”,[11] his Honour also provides examples where the exercise of discretion to award indemnity costs is warranted, including:
(a)false and irrelevant allegations of fraud;
(b)misconduct that causes a loss of time to the Court and other parties;
(c)where the proceedings were commenced or continued for an ulterior motive;
(d)the undue prolongation of a case; or
(e)wilful disregard of known facts and clearly established law.
[10] (1993) 46 FCR 225.
[11] (1993) 46 FCR 225 at [256].
The Full Court in Mansfield and Ors & Mansfield and Anor[12] has recognised these principles as well-established law with respect to applications for indemnity costs, stating that “numerous decisions of the Full Court have endorsed the principles stated in Colgate-Palmolive concerning the approach to indemnity costs”.[13]
[12] (2019) FLC 93-920.
[13] (2019) FLC 93-920 at [8].
While the category of cases in which an award of indemnity costs may be appropriate is not closed,[14] the Full Court stated in Joyce & Fante[15] at [11]:
… In short, it is beyond doubt that in order to justify an award of indemnity costs, it must be demonstrated there are exceptional circumstances such that the usual order of party-party costs should be departed from.
[14] (2000) FLC 93-029.
[15] [2013] FamCAFC at [141].
In Hawkins & Roe[16] the majority of the Full Court said at [147]:
Whilst the categories of occasions when costs may be ordered is not limited, the occasions on which such an order should be made in a parenting dispute should have some particular features. Where there is a complete absence of preparedness to compromise in the face of unambiguous expert evidence, where false allegations are made, or where one party is clearly motivated by self-interest rather than the best interests of a child, then a judge may well conclude that there are circumstances justifying an order for costs.
[16] [2012] FamCAFC at [77].
In submissions made on her behalf, the mother makes no reference to the applicable law or principles related to indemnity costs and the contentions made on her behalf as to exceptional circumstances that justify departure from the usual order of party/party costs are unclear. In particular, it is submitted on the mother’s behalf that a circumstance of the case which justifies an indemnity costs order is that the “usual rule in litigation, that costs follow the event, should apply.” This is not the usual rule in litigation under the Act.
It appears that the balance of the matters relied upon by the mother in this regard relate to the extent of the father’s deceit in his conduct of the proceedings which misled the mother and the Court and that he did so for the purposes of obtaining more favourable orders to himself in relation to the parenting arrangements for the children. This deception put the mother to additional expense including retaining counsel and filing subpoenas to obtain information in relation to the father’s deceit.
I am of the view that the father’s conduct in these proceedings does bear some of the particular features identified by the Court in Hawkins & Roe.[17] In my view, the father was clearly motivated by self-interest, that is, achieving a parenting arrangement that he desired rather than focusing on the best interests of the children by falsely maintaining a case for two and a half years that was dishonest and deceptive in relation to matters that went to the heart of the risk of harm he poses to the children.
[17] [2012] FamCAFC at [77].
This conduct on the father’s behalf is also akin to “misconduct that causes a loss of time to the court and other parties”, “the undue prolongation of a case” and “wilful disregard of known facts” given as examples of special or unusual features that justify departure from ordinary practice in Colgate-Palmolive.
The misconduct of the father in falsifying the drug test results over such a lengthy period of time resulted in a number of court events related to applications in which the father progressively sought (and generally achieved) variations in the parenting arrangements that were more favourable to himself. In not admitting his ongoing drug use and sexual activities with strangers that placed the children at risk, the time and expense of the expert assessing the parties and writing a report based on information, known only to the father to be incorrect, caused a loss of time and additional expense to the mother. As observed earlier, had the true circumstances of the father’s conduct been known at the time he was engaged in it, it is highly likely that the expert would have expressed a different opinion and that the proceedings would have been resolved (likely without the need for any final hearing) at a much earlier stage.
In my view, each of the forgoing circumstances and the matters earlier referred to when considering each of the matters in s 117(2A) of the Act justify an indemnity costs order in the mother’s favour.
Rule 12.08 of the Rules provides that if a Court orders costs be paid on an indemnity basis, those costs must be “fairly, reasonably, and proportionately incurred” and “fair, reasonable and proportionate in amount” having regard to: the scale of costs set out in Schedule 3; any costs agreement between the party to whom costs are payable and that party's lawyer; and charges ordinarily payable by a client to a lawyer for work.
Further, r 12.17 provides for the method of calculation of costs, including on an indemnity basis, and r 12.13(4) provides that a party seeking costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs, and if so, the terms of the agreement.
Although there was no costs agreement provided pursuant to the requirement to do so contained in r 12.13(4) compliance with the rules may be dispensed with and in my view, the circumstances of this case permit me to do so.
Although a failure to provide a costs agreement or inform the Court of the terms of such an agreement in accordance with the Rules is generally fatal to an application for costs on an indemnity basis,[18] ordering costs is a matter in which the Court has wide discretion. The Full Court held that a failure to provide a costs agreement pursuant to what was then r 19.08 of the Family Law Rules 2004 (Cth) did not invalidate a costs order made by the trial judge in SCVG & KLD.[19] In that case, the Full Court did not consider to the failure to provide a costs agreement fatal in the circumstances on appeal where the trial judge knew the costs the wife had incurred as his Honour had close familiarity with the litigation and as the primary purpose of the rule is to ensure that the Court is aware of the extent of the costs that will be payable. Further, the order for costs made by the trial judge in that case did not fully indemnify the wife (costs were ordered on an indemnity basis in the amount of half of the total costs incurred by the wife). As such, a failure to provide the costs agreement was not a sufficient basis to overturn the costs order. In my view, the features of the SCVG & KLD[20] are equally apposite here and accordingly, I dispense with the Rules requiring that the costs agreement be made available.
[18] See Gabaldon & Gabaldon [2015] FamCAFC 59 at [150]-[16]; Senfl & Blee [2017] FamCA 901 at [137]-[139]; Gaber & Akhtar (No 2) [2021] FamCA 147 at [23], [29]; Yanez & Yanez [2021] FamCA 148 at [22]; Albert v Plowman [2022] FedCFamC1F 243 at [46].
[19] SCVG & KLD [2017] FamCAFC 95 at [60]-[62].
[20] SCVG & KLD [2017] FamCAFC 95.
So far as the question of whether the mother’s costs were “fairly, reasonably and proportionally incurred” is concerned, I note that she has been privately represented throughout the proceedings since their commencement in July 2019, including by counsel on three occasions prior to final hearing and four further days at final hearing. In total, the parties have attended 20 court events over the course of these proceedings. The Costs Notice filed by the mother on 19 October 2022 sets out that the mother’s counsel and the senior associate who attended the final hearing would both be charged at $4,400 per day of attendance. Although the fees charged by junior counsel is considerably more than the upper range for junior counsel ($3,092.44) and more than double the lower end of the range ($2,103.90) for such fees specified in the Scale of Costs set out in Schedule 3 of the Rules, I am not satisfied that such fees are not fair, reasonable, or proportionate.
Having regard to the history of the matter, the complexity of facts, the appointment of experts, the parties’ attendance on mediators and the level of experience, specialisation and seniority of lawyers concerned, I am satisfied that the mother has incurred these costs fairly, reasonably and proportionately in order to meet the case brought by the father.
CONCLUSION
In these proceedings the only offers to settle the dispute (which were rejected by both parties) were based on an incorrect understanding of the facts. Further, the expert’s opinion was formulated on the basis of false and misleading information either given or generated by the father. The full extent of the father’s deception had also not been revealed in his trial affidavit and even in the evidence produced on subpoena. In these circumstances, it was inevitable that there would be a final hearing. However, it was the father who is entirely responsible for that deception and who continued to deceive the mother, the ICL and the expert about crucial matters in the proceedings, some of which (such as the falsification of drug test results) were only revealed under cross-examination. Other matters (such as his admitted drug use and sexual activity) contained within records of the sexual health centre did not ever come to light due to actions taken by the father to prevent this occurring.
In my view, in all of the foregoing circumstances more than half of the costs that the mother incurred related to matters for which the father was responsible. Taking into account all of the mattes referred to in these Reasons and attaching weight to certain matters for the reasons given, I am satisfied that the just sum for the father to pay is 60 percent of the actual costs the mother incurred and claims as indemnity costs.
As such, I propose to award costs to the mother on an indemnity basis in the amount of $164,662.34 being 60 percent of the figure sought by her. Accordingly, I make the orders set out at the forefront of these Reasons.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hannam. Associate:
Dated: 28 July 2023
0
9
0