Melson & Divjak (No 2)
[2023] FedCFamC1F 134
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Melson & Divjak (No 2) [2023] FedCFamC1F 134
File number: MLC 6164 of 2018 Judgment of: CARTER J Date of judgment: 10 March 2023 Catchwords: FAMILY LAW – COSTS – where indemnity costs are sought - where there are no exceptional circumstances such that it would be appropriate to make an indemnity costs order – where there are no circumstances that justify departing from the usual rule that each party bear his or her own costs save in relation to the application for a Recovery Order – costs ordered in an amount fixed Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited: Anison and Anison (2019) FLC 93-908
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No. 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin & Limousin (Costs) [2007] 38 Fam LR 478
Munday v Bowman (1997) FLC 92-784
Rice & Asplund (1979) FLC 90-725
Yunghanns v Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 65 Date of last submissions: 20 February 2023 Date of hearing: 6 December 2022 Place: Melbourne Solicitor for the Applicant Mr Michael Lipschutz The Respondent Litigant in person Counsel for the Independent Children’s Lawyer Mr Doug McLeod Solicitor for the Independent Children’s Lawyer Victoria Legal Aid ORDERS
MLC 6164 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MELSON
Applicant
AND: MS DIVJAK
RespondentINDEPENDENT CHILDREN'S LAWYER
order made by:
CARTER J
DATE OF ORDER:
10 March 2023
THE COURT ORDERS THAT:
1.The mother pay the sum of $3,300 to the father by way of costs in relation to the Application in a Proceeding filed on 5 December 2022.
2.The Application in a Proceeding filed on 16 December 2022 in relation to costs is otherwise dismissed.
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 the pseudonym Melson & Divjak has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER:
INTRODUCTION
Final orders were made in this matter on 6 December 2022. Those orders finalised the parties’ parenting dispute. By way of an Application in a Proceeding filed 16 December 2022, the applicant father (“the father”) seeks a cost order against the respondent mother (“the mother”). He seeks costs on an indemnity basis for the period 16 February 2022 to 6 December 2022. That period covers the following applications:
(a)The father’s Contravention Application filed on 2 March 2022;
(b)The substantive proceedings issued on 25 May 2022; and
(c)The application for a recovery order filed on 6 December 2022.
He also seeks the costs of this costs application.
The mother opposes any order be made for costs.
BACKGROUND
Final orders made by McEvoy J on 19 August 2021 (“the 2021 final orders”) provided that X and Y born 2017 (“the children”), live with the mother and that the father spend time with the children in accordance with the regime set out in the orders. The orders were made largely by consent.
In late 2021, the mother raised allegations that the father had sexually abused the children while in his care.
The children were then interviewed by the Sexual Offences and Child Abuse Investigation Team (“SOCIT”) on in late 2021 and, at the mother’s request, for a second time in early 2022. No further action was taken as no disclosures were made by the children to SOCIT.
During this period, the father filed a Contravention Application on 2 March 2022 due to a number of alleged contraventions by the mother.
That Contravention Application filed on 2 March 2022 was subsequently withdrawn, as it became apparent a contravention hearing would not provide an appropriate forum to ventilate the issues in dispute. Further, both parties were seeking substantial and significant changes be made to the 2021 final orders. I note that the mother initially asserted she had a reasonable excuse not to provide the children to the father in accordance with court orders as he had subjected them to abuse.
In those circumstances, the mother filed an initiating application seeking that the father have supervised time with the children on the basis she then said he presented an unacceptable risk to the children. The father in his response sought inter alia sole parental responsibility, and a change of residence.
The matter was originally listed for a final hearing on 29 August 2022. However the mother and children contracted COVID-19 and the hearing was adjourned to 5 September 2022.
The matter proceeded before me on 5 September 2022. It ran for four days.
At the commencement of the final hearing, the mother resiled from her affidavit of 29 August 2022 and no longer asserted that the father was an unacceptable risk to the children. She instead sought the parties return to the care regime for the children as provided in the 2021 final orders.
Orders were made by me on 2 December 2022, pursuant to which the children were to live with the father. The mother’s time was initially suspended, to enable the children to move into the father’s care without that process being disrupted. The children’s time with their mother was due to resume at the end of February 2023.
The mother did not appeal my orders.
The father’s Application in a Proceeding filed 5 December 2022 sought a recovery order in relation to the children. The children were due to be in the father’s care on 2 December 2022, being the day the final orders were made. However, the father was not well that day, and unbeknownst to the court the father had allowed the children to remain in the mother’s care. Over the course of the weekend the parties exchanged text messages in which the father sought the children come into his care on Monday 5 December 2022.
On 5 December 2022 the mother advised the father’s solicitors in an email that there was an ongoing SOCIT investigation and she would not be providing the children to the father.
The matter was listed before me on 6 December 2022. The mother told the court at that time that the children had complained to her that their father was subjecting them to sexual abuse. She said she took the children to a class a few days prior, in 2022, and they reported the allegations of abuse to a teacher there. She said arrangements had then been made for the children to be interviewed by SOCIT within a few days of the reporting, in 2022. The mother did not agree to provide the children to the father, and asserted that the children would be at risk of harm in their father’s care.
I made orders that the mother deliver the children to the father by 12.30 pm on Tuesday, 6 December 2022. If she did not do so, a Recovery Order would be issued.
As I understand it, the mother took the children to the police on 6 December 2022 seeking that the children be interviewed. The police facilitated the changeover of the children into the father’s care.
I understand there have been ongoing issues regarding the arrangements for the mother’s time with the children, and allegations by the father that the mother has attended at times and places outside those specified in my orders to see the children. Those matters will be dealt with by a Senior Judicial Registrar.
THE PARTIES’ POSITIONS
The father seeks an order that that the mother pay the costs of and incidental to the Contravention Application filed by him on 2 March 2022, the Initiating Application filed by the mother on 25 May 2022 (and his Response to Initiating Application filed 1 June 2022) and the Application in a Proceeding filed 5 December 2022:
(a)on an indemnity basis being solicitor’s fees at $138,163.85 and counsel’s fees of $27,500; or
(b)to be paid on a party/party basis in accordance with schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) to be agreed upon and failing agreement to be taxed, together with counsel’s fees of $27,500.
He says those costs were incurred from 16 February 2022 to 6 December 2022.
The mother filed a response to the father’s written submissions on 24 January 2023. That response was filed out of time. Pursuant to orders I made on 6 December 2022, the mother was required to file her responding submissions on or before 17 January 2023. The mother did not adequately explain her delay, but I have had regard to those late filed submissions. She is currently unrepresented.
It is the mother’s position that the father’s costs application be dismissed.
THE LAW
Pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”), each party to proceedings in this court bears his or her own costs. As set out in s 117(2) of the Act, the court may depart from that usual rule, and make an order for costs, provided the court is satisfied there are circumstances which justify it doing so.
The matters the court is required to take into account in considering what order, if any, should be made as to costs are set out in ss 117(2A)(a), (b), (c), (d), (e), (f) and (g) of the Act. I am required to take all the relevant matters in s 117(2A) of the Act into account and balance them to determine whether the overall circumstances justify the making of a costs order. No particular consideration is to be given more weight than any other and no one factor is required to be present. Accordingly, the discretion is broad.
The factors set out in s 117(2A) to which the court must have regard are as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
In relation to indemnity costs, it will only be in exceptional circumstances that a costs order will depart from the general rule that costs – if awarded at all - are calculated on a party/party basis (Kohan and Kohan (1993) FLC 92-340; D & D (Costs) (No. 2) (2010) FLC 93-435; Limousin & Limousin (Costs) [2007] 38 Fam LR 478). That means I must be satisfied that there is something special or unusual in the matter that might justify the awarding of indemnity costs before determining to exercise my discretion to do so.
In Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive Company”), Sheppard J provided some examples of circumstances that might justify the awarding of indemnity costs, and Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision these 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.
The categories of circumstances which enliven the discretion to award indemnity costs are not closed: see e.g. Yunghanns v Yunghanns (2000) FLC 93-029. However, the case law makes it clear that making an order for indemnity costs represents a very significant departure from the usual standard.
The main thrust of the father’s submissions in support of an order for indemnity costs are that the mother acted fraudulently in the makings of her allegations, which she knew to be false; that she commenced or continued proceedings for an ulterior motive; and that she unnecessarily prolonged the matter by groundless contentions. He submits that the case was unnecessarily prolonged and caused significant distress for the applicant as a result of the mother’s false allegations of child sexual abuse, family violence, and other unsavoury allegations she made about him during the course of the proceedings.
The father maintains that these matters equate to exceptional circumstances as understood in Colgate-Palmolive Company.
THE CONSIDERATIONS PURSUANT TO SECTION 117(2A)
The father is engaged in employment in his sister’s business, earning a modest income. He is a co-owner of a property in Suburb FF together with his sister and mother.
At trial, the mother was employed as a scientist. She was earning $165,000 per annum. However, the mother said she only held that paid position for four months, before taking unpaid leave in around mid-2022 to concentrate on these proceedings. She said that since late 2022 she has been unemployed. The mother’s annexure containing her Centrelink Employment Separation Certificate confirms that her employment ceased in late 2022.
In her written submissions the mother said she lives in a flat in Suburb Q, purchased by her father, but held in her name, on trust, although it also appeared from her oral submissions that it was her property and she had to pay her father. In her written submissions, the mother said she pays a nominal amount of $300 per week to her father in rent, and that she is in rental arrears in regard to these payments. The quantum of alleged rental arrears was not clarified.
In her oral submissions the mother asserted the value of the Suburb Q property has fallen since its purchase in 2021. She said between the amount owing on the mortgage of approximately $250,000 and the amount of $70,000 contributed by her father towards the purchase (which she said she must repay) there is minimal equity in the property. She further said that she must begin making repayments to her father by way of five lump sum payments of $14,000 commencing in July 2023. She said she did not have the financial resources to meet that obligation. It was implicit in those submissions that the property is not being held on trust for her father.
The mother did not adduce evidence to support any of these assertions regarding the property in her name. As observed her written and oral submissions regarding ownership of that property did not seem easily reconcilable.
Impecuniosity is, of course, not necessarily a bar to a costs order being made. However, in my view I must take into account that the mother has been required to meet the costs of professional supervision pursuant to the orders I made on 2 December 2022. Additionally, she was ordered to engage with an appropriately qualified psychologist at her expense with a view to her being assisted to understand the reasons behind the orders I made, and the potential impact of the repeated abuse allegations on the children’s sense of safety and security, and the impact on them as a result of experiencing disruptions to, and the undermining of their relationship with their father.
In circumstances where the mother does not appear to be in paid employment, I have some concerns that a costs order would impact on her ability to meet the costs of supervision or her ability to meet the costs of psychological support. If those matters are not attended to, this could have an impact on the children’s wellbeing.
Neither party is legally aided.
In relation to the contravention proceedings, the mother initially maintained that the allegations as to risk founded her assertion she had a reasonable excuse to not provide the children for time with the father. The contravention proceedings were withdrawn in circumstances where each party at that time was asserting the 2021 final orders were not in the children’s best interest. Thus, there were never findings made that the mother had breached the orders, or whether she had a reasonable excuse to do so.
In regard to the substantive parenting applications and four day trial, it is apparent from my reasons given on 2 December 2022 that the mother’s conduct during the course of the substantive proceedings was perplexing. The allegations she made regarding sexual abuse were not withdrawn by her – and indeed she remained adamant that the father had been abusive towards the children. It was difficult to understand how she nevertheless did not assert at trial the father presented any unacceptable risk to the children.
Although at the eleventh hour the mother said she no longer relied on those parts of her affidavit, in which she asserted various occasions of abuse or violence, the father had to respond to those allegations. As noted, the mother maintained that each and every allegation she made was truthful. Notwithstanding her evidence at trial to the contrary, it appeared from the submissions she made to me on 20 February 2023 that she has in fact regarded the father as presenting an unacceptable risk at all times.
The mother further made allegations against the father’s sister and son, who both had to prepare affidavits, at further expense to the father.
However, having made those observations, I note that in the running of the hearing both parties behaved appropriately. The trial proceeded in an appropriate manner. In my view, it was not unnecessarily delayed or prolonged as a result of the mother’s behaviour as a litigant. It was adjourned on 29 August 2022 as the mother and children had COVID-19, but she cannot be criticised for that.
In relation to the recovery order application, that was brought in circumstances where the mother had the care of the children and declined to provide them to the father despite the orders requiring she do so. Instead she retained the children and sought to have then re-interviewed by SOCIT, notwithstanding the findings that I had made about her, and about the lack of risk posed by the father.
The father asserted that between late 2021 and early 2022, there were multiple occasions the mother did not deliver the children for time with their father. He made further assertions that the mother was often late, on occasion she did not collect the children, and she also referred to him as “F” which the orders specifically restrained her from doing. He said the mother’s breaches of the 2021 final orders resulted in him bringing the contravention proceedings, and in the substantive proceedings having to be brought. That is, he says the contravention, and the subsequent final hearing were necessitated by the mother’s failure to comply with the 2021 final orders. As already observed, the contravention application was withdrawn and accordingly, findings were not made.
I do not regard the substantive parenting proceedings commenced by the mother in May 2022 as being necessitated by the mother’s failure to comply with the 2021 final orders in the same way, for instance, that enforcement proceedings are. There was a genuine issue to be determined at that time regarding the children’s best interests.
In relation to the application for a recovery order, that application was made in circumstances where the mother refused to provide the children to the father in accordance with my orders. The father was required to prepare an application and an affidavit, as well as to attend court on 6 December 2022. That application did arise squarely as a result of the mother’s deliberate failure to comply with court orders and provide the children to the father.
The Full Court in Anison and Anison (2019) FLC 93-908 said at [37] that the term “wholly unsuccessful” means “where proceedings as a whole have been unsuccessful”. In my view, the court is required to consider not just the outcome at trial, but also the position that the party adopted.
The position the mother adopted changed significantly throughout the proceedings. Initially she said she had a reasonable excuse for breaching the 2021 final orders on the basis that the father was an unacceptable risk. That remained her position when the trial was initially due to commence. However, when her case was opened, she maintained that there were no longer unacceptable risk issues. As set out in my reasons, the change of the mother’s position was deeply confusing. I did not make a finding that the children were at risk in the care of the father.
I note that upon the making of the final orders, the mother retained the children in her care, once again asserting that the children were at risk in the father’s care.
I could not describe the mother as having been wholly unsuccessful in relation to the contravention application as that was withdrawn without findings being made.
The mother was substantially unsuccessful at trial. She pressed for a dismissal of the proceedings on the basis of the principles in Rice & Asplund (1979) FLC 90-725 (“Rice & Asplund”). That application was not successful. She further sought that the children remain in her care and spend time with the father. The orders I made placed the children in the primary care of the father, with relatively limited time with the mother after a short moratorium on time. I did not make an order for the father to have sole parental responsibility for all aspects of the children’s care.
I note the mother was wholly unsuccessful in relation to the father’s application for a recovery order. Her refusal to return the children to him was unreasonable and without merit.
DETERMINATION
I am not satisfied there are circumstances that enliven my discretion to award indemnity costs. I accept that the mother’s conduct as a litigant was problematic. She made allegations of abuse she did not pursue at trial. The father had to adduce evidence to defend himself, and his family members against her allegations, none of which I found to have occurred.
I accept the mother’s Rice & Asplund application did not have any reasonable prospects of success given the very significant changes that had occurred following the 2021 final orders. However, I could not say that her position – that she retain primary residence of the children – had no chance of success. It was not, in my view, unreasonable that she did not consent to the father’s proposal that the children move into his primary care.
I am not satisfied that the mother made the allegations dishonestly or fraudulently. Whilst I was satisfied there was no rational basis for her beliefs as to the father’s behaviour, I was not satisfied the mother deliberately made false allegations. She appeared to believe the allegations, and maintained that she had acted protectively. Indeed, one of the orders I made was for the mother to engage with an appropriately qualified psychologist to assist her to move beyond her entrenched views. I understand from the mother’s submissions that she is seeking that support and assistance.
Further, in the exercise of what has been described as a wide discretion and weighing all the matters to which I have referred, it does not seem to me that there are circumstances that justify departing from the usual rule that each party bears his or her own costs in relation to the contravention application or the substantive parenting proceedings. As already observed a costs order could impact the mother’s ability to meet the costs of supervision or her own psychological treatment. The contravention proceedings were not determined, and no findings were made as the application was withdrawn. Whilst the father was substantially successful at trial, I did not make orders precisely in the terms he sought. I did not provide for him to have sole parental responsibility for all aspects of the children’s care.
Even had the mother been wholly unsuccessful in the substantive family law, in my view that alone would not be sufficient in this particular case to justify a costs order against the mother in relation to the whole of those substantive proceedings. Quite clearly, this is not a jurisdiction where costs automatically follow the event. As indicated, there was a real issue to be tried regarding whether there ought be a change of residence. Whilst there were some aspects of the mother’s case that were perplexing and required the father to adduce evidence to refute, the mother’s application that she remain the children’s primary carer was not entirely without merit or unreasonable and the trial was conducted properly and in a reasonably contained manner.
Conversely, in relation to the recovery order application, it does seem to me that there are circumstances that justify departing from the usual rule and requiring that the mother contribute to the father’s costs of same. That application was necessitated as a result of the mother’s refusal to provide the children to the father. The mother was wholly unsuccessful. The mother’s retention of the children was not reasonable given the finding that I had made. She has not filed any material to date that explains her decision to retain the children and seek that they be re-interviewed by SOCIT. She did not appeal my decision.
However, I am not of the view that this is an exceptional case requiring the court to impose an order for indemnity costs in relation to the application in a proceeding.
In terms of the quantum, I am able to fix an amount for costs. Rule 12.17 of the Rules makes that plain. By fixing costs the parties are able to avoid the expense, delay and inconvenience involved in taxation. In making an order under r 12.17(1), as I am, I may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceeding, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
The father had to prepare an Application in a Proceeding, supported by an affidavit. There was an appearance on 6 December 2022. It was not a complex or complicated application, but it was urgent. The affidavit is very short.
Taking all these matters into account, and in the exercise of my very broad discretion, I have determined it is appropriate to make a costs order against the mother in the sum of $3,300. That sum is to be paid within 60 days.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter. Associate:
Dated: 10 March 2023
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