O'Brien & O'Brien

[2017] FamCAFC 219

FAMILY COURT OF AUSTRALIA

O’BRIEN & O’BRIEN [2017] FamCAFC 219

FAMILY LAW – APPEAL – CHILDREN – Where final parenting orders were made in 2013 by consent – Where the primary judge dismissed the mother’s application for variation of the orders – Where the primary judge’s expression of the Rice and Asplund test does not align with Full Court authorities – Where the primary judge impermissibly restricted his consideration of the evidence – Where several orders were sought on discrete issues not covered in the consent orders – Where the primary judge erred in dismissing the application in its entirety – Appealable error demonstrated – Order set aside and matter remitted.

FAMILY LAW – APPEAL – COSTS – Where the primary judge ordered that the mother pay indemnity costs for a discontinued contravention application – Where his Honour’s conclusion that the mother filed the application for an improper purpose was unsupported by the evidence – Where the primary judge denied the mother procedural fairness – Where the primary judge did not resolve the issue as to the quantum of costs claimed – Appealable error demonstrated – Re-exercise – Where the mother conceded that she should pay costs – Costs ordered as per Schedule 1 of the Federal Circuit Court Rules 2001 (Cth).

Family Law Act 1975 (Cth) s 117(2A)

Federal Circuit Court Rules 2001 (Cth) Schedule 1

Bale v Mills (2011) 282 ALR 336

Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
D & D (Costs) (No. 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361

Marsden v Winch (2009) 42 Fam LR 1
Rice and Asplund (1979) FLC 90-725
Smit and Pickworth (1981) FLC 91-071
SPS and PLS (2008) FLC 93-363

APPELLANT: Ms O’Brien

RESPONDENT: Mr O’Brien

FILE NUMBER: PAC 3667 of 2012

APPEAL NUMBER: EA 14 of 2017

DATE DELIVERED: 17 October 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ainslie-Wallace, Aldridge & Watts JJ

HEARING DATE: 17 October 2017

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 21 December 2016

LOWER COURT MNC: [2016] FCCA 3194

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Kearney SC

SOLICITOR FOR THE APPELLANT: Anderson Boemi Lawyers

COUNSEL FOR THE RESPONDENT: Mr White SC

SOLICITOR FOR THE RESPONDENT: Michael Conley Lawyers

Orders

1. The appeal against the orders of Judge Dunkley made on 21 December 2016 be allowed.

2. Order 2 of the orders made on 21 December 2016 be set aside.

3. The appellant mother’s Further Amended Initiating Application filed on 7 September 2016 be remitted to the Federal Circuit Court of Australia for rehearing by a judge other than Judge Dunkley.

4. Order 1 of the of the orders made on 21 December 2016 be set aside insofar as it provides for payment of the amount of $9,611 and the amount of $915 be inserted in lieu thereof.

5. The respondent father pay the appellant mother’s costs of and incidental to the appeal, such costs to be agreed or assessed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym O’Brien & O’Brien has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number:  EA 14 of 2017
File Number:  PAC 3667 of 2012

Ms O’Brien

Appellant

and

Mr O’Brien

Respondent

EX TEMPORE REASONS FOR JUDGMENT

Ainslie-Wallace J

1. On 21 December 2016 Judge Dunkley of the Federal Circuit Court of Australia made orders in parenting proceedings between Ms O’Brien (“the mother”) and Mr O’Brien (“the father”). The parenting proceedings relate to the two children of the parties, C, who was born in 2006 and D, who was born in 2007.

2. His Honour dismissed the mother’s application for variation of parenting orders filed on 7 September 2016 and ordered that the mother pay the father’s costs of a discontinued contravention application in the sum of $9,611. By Further Amended Notice of Appeal filed on 22 June 2017 the mother appeals against both orders. The father resists the appeal.

3. Some background to both the application for variation of the orders and the costs application is necessary so as to give context to the appeal.

Background

Application for parenting orders

1. On 11 April 2013 the mother and father consented to parenting orders in relation to the children. Those orders provided that the parties have equal shared parental responsibility, and that the children live with the mother from Wednesday to Saturday each week, and with the father for the remainder of the time. The orders also provided for the parties to be entitled to extra school holiday time and set out, in significant detail, the manner in which agreement was to be reached between the parties in relation to this additional time with the children.

2. On 1 April 2015 the mother filed an Initiating Application seeking that the final parenting orders be varied.  That application, later amended in September 2016, was the subject of the hearing before the primary judge and from which the appeal arises.  The mother sought a variation of the parenting orders so that the children would spend time with each parent on a week about basis, and for half of the school holidays.  The mother also sought further orders as to the children’s surnames, the high school at which they will attend and provision for overseas travel. It seems that there was no contention that these latter matters had not been otherwise the subject of orders.

3. The mother’s argument was that the orders made in 2013 were unnecessarily complex and had resulted in protracted negotiations between her and the father over the time that the children would spend with her. She pointed to the arrangements made for the school holiday period over 2014 to 2015 which produced 87 emails between her and the father.

4. In response, the father asserted that the orders were not complex but that the difficulties attending arrangements were of the mother’s creation.  He sought different orders in relation to overseas travel and disagreed with the mother’s position on overseas travel, although it is tolerably clear that part of the proposal for overseas travel was common to both of them and, though they differed in technical terms such as the amount of written notice required, both parties sought that the court determine this issue. 

5. On 25 May 2015 the father filed a contravention application, alleging that the mother had contravened the 2013 consent orders. On 10 June 2016 the mother admitted to contravening the orders on 25 occasions.

6. On 6 October 2016 judgment was delivered ordering the mother to enter concurrent bonds to be of good behaviour and obey the consent orders, as well as providing for 45 nights of make-up time.

7. On this same day, that is 6 October 2016, the mother’s amended application for variation of the orders was listed for a “threshold hearing” by which I understand the primary judge would consider whether, in light of the orders being made in 2013, a prima facie case of changed circumstances had been established sufficient to justify a reconsideration of those orders.

8. The mother’s application for variation of the parenting orders was dismissed in its entirety by his Honour on 21 December 2016. No orders were made in relation to the father’s amended response, which sought orders in relation to overseas travel.

Costs

1. On 23 May 2016 the mother filed a contravention application alleging that the father had breached the parenting orders. This application was discontinued on 30 August 2016. The father filed an application seeking indemnity costs for the discontinued application on 15 September 2016 which was heard on 6 October 2016.

2. His Honour made that order for indemnity costs in the amount of $9,611 which was the amount sought by the father.

The appeal

1. As I have said, the mother appeals both against his Honour’s order dismissing her application for variation of orders and the costs order.

Appeal against dismissal of the parenting application

1. The primary judge said at [50], referring to Rice and Asplund (1979) FLC 90-725:

   … that Courts should have regard to earlier orders and the reasons for those orders and should not lightly entertain an application for variation without being satisfied that there is some changed circumstance which will justify such a serious step, or some new or undisclosed factor which would have been material.

2. His Honour continued:

   52. In the present proceedings it is the [mother] who bears the onus on the civil standard of proving the change in circumstance or new factor that would mean new or changed parenting orders are in the children’s best interest.

3. His Honour said at [53] that while the parenting orders were complex this was “by the parties choosing so as to meet the best interests of [the children] otherwise the parties would not have consented nor would the court have made the orders.”

4. The primary judge said that apart from referring to the complexity of the orders, the mother “proffers no new circumstance nor any change in circumstance” at [55].

5. Thus his Honour dismissed the application for variation of parenting orders.

6. There are four challenges to his Honour’s dismissal of the mother’s parenting application.  However, the thrust of the challenge is that his Honour failed to properly identify and apply the principles in what is conveniently referred to as the Rice and Asplund determination.  The other grounds challenge his Honour’s dismissal of the whole of the application without considering the issues between the parties which were not part of the 2013 orders. 

7. It is perhaps important to set out here the relevant principles which are conveniently set out by the Full Court in Marsden v Winch (2009) 42 Fam LR 1 (“Marsden”).  In that case, after discussion of the earlier authorities and, in particular, adopting statements made by Warnick J in SPS and PLS (2008) FLC 93-363 (“SPS”) the Full Court said:

   48. In summary, the best interests issue arises because there are so many changes in the lives of families that the changed circumstances that will permissibly allow re-litigation of a decision must be circumscribed, otherwise there would exist in some cases the spectre of endless litigation finalising only when the child attains 18 years of age and the courts no longer have jurisdiction.

   49.However, even that simple formulation must be subservient to the nature of the application itself.  This is the genesis of the “rule” in Rice and as Warnick J says it is founded on the notion that continuous litigation over the child or children is not generally in their interests.  It is usually hoped that the determination of a controversy concerning children by a court will result in at least a reasonable period of stability of those arrangements and freedom from the stressful and conflictual effects of litigation on both parents and children.  In addition, recent research demonstrates that conflict between parties is itself harmful to children.  

   50. Nevertheless, there are significant changes that occur and which do require a court to reconsider decisions previously made.  Whether in a particular case a court should be willing to embark upon another hearing concerning the child and parent, or whether to do so would itself be demonstrably contrary to the best interests of the child, is a decision to be made in each particular case.  How is that decision to be made?  The court must look at:

   (1)       The past circumstances, including the reasons for the       decision and the evidence upon which it was based.

   (2)Whether there is a likelihood of orders being varied in a significant way, as a result of a new hearing.

   (3)If there is such a likelihood, the nature of the likely changes must be weighed against the potential detriment to the child or children caused by the litigation itself.  Thus, for example, small changes may not have sufficient benefit to compensate for the disruption caused by significant re-litigation. 

   (Footnote omitted)

8. His Honour’s expression of the “test” to be applied as set out in his reasons at [52] does not align with the Full Court authorities and restricts the nature and extent of the enquiry necessary to the determination. To merely look to whether there has been a “change in circumstance” or the coming to light of some previously undisclosed piece of information is not consistent with the principles as explained in Marsden. As was emphasised by both Warnick J in SPS and the Full Court in Marsden, the rule in Rice and Asplund is merely a manifestation of the best interests principle. I note too that in submissions to his Honour counsel for the mother correctly set out the principles to be applied. Unfortunately they did not translate to his Honour’s reasons.

9. I am of the view that having impermissibly restricted his consideration of the evidence before him in the way he has, his Honour failed to give proper consideration to the facts before him and on which the mother relied in seeking a hearing of her application.  At this stage, his Honour was doing no more than considering whether it was in the best interests of the children that a hearing take place.

10. In response to counsel for the mother’s submission that the orders were complex in their nature and the attempts at implementation had resulted in complaints in relation to changeovers and threats of contravention applications his Honour said:

    But they knew that at the time they entered into the orders.

    …

    … They knew what they were getting themselves into. They must have decided at that point that this was in the best interests of the children.

    …

    … but that’s the underlying basis that orders are made. They have to be in the best interests of the children and reasonably practicable …

    (Transcript 6 October 2016, page 10 line 7 – 20)

11. It may be beyond doubt that when the parties negotiated these complex parenting arrangements they understood them and, no doubt, hoped that they would provide for certainty and harmony in their dealings with each other relating to the children. That, however, is no answer to the complex question to be answered in determining whether a further hearing should take place. Rather, it reduced the issue to one of virtual issue estoppel.

12. In my view his Honour’s consideration of this issue was based on wrong principle and confined his attention impermissibly.

13. Further, his Honour failed to take into account the fact that the father had brought a contravention application in which he alleged, and the mother conceded, 25 breaches of the orders and that in correspondence the father threatened the mother with contravention proceedings on a number of occasions. Consideration of these facts might have indicated to his Honour that the orders were not working and a reconsideration of the orders may indeed have been in the children’s best interests.

14. Thus in my view, this challenge to his Honour’s orders is made out. However, it cannot be ignored that while the transcript makes it clear that his Honour was aware that there were unresolved issues between the parties, and in relation to at least schooling and overseas travel both parties were asking the court to resolve them, his Honour nevertheless dismissed the application in its entirety.

15. The primary judge’s reasons do not support the suggestion that his Honour preferred to leave those issues undetermined or intended that the parties decide the issues between themselves. Indeed, in any event, the affidavits before his Honour would have demonstrated the latter to be a triumph of hope over experience.

16. In dismissing the parenting application without determining those issues his Honour erred and, for that reason too, I would uphold the challenge to the order.

Costs

1. As I have indicated, on 23 May 2016 the mother filed an application alleging that the father was in contravention of the orders. The application was withdrawn some three months later, on 30 August 2016.

2. On 15 September 2016 the solicitor acting for the father filed an application seeking that the mother pay the father’s costs of the discontinued application on an indemnity basis.

3. The affidavit in support of that application indicates that the father’s solicitor was served with the application on 27 May 2016 and on 20 July 2016 the father’s solicitor corresponded with the mother’s solicitor on this issue. On 1 August 2016 the mother’s solicitor sent to the father’s solicitor a copy of a subpoena directed to the father’s phone service provider.  On 3 August 2016 the father’s solicitor filed a Notice of Objection to the subpoena challenging the relevance of some of the documents to which the subpoena was directed. 

4. On 30 August 2016 the father’s solicitor received the Notice of Discontinuance filed in relation to the contravention application.

5. His Honour’s reasons for decision on this point are brief. After noting that the application was withdrawn before any hearing of it took place his Honour said:

   25. However [the mother’s] discontinuance only occurred after some months since [the application] was filed and much exchanged correspondence.

   26. It seems probable she had no intention of proceeding with the contravention application and it was possibly only an exercise designed to annoy by the incurring of costs.

   27. If so it would have been an example of an abuse of process.  I do not believe I can go so far as making that finding.

   28. Nevertheless it incurred substantial costs for [the father] and this justifies the making of a costs order.

   (Emphasis added)

6. The primary judge made passing reference to the decision of Colgate Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 and noted at [30] that costs other than party and party costs must occur in “some unusual circumstance”. His Honour then found:

   31. In the present case the usual [sic – unusual] circumstance is the commencement and continuation of [the mother’s] contravention application with the probable ulterior motive of [the father] incurring costs.

   32. Additionally, another unusual circumstance, given the discontinuance before hearing is the making of allegations in the contravention application which should never have been made.

7. Having determined that a costs order should be made and made on an indemnity basis, his Honour then turned to s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”).

8. After noting that the mother’s affidavit set out her business interests and interest in real property, albeit with no values ascribed, his Honour said that she was “likely” to have the capacity to meet a costs order because there was no evidence that the business she operated ran at a loss.

9. Continuing his theme that the mother’s bringing of the application was not bona fide he said:

   37. The filing and then discontinuance before hearing of the contravention application leads to the conclusion that it was filed other than for legitimate litigation purposes.

   38. The discontinuance came after the provision of “evidence” on behalf of [the father] by his solicitors.

   39. Commencement and discontinuance before hearing of an application are indicative of wholly unsuccessful proceedings.

   (Emphasis added)

10. The grounds of appeal challenge his Honour’s findings that the application was brought for some ulterior motive and that the allegations made in the application ought not to have been made.  It was argued that the reasons do not provide any foundation for the conclusions on which his Honour relied.  Further, the grounds challenge the making of the order without any apparent consideration of the basis of the claimed costs.

1. Counsel for the father on appeal acknowledged considerable difficulty in maintaining his Honour’s findings of the mother’s lack of bona fides but contended that his Honour’s finding at [32] was sufficient to found the order for indemnity costs.

2. The acknowledgment of the difficulty in supporting the primary judge’s findings as to the mother’s motive was well made.  I must first observe that, although at [26] his Honour adverted to the possibility of an improper motive for bringing the proceedings and at [27] his Honour thought that he was not in a position to find that the application was an abuse of process, at [37] his Honour nonetheless concluded that it was filed for an improper purpose.

3. Nowhere in his reasons does his Honour support either his suspicion of improper purpose at [27] or his conclusion of an improper purpose at [37] by reference to the evidence.  It is to be observed that counsel for the father did not impugn the mother’s motives but did contend that the application ought not to have been brought and clearly, in those circumstances, counsel for the mother had no opportunity to address the primary judge on the point of the mother’s apparent mala fides. His Honour’s conclusions as to the mother’s motives were unsupported by the evidence and no submission was made as to there being an ulterior motive by the father’s counsel. In circumstances where nothing was put to the mother’s counsel, his Honour erred in so finding because in doing so he denied her procedural fairness (see Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361). Further in Bale v Mills (2011) 282 ALR 336 Allsop P, Giles JA and Tobias AJA said at 355:

   The inference sought was one, but only one, possibility. The matters to which we have already referred at [39] above in discussing what was not put to Mr Schipp reveal that a recognition of error and conscious dishonesty are not the only possible explanations. The inference that Mr Schipp was aware of the error and intentionally deceived his client is a possibility. It is a possibility about which minds might differ as to whether it is sufficiently probable to be a proper inference, that is more probable than not. … In our view that inference cannot be drawn as more probable than not, for the reasons set out below. Most importantly, however, could it be drawn with the requisite confidence in circumstances where that inference and its significance was never raised with Mr Schipp so that he was deprived of any opportunity to respond to it? The answer is plainly, no.

   (Emphasis added, references omitted)

4. As I have said, counsel for the father relied on [32] of his Honour’s reasons to support the making of an order for indemnity costs. 

5. While the primary judge clearly accepted counsel’s submissions that the mother’s application ought not have been brought, there is nothing in his Honour’s reasons to indicate why that is so.  Although his Honour repeats counsel’s submissions in his reasons, the reasons, like the submission, lack detail and merely assert that the application ought not to have been brought and that it was withdrawn once the father’s “evidence” in rebuttal was provided to her.  The father submitted that the mother’s decision to withdraw the application was directly associated with the provision to her of his evidence.  However, there was another finding open to his Honour as to why the application was withdrawn and it was submitted on behalf of the mother that:

   … [t]his is a situation where there was not only consideration given to the overall proceeding but it was given – consideration given to trying to have the Rice & Asplund matter dealt with before the court on a reasonably appropriate basis in time, when it wouldn’t have been able to with the application remaining outstanding …

   (Transcript 6 October 2016, page 22 line 9 - 13)

6. It was therefore argued the outstanding application for contravention would stand in the way of any substantive parenting hearing, including the threshold question being dealt with (see Smit and Pickworth (1981) FLC 91-071).

7. On appeal it was argued for the father that his Honour clearly rejected that explanation and in any event had the mother wished to advance it she was required to file evidence of her state of mind.  We do not accept that proposition in the circumstances of this case especially when counsel then appearing for the father did not raise the issue nor challenge the assertion of the mother’s counsel in this regard.

8. His Honour did not apparently accept that submitted reason of the mother.  Whatever he found, his Honour advanced no reasons for so finding and in that erred in law.  In the circumstances of this case, the mere withdrawal of an application for contravention does not of itself lead to the inference that it ought never to have been brought.

9. I accept the contention that his Honour failed to give reasons for that finding.

10. Thus so much of the basis for his Honour making an order for indemnity costs as was his conclusion that the mother’s contravention application was brought for an ulterior or improper motive has no foundation and there seems to me to have been no basis discernible in his Honour’s reasons for making that finding and the indemnity costs order.

11. Finally, it was argued that his Honour did no more than accept the amount of fees said by the father’s solicitor to have been incurred in relation to the matter.  Counsel for the mother in opposing the making of an indemnity costs order challenged the quantum of the fees before his Honour said to have been incurred.  His Honour did not resolve that issue or if he did, he gave no reasons as to its resolution.

12. Thus, in my opinion, the challenges to the costs order are made out and the appeal should be allowed.

Disposition

1. On the disposition of the appeal, I would propose that the application to vary the parenting orders should be remitted to the Federal Circuit Court for rehearing. Notwithstanding that there are further parenting matters listed for hearing before the primary judge, I consider that the findings he made, particularly as to the mother’s motives and his finding that she filed an application for a purpose other than for a legitimate litigation purpose, require the matter to be remitted to a judge other than the primary judge.

2. I also propose that the costs order should be set aside. 

Aldridge J

1. I agree with the reasons of, and the orders proposed by, the presiding judge.

Watts J

1. I also agree with the reasons of, and the orders proposed by, the presiding judge.

Re-exercise and costs

Ainslie-Wallace J

1. I am not satisfied that exceptional circumstances exist which would warrant an order for indemnity costs (see Kohan and Kohan (1993) FLC 92-340 and D & D (Costs) (No. 2) (2010) FLC 93-435). Nonetheless and not least because counsel for the mother conceded it, there should be an order for costs in relation to the withdrawn application. The primary judge found at [21] that the amount prescribed in Schedule 1, Part 1 of the Federal Circuit Court Rules 2001 (Cth) is an amount pursuant to item 10 which at the applicable time was $915. I would order that the mother pay the father’s costs of and incidental to the withdrawn contravention application in the sum of $915.

2. The appeal has been wholly successful.  Counsel for the father conceded that if the appeal was wholly successful he could not resist an order for costs and in my opinion the father should pay the mother’s costs of and incidental to the appeal.

Aldridge J

1. I agree.

Watts J

1. I agree.

Ainslie-Wallace J

1. The orders of the Court will therefore be:

   (1)The appeal against the orders of Judge Dunkley made on 21 December 2016 be allowed.

   (2)Order 2 of the orders made on 21 December 2016 be set aside.

   (3)The appellant mother’s Further Amended Initiating Application filed on 7 September 2016 be remitted to the Federal Circuit Court of Australia for rehearing by a judge other than Judge Dunkley.

   (4)Order 1 of the of the orders made on 21 December 2016 be set aside insofar as it provides for payment of the amount of $9,611 and the amount of $915 be inserted in lieu thereof.

   (5)The respondent father pay the appellant mother’s costs of and incidental to the appeal, such costs to be agreed or assessed.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Aldridge & Watts JJ) delivered on 17 October 2017.

Associate: 

Date:  10 November 2017