Nayer & Groth (No 5)
[2024] FedCFamC1F 611
•13 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Nayer & Groth (No 5) [2024] FedCFamC1F 611
File number(s): CAC 1702 of 2021 Judgment of: GILL J Date of judgment: 13 September 2024 Catchwords: FAMILY LAW - COSTS - Where father sought indemnity costs in accordance with costs agreements - Where the mother’s case was pursued with wilful disregard for the facts - Where the mother’s introduction of a sexual risk contention part-way through the proceedings in the context of the child only having ever spent supervised time with the father meant that from that point her conduct of the proceedings warranted costs to be paid on an indemnity basis - Where neither party was wholly successful or wholly unsuccessful - Where both parties’ legal fees were significantly higher than scale - Mother to pay the father’s costs at scale for the first part of the proceedings on a party-party basis and following the sexual risk allegation on a solicitor-client basis Legislation: Family Law Act 1975 (Cth) – s 177 Cases cited: Albertinni v Podopoulos [2010] FamCA 405
Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Hawkins & Roe [2012] FamCAFC 77
Higginbotham & Robinson (1991) FLC 92-209
In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321
Kohan & Kohan (1993) FLC 92-340
Lenova v Lenova (Costs) [2011] FAMCAFC 141
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Nada & Nettle (Costs) (2014) FLC 93-612
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Pope v Pope (Costs) [2012] FamCA 655
Quickley & Pelissier [2016] FamCAFC 124
Roydon & Roydon [2023] FedCFamC2F 1265
SCVG & KLD [2015] FamCA 687
Division: Division 1 First Instance Number of paragraphs: 109 Date of hearing: 2 September 2024 Place: Canberra Counsel for the Applicant: Mr Stagg Solicitor for the Applicant: Parker Coles Curtis Counsel for the Respondent: Mr Berger, KC Solicitor for the Respondent: Farrar Gesini Dunn ORDERS
CAC 1702 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR NAYER
Applicant
AND: MS GROTH
Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
13 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The respondent pay the applicant’s costs of and incidental to the proceedings initiated in the Federal Circuit Court of Australia and subsequently dealt with in both Division 1 and Division 2 of the Federal Circuit and Family Court of Australia and finalised by judgment on 18 March 2024 as assessed or as agreed on the following basis:
(a)That the costs will exclude those dealt with by the Orders of Judicial Registrar Hiles of 22 September 2021 and Judge Hughes of 24 October 2022;
(b)That the costs will be calculated as specified in the applicable Scales of costs as provided for in the applicable Rules of court;
(c)That the costs will be calculated on a party and party basis from the commencement of the proceedings until 21 March 2023;
(d)That the costs on and from 21 March 2023 until 18 March 2024 will be calculated on a solicitor and client basis;
2.The respondent pay the applicant’s costs of and incidental to this costs application calculated in accordance with the applicable Scale of costs on a party-party basis;
3.That the costs as payable pursuant to these orders fall due to be paid to the applicant by the respondent by no later than 1 January 2029 into an account nominated in writing by the applicant.
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
GILL J
This judgment concerns an application for costs following final judgment in the substantive parenting proceedings. At issue in those proceedings was whether the father, the applicant to this application, would have any relationship with the parties’ child X. The mother, the respondent to this application, at all stages opposed the applicant spending any time with X.
The respondent initially contended that the father posed a risk to X, based upon his mental health/personal characteristics and his alleged conduct during their relationship.
Despite this opposition interim orders were made for professionally supervised time, then non‑professionally supervised time.
The respondent then, in the face of X having spent only supervised time with the father, alleged that, as a result of X’s presentation around such times, the father presented a risk of sexual abuse to X.
In the final judgment the risk claims were rejected and orders were made for the equal sharing of parental responsibility and transition to X spending substantial regular time with the applicant.
Despite the applicant’s primary position at the final hearing being that X would live with him, and that there would be a moratorium on X’s time with the respondent, orders provided for X to live primarily with the respondent.
It is in this context that the applicant seeks the costs of the whole of the proceedings be met by the respondent on an indemnity basis, or in the alternative, on a party-party basis. He further seeks that such be payable within six weeks, or in the alternative by 1 January 2029.
The applicant asserts, through the production of various invoices, costs paid by him in the sum of $658,157.05.
Both parties seek their costs in relation to this costs application.
Documents relied upon
The applicant father relied upon:
(a)Affidavit of the father filed 28 May 2024
(b)Financial statement filed 28 May 2024; and
(c)Outline of case document.
The respondent mother relied upon:
(a)Response to an application in a proceeding filed 24 June 2024
(b)Affidavit of the mother filed 24 June 2024; and
(c)Financial statement filed 24 June 2024.
Principles
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the default position being a general rule that each party bears their own costs, subject to circumstances justifying otherwise. In Kohan & Kohan (1993) FLC 92-340, the Full Court observed that:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just.
In Penfold v Penfold (1980) 144 CLR 311 the High Court considered that whilst justifying circumstances, as identified in s 117, must be determined to enable a costs order to be made, no “additional or special onus” is placed upon applicants in their pursuit of costs.
The precondition to making an order for costs is the finding that there are circumstances justifying the making of an order for costs. Once these are found, the default position yields to the Court’s discretion to award costs as it considers just.
The relevant considerations to assess the circumstances are set out at s 117(2A) of the Act as follows:
In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to 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 Hawkins & Roe [2012] FamCAFC 77 (“Hawkins & Roe”) May and Ainslie-Wallace JJ observed that:
The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative.
In this, a parenting case, the respondent relied in particular upon the following observation made by May and Ainslie-Wallace JJ:
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.
As indicated in Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 (Strickland J), no single factor takes precedence over any other factor. The trial judge is to exercise their discretion with regard to the weight that is afforded each factor under s 117(2A).
Of these considerations, those emphasised by the parties were the financial circumstances, the manner of conduct of the proceedings, whether the mother can be considered to have been wholly unsuccessful, and whether an offer in writing has been made to settle the proceedings that bears upon the costs issue.
Financial circumstances of the parties
In Albertinni v Podopoulos [2010] FamCA 405 at [30], Dawe J noted that the reference to the financial circumstances of each of the parties to the proceedings ‘is not a reference to any suggestion that the person with the superior financial position should have less chance of obtaining an order for costs than a person with the inferior comparative position in relation to the parties’, but rather that ‘[t]he financial circumstances of each of the parties to the proceedings … has to be taken into account’.
It should be noted that a party’s impecuniosity is not a bar to an adverse costs order. In Nada & Nettle (Costs) (2014) FLC 93-612, the Full Court articulated this as follows:
That a party is impecunious, even indigent, is not a bar to the making of a costs order if the Court is otherwise of the opinion that such an order ought to be made.
As to potential impact of the consideration, in Pope v Pope (Costs) [2012] FamCA 655 at [89] Ryan J said:
… the husband’s materially superior financial circumstances have a significantly moderating influence on the magnitude of order which I am satisfied should be made against the wife. This does not, however, mean that the costs application is an appropriate time for conducting a wholesale examination into every aspect of the parties’ financial circumstances; in the ordinary case, the court will be satisfied with a broad comparison of the parties’ financial positions available to it: Browne v Green (2002) 29 Fam LR 428 at 433.
There was dispute between the parties as to the level of disparity between them, the respondent asserting that the applicant is in a far superior financial position. The applicant’s Financial Statement discloses liabilities that exceed the value of property held by him.
His Financial Statement discloses income of $4,290 per week, marginally above his asserted expenditure.
The respondent, by her Financial Statement, discloses liabilities significantly outweighing the value of her property by more than $500,000. The respondent describes incurring legal fees, including in relation to family violence proceedings of $683,547.14, of which she still owes $236,676.30 to her lawyers. Her income is disclosed as $3,231 per week, plus Child Support of $352 per week, with expenses and expenditure on X of approximately the same amount.
Both parties are professionally qualified, the applicant as a medical professional, the respondent as a professional. At present the respondent works on a part time basis.
The conduct of the parties
Section 117(2A)(c) requires consideration of the conduct of the parties in relation to the proceedings. This was a key matter of contention, each party accusing the other of poor conduct in the manner of their engagement in the proceedings. This was also an aspect of the substantive trial where the respondent alleged that the applicant had used the proceedings as a mode of abuse, a contention that was rejected.
As observed by Cronin J in SVG v KLD [2015] FamCA 687 (“SVG v KLD”):
It must also be remembered that costs are not awarded by way of punishment of the unsuccessful party but rather are compensatory in the sense that they are awarded to ameliorate the expense of the successful party as a result of having been required to endure the legal proceedings. (Minister for Immigration and Multicultural Affairs v Vadarlis (No 2) (2001) 188 ALR 143 citing with approval Cretazzo v Lombardi [1975] 13 SASR 4 and Chilli v Abbott (1981) 53 FLR 108).
In that same case Cronin J explained the scope of this particular consideration:
One needs to be very careful here to distinguish Mr SCVG’s “conduct” as a parent from that as a litigant. I agree with counsel for Mr SCVG that the question must be addressed about conduct in relation to the proceedings but it must be noted that s 117(2A)(c) is extremely wide. The applicant for costs must satisfy the Court that there is a nexus between what is complained about and the costs in issue in the proceedings.
The specifics of the complaints made are addressed further below.
Whether the mother can be considered to have been wholly unsuccessful
The applicant submitted that the respondent was wholly unsuccessful.
In SCVG & KLD, Cronin J discussed the concept of being ‘wholly unsuccessful’ observing that it “must mean entirely without success.”
It cannot be said that the respondent was wholly unsuccessful. While her case sought sole parental responsibility and that X would spend no time with her father the applicant, and the respondent was unsuccessful in those respects, the respondent also sought orders that X would live with her, in which she succeeded despite the applicant’s primary position being that X would live with him and that there would be a moratorium on X’s time with her mother for a defined period.
Whether an offer in writing has been made to settle the proceedings
In Lenova v Lenova (Costs) [2011] FAMCAFC 141 Murphy J observed:
[10] In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subs (2) ... each party to proceedings under this Act shall bear his or her own costs” (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.
[11] A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
Justice Nygh in Higginbotham & Robinson (1991) FLC 92-209 encapsulated s 117(2A)(f) as follows:
…when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition.
It may be observed that the question is one of engagement with a genuine offer. An offer does not lose relevance merely because a party does what may be considered to be marginally better than the terms of the offer. Where the offer is adjacent to, but not better than the outcome, there may still be good reason to give consideration to a party’s failure to engage with or to accept it.
The applicant identified an offer made on 30 June 2023. He contended that the offer was in terms largely in accordance with the final judgment.
That offer provided for an equal sharing of parental responsibility, and an immediate transition to unsupervised time between X and the applicant, ultimately, in 2029, transitioning to week about time. Provision was made for special occasions and for the change of X’s name to incorporate the surnames of both parents. A number of machinery orders were also sought, along with a mandatory injunction to compel the respondent to undertake mental health treatment.
Like the offer the final orders provided for equally shared parental responsibility, and for the change in X’s surname. They also provided for unsupervised time, but after a period of further supervised time until 2025. They ultimately provided for a 4-10 split each fortnight, with X living predominantly with the respondent. Provision was also made for special occasions and various machinery provisions. No mandatory injunction for mental health treatment for the respondent was made.
The refusal to settle on these terms does not constitute a matter of weight. There is significant difference between the orders and suggested terms, both as to the sharing of time and when that will occur on an unsupervised basis. A mandatory injunction was not made.
It also cannot be considered as an imprudent refusal of offer.
Indemnity costs
As noted above, the applicant seeks costs firstly on an indemnity basis. The principles to be applied in relation to indemnity costs are neatly set out by the Full Court in Quickley & Pelissier [2016] FamCAFC 124 at [120]:
We then turn to consider whether costs should be awarded on a party/party or indemnity basis.
In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the "settled practice" that where a court orders one party to pay another party's costs, the order is for costs to be paid on a party/party basis. His Honour also said "there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice" at 257.
In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:
Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.
In Kohan & Kohan (1993) FLC 92-340 (“Kohan”), the Full Court, in observing that indemnity costs are the exception, said that:
… the court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.
The principles in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 are also usefully discussed in In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321 (“Marriage of W P J Munday and H J Bowman”). In that judgment, Holden CJ extracted a series of circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis, being:
(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: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
(c)Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
(e)An imprudent refusal of an offer to compromise.
It ought, however, to be noted that in citing such examples, Holden CJ was dealing with extremes. For example, in relation to the “no chance of success” example Holden CJ indicated that the conduct was to be such as to allow a finding of “ulterior motive” or “wilful disregard of known facts”. That is, it is not sufficient to reflect that the application had a low chance of success, but rather that the prospective lack of success was so stark as to require the inference that the application was occasioned by an ulterior motive or was pursued in wilful disregard of known facts.
Further, in relation to the final example of ‘imprudent refusal[s]’, Holden CJ noted, as did the Full Court in Kohan, that the authorities giving rise to such a category are predominately New South Wales (“NSW”) authorities, and are in part “attributable to the amendment of the Supreme Court Rules of that state which provide for indemnity costs where a plaintiff obtains judgment in terms no less favourable than those of an offer to compromise made by him and not accepted by the defendant.” In Kohan, the distinction was then drawn between the practice in NSW in accordance with the Rules of the Supreme Court, and in this jurisdiction:
In so far as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income as in Penfold v Penfold (1980) 5 Fam LR 579; [1980] FLC 90-800 and Oriolo v Oriolo (1985) 10 Fam LR 665; [1985] FLC 91- 653, no more than party and party costs have been awarded.
As was observed by Reithmuller J in Roydon & Roydon [2023] FedCFamC2F 1265 (“Roydon”)
The matters identified by Sheppard J in Colgate Palmolive as justifying indemnity costs orders all involve significant misconduct in litigation, not simply a party litigating a marginal or speculative case.
The remarks of Sheppard J with respect to offers must be seen in context. The proceedings before Sheppard J concerned commercial litigation where, unlike family law proceedings, costs ordinarily follow the event. In family law cases, ordinarily there are no orders for costs. This practical difference between costs rules for commercial litigation compared to family litigation is particularly important when considering whether a failure to accept an offer is “imprudent”, and thereby justifying an indemnity costs order, rather than a situation where it was not reasonable to have rejected an offer (leading to a party and party costs order): Badawi & Badawi (Costs) [2017] FamCAFC 196 at [27]–[29]. As was said by Murphy J in Prantage & Prantage (2013) FLC 93-544 at [152]:
Indemnity costs are confined to “an exceedingly rare situation” … in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party ... shall bear his or her own costs (s 117(1)).
Factors relied upon
As observed above, the applicant relied upon a number of considerations, being the financial circumstances of the parties, the conduct of the proceedings by the respondent, an assertion that the respondent has been wholly unsuccessful, and that a relevant offer to settle has been made in writing by the applicant.
It cannot be considered that the respondent was wholly unsuccessful. Further, her non‑acceptance of the particular offer is not a matter that can attract weight.
Although both parties have strong income earning capacity, the applicant’s position is marginally stronger than the respondent’s. Given the magnitude of costs incurred by each party, failing to make an order leaves a heavy burden on the applicant, whilst making one will impose a further heavy burden on the respondent, being a burden unlikely to be able to be met in the short term.
The remaining issue require analysis is as to the respondent’s conduct of the proceedings.
Underlying the applicant’s criticism as to the manner of engagement with the proceedings was the concession by the respondent that, since X’s birth, her position had been that of X spending no time with the applicant. That is, from prior to the commencement of the proceedings until their completion the respondent’s fixed position was that X would spend no time with the applicant (with a limited exception set out below where the respondent at one stage indicated the potential to consider an arrangement for permanent supervision).
The applicant submitted that the respondent maintained this position through the trial in the face of expert evidence that contradicted such an approach. In support of this contention the applicant pointed to three experts. Firstly, he noted that the high point (being that most favourable to the respondent) of Mr T’s report was that even if the applicant was considered (by the court) to pose risk that he should still spend time with X, albeit supervised. This was the case even if the respondent’s then extant contentions against the applicant, being that he engaged in family violence and the extent of drug and alcohol abuse during the relationship were made out. Ultimately they were not.
Secondly, he noted the position of Dr EE who, at an interim stage recommended that there be a move away from professional supervision of X’s time with the father, to non-professional supervision. This move was opposed by the respondent.
Thirdly, he noted the evidence of Dr DD that undermined the respondent’s contention that X’s behaviour in her household was indicative of sexual abuse. X’s presentation to the respondent, and her interpretation of it (aided by her consultation with other professionals) formed the key element of the respondent’s contention that the applicant posed a sexual risk to X.
The applicant characterised this body of expert evidence as unambiguous, submitting that the respondent was unreasonable in failing to compromise her position in the face of such evidence. However, it may also be observed that the respondent received some support from other professionals in harbouring her suspicion of the applicant.
The applicant also pointed to the respondent’s conduct during the interlocutory phase of the proceedings, emphasising a number of incidents. The overarching contention as to these matters raised by the applicant was that on each occasion the respondent’s position was doomed to failure.
The first was the respondent’s resistance to the initial application by the applicant for supervised time with X. This was under the circumstance that the applicant and X had not then met. Orders were made for time despite that resistance. No order for costs was then pressed. Although the applicant sought to characterise this incident of the litigation as doomed to fail, absent some further identification of the circumstances such a conclusion is not available.
The second was refusing, absent court order, to have the applicant’s name added to X’s birth certificate.
The third was the respondent’s resistance to further questions being administered to Dr EE.
As a single expert each party was entitled to administer further questions. The respondent, however, approached the applicant for her agreement to the questions that he sought to administer. This resulted in the respondent then being out of time to administer questions as of right.
The respondent then resisted the applicant posing questions to Dr EE. The applicant applied to the court at which time the respondent proposed that she too would administer supplementary questions. The parties were however unable to resolve the questions to be administered, such questions then being determined by Judge Hughes.
It should however be noted that, following the resolution of this issue Judge Hughes ordered that each party bear their own costs.
Aside from early in the proceedings, when a costs order was made against the respondent in respect of the striking out and refiling of her affidavit, this was the only occasion identified as involving some resolution of costs at an interlocutory level. The applicant conceded that there had been no reservation of costs otherwise on interlocutory events.
The next issue was declining to alter X’s time arrangements as had been foreshadowed in previous interim proceedings to be predicated upon a report to be prepared by Dr EE.
This was resolved by further interim order, but absent further description, an adequate basis for costs to follow such has not been made out.
On the terms in which it was presented this incident of the litigation takes the costs issue no further.
A further example was the respondent’s unilateral suspension of X’s non-professionally supervised time with the applicant in 2023. The matter was returned to court and time with the applicant was restored, again without costs being ordered or reserved.
However, again, absent the identification of specific circumstances it cannot be concluded that this position was doomed to failure.
The significance of these instances, outside of the context of the overall proceedings, is limited. They illustrate the respondent’s resistance to X having a relationship with the applicant, but as aspects of the interlocutory phase of the proceedings, are not demonstrated by the applicant as doomed to failure.
A more overarching claim on the part of the applicant was that the respondent pursued a case for his exclusion from X’s life based upon factual contentions that were determined unfavourably to her.
Prior to examining each of the identified factual contentions it is necessary to give some explanation of the place that they held in the case run by the respondent.
At [74] of the judgment the risks relied upon by the respondent, by the end of the trial, were set out:
The mother however submitted that a cumulation of matters should lead to a conclusion that the father presents an unacceptable risk of abuse to [X], comprising a sexual abuse risk, a risk related to the father’s mental health, risks flowing from prior aggression, abuse and violence on the part of the father, both in the relationship and towards other persons, and risks flowing from the father’s use of alcohol and other drugs.
[Emphasis omitted]
In summary, those matters involved factual assertions by the respondent:
·As to X exhibiting dysregulated behaviour[1] (This aspect of her evidence was not the subject of any significant challenge, although its significance was);
·That the supervisors failed to keep X safe from the father (in particular in respect of sexual abuse);
·As to the nature and extent of the applicant’s drug and alcohol use during the relationship, and the father’s alleged misrepresentation of such, pointing to risk;
·That the father’s mental health compromises his capacity to communicate with the mother and addressing the needs of X;
·That the father engaged in physical violence to the mother, and behaved in a threatening, hostile and aggressive manner, including through the litigation process;
[1] Nayar & Groth(No 4) [2024] FedCFamC1F 160 at [76] (“Nayar & Groth”)
The applicant correctly observed that the respondent lacked success in relation to the following factual contentions that she relied upon to make out the above risks:
·Risk of sexual abuse;[2]
[2] Nayar & Groth at [326]
·The applicant’s mental health. However, the lack of success in this aspect was a question of degree;[3]
·The extent of alcohol and drug use by the applicant;[4]
·Allegations of violence, threatening conduct and coercive control during the relationship;[5]
·Generally, the manner of litigation by the applicant,[6] and particularly:
·As to the use of experts;[7]
·As to objections to the respondent’s material;
·As to the manner of correspondence engaged in;[8]
·As to threats to cause the resumption of the relationship;[9]
·General risks as to parenting capacity.[10]
[3] Nayar & Groth at [327-9]
[4] Nayar & Groth at [144-159]
[5] Nayar & Groth at [183], [318]
[6] Nayar & Groth at [224]
[7] Nayar & Groth at [215]
[8] Nayar & Groth at [223]
[9] Nayar & Groth at [191]
[10] Nayar & Groth at [329]
Discussion
The most significant matter advanced by the applicant is the respondent’s unreasonable pursuit of a remedy in the form of X spending no time with the applicant. This was the position held by the respondent from the birth of X, prior to the commencement of litigation, maintained throughout the interlocutory processes and, ultimately, the trial.
The case mounted by the respondent was predicated on risk posed by the applicant.
Even assuming that, at a purely subjective level, the respondent was genuine in her fears and suspicions as to risk, the key factual contentions that she advanced to justify such relief were absent.
At the commencement of the litigation, prior to the sex abuse risk being advanced, the risk issues were predicated upon other allegations advanced by the respondent about the applicant, primarily involving allegations of family violence and substance abuse. To the extent that these relied upon substance use, or upon family violence, the reality as determined at trial fell well short of that which could be capable of indicating risk to X. The respondent’s contentions as to family violence, and as to the extent of alcohol and drug use were rejected. That is, there was no proper factual basis for her assertions of risk at the start of the proceedings.
This lack also permeated the early expert evidence that indicated some deficits in the applicant’s capacity to parent and co-parent. The extent of those deficits was reliant on whether the contentions made by the respondent about the applicant were accepted. Even if the respondent’s account was to be accepted, the views of the experts did not support the remedy of no time. As the factual matters alleged by the respondent were not accepted the assessment of the applicant’s limitations were likewise diminished.
As the proceedings continued, the respondent alleged further indicia of risk, such as the improper use of the proceedings as a mode of abuse or coercion or control. Again, the reality was determined to be otherwise, as the respondent’s assertions were rejected.
When the issue of sexual abuse risk was raised, it was raised in a context where X had never spent any time with the father absent supervision. It was raised not on the basis that in their previous relationship the applicant revealed some sort of improper interest in children, but rather on X’s comments and presentation surrounding her supervised time with the father. The contention as to sexual risk was reliant upon inferences and suspicions entertained by the respondent that could not be reasonably sustained in the light of the supervision.
To the extent that it might be thought that, absent the supervision, X’s presentation was indicative of abuse, such a notion was debunked by the evidence of Dr DD, which led however to no amelioration of the respondent’s case. When confronted with the evidence both of Dr DD and the various supervisors the respondent persisted in her case of sexual risk. At trial it was positively concluded that the applicant had not engaged in sexual abuse of X and posed no such risk.
These matters, being the pursuit of a no time case based upon risk when the factual matters known to the respondent could not sustain such, form the strongest basis to consider that the manner of conduct of the litigation by the respondent warrants an order as to costs.
Added to this, the applicant also asserted that the respondent failed to genuinely engage in settlement negotiations. However, the rejection of the offer as set out above is not sufficient to found such a conclusion. Further, exhibit R2 was a letter from 2022 where the respondent indicated a willingness to negotiate a result of professionally supervised time.
Neither the rejection of the offer, nor an isolated indication of willingness to negotiate narrowly, add to, or significantly detract from the overall picture of the singular pursuit of no time in the absence of reasonable justification.
Although the applicant relied heavily upon the manner of conduct of the interlocutory phases of the litigation and identified a shortlist of interlocutory events to illustrate further poor conduct by the respondent in relation to the proceedings, those interlocutory events fall short of establishing such.
Returning to the issue of the financial positions of the parties, it may be observed that each has carried the heavy effects of the costs of the litigation, each spending comparable amounts. Although each is in receipt of a strong income, each also bears expenses approximate to such. Should a costs order be made it will improve the heavily indebted position of the applicant, but will place a heavy burden, that it may be supposed would not be quickly discharged, upon the respondent. Some acknowledgement of such can be seen in the fallback position of the applicant that there be a significant period allowed for the respondent to pay. Although the applicant sought to make much of the respondent’s previous access to resources to enable her to expend such sums on her legal representation, there is no basis to consider that such resources, whether from family or otherwise, remain to be accessed by the respondent.
In considering whether the overall circumstances warrant an order for costs, the caution expressed in relation to parenting proceedings in Hawkins & Roe must be borne in mind. Such a caution is reflective of the difficulties inherent in determining the best interests of a child, and for a parent in determining what orders ought to be pursued. As counsel for the respondent submitted, it is a chilling prospect that a parent would be dissuaded from the pursuit of parenting orders by the shadow of a potential costs award.
However, in this case, the pursuit of a no time case by the respondent was based on factual premises as to family violence, drug abuse and a sexual risk that were without basis and without merit. In particular, the circumstances of X’s time with the applicant always being supervised rendered the respondent’s assertions as to sexual risk, at best, highly speculative. The respondent pursued a case on a factual basis that, in reality, gave that position no support. Despite lacking a proper factual basis to pursue those claims, the respondent was single minded in her pursuit of no time. It is this aspect of the conduct of the case that, in the context of the other matters set out above, warrants a departure from the starting point that each party bear their own costs.
The issue is then as to the basis and extent of any costs order.
The applicant sought an order for the whole of the proceedings on an indemnity basis.
As to whether the costs should be other than party-party costs, as identified above, such an outcome is extreme. It requires more, as identified by Reithmuller J in Roydon, than the pursuit of a speculative case. It requires, as identified by Holden CJ in Marriage of W P J Munday and H J Bowman, “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 the sense that it was pursued in “wilful disregard of known facts”.
In this case the respondent was frank in her pursuit of no time and as to her motive to exclude the applicant from X’s life. Even assuming that she considered such to be in X’s best interests, her continued pursuit was in wilful disregard of known facts. In particular, the respondent pursued contentions and allegations that she should not have, conclusions ultimately being made as to absence of family violence, as to drug use not being as she alleged, as to the proceedings not being used as a form of abuse by the applicant, as to supervision that negatived the basis on which risk was predicated, and on expert evidence that rendered X’s behaviour as no good indicator of abuse.
This forms an extreme example of a case that has been pursued in wilful disregard of known facts. There was never a basis to pursue such a relief and the basis put forward, alleging serious misconduct and risk posed by the applicant, was untrue.
The particular circumstances of this case warrant a departure from party-party costs from the point at which the respondent’s conduct of the proceedings was at its most egregious, being from the raising of the sexual abuse risk contention. The groundless allegations and contentions around which her case was based came to their most extreme when the risk of sexual abuse was added to the contentions that the respondent pursued, even though the applicant’s time had always been supervised, and even though she was provided with strong evidence to counter the notion that anything could have happened. They constitute extreme circumstances where the respondent has pursued factual contention after factual contention to exclude the applicant, without merit in her case.
As to the proceedings leading up to that point, it can be taken that the whole of the proceedings are tainted by the respondent’s unreasonable pursuit of a remedy to exclude the applicant from X’s life.
The applicant had no choice but to pursue a remedy through the court if X was to have a relationship with him. In pursuing such he was confronted by cumulating groundless allegations.
This leaves the predominant circumstance justifying costs prior to the raising of the sexual abuse risk as being a part of the overall conduct of the proceedings that was unreasonable in its pursuit of a no contact remedy. That unreasonableness was revealed on final judgment but, given the findings made on final judgment, was never sustainable and was based on allegations of fact that ought not to have been made.
However, where costs orders have already been made, those particular aspects have been dealt with and warrant no further imposition of costs in respect of those aspects.
The ordering of costs will be a significant financial burden upon the respondent. This will be the case, in the context of her own legal fees, and in spite of her strong income earning capacity. Despite that burden, it is appropriate that costs be met for the applicant by virtue of the above circumstances.
Conclusion
Orders for costs in favour of the applicant will be made, excluding for those aspects of the proceedings where costs have already been dealt with by Judge Hughes on 24 October 2022 and Judicial Registrar Hiles on 22 September 2021.
Up until the raising of the sexual abuse allegation, as marked by the respondent’s application in proceedings filed on 21 March 2023, those costs will be on a party-party basis, based upon the Scale as representing a reasonable rate of engagement.
From the point at which the sexual abuse risk assertion was raised in support of the respondent’s case, as marked by the respondent’s application in proceedings filed on 21 March 2023, costs are to be paid on an indemnity basis.
Whilst the applicant sought costs to fully indemnify, based upon costs charged at well above Scale, the Scale represents a reasonable rate of engagement. There is not an adequate basis to consider that the additional component of costs above that reasonable rate should be met by the respondent, even where indemnity costs are warranted. Further, the indemnification should be on a solicitor-client basis, as costs incurred outside of that basis should not be considered as reasonably incurred.
Although this will require the costs to be as assessed or as agreed, and that this may then subject the parties to the further burden of assessment, in the absence of agreement assessment is the best available method for ensuring the appropriate quantum.
A remaining issue is as to the costs of this application. Although the respondent made an offer, it pales in comparison to the order to be made here.
Neither party can be seen to have been wholly unsuccessful in the costs aspect of the proceedings. However, the overall circumstances warrant the payment of costs in favour of the applicant, but on a party-party basis, there being no ongoing aspect of the conduct of this part of the proceedings warranting more.
Given the heavy burden the payment of costs in accordance with these orders will impose, it is appropriate, on consideration of the financial circumstances of the parties, to provide for the extended timeframe as contemplated by the applicant.
I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 13 September 2024
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