O’Khelleher & O’Khelleher (No 2)
[2022] FedCFamC1F 735
•27 September 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
O’Khelleher & O’Khelleher (No 2) [2022] FedCFamC1F 735
File number(s): SYC 8592 of 2016 Judgment of: SCHONELL J Date of judgment: 27 September 2022 Catchwords: FAMILY LAW – COSTS – Where the wife sought a costs order – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where both parties have not complied with the overarching purpose of family law practice and procedure – Where the wife’s costs are disproportionate to the issues and quantum of pool – Wife’s application dismissed – Each party to bear their own costs. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 190
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13
Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Colgate Palmolive Co & and Another v Cussons Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
O’Khelleher & O’Khelleher [2022] FedCFamC1F 393
Pascoe & Larsen (No 2) [2022] FedCFamC1A 126
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Penfold and Penfold (1980) 144 CLR 311; [1980] HCA 4
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 47 Date of last submissions: 23 September 2022 Place: Sydney Counsel for the Applicant: Mr Liedermann Solicitor for the Applicant: Falzon Legal Pty Ltd Counsel for the Respondent: Ms Snelling Solicitor for the Respondent: Suzanne Wyman & Associates ORDERS
SYC 8592 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS O'KHELLEHER
Applicant
AND: MR O'KHELLEHER
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
27 SEPTEMBER 2022
THE COURT ORDERS THAT:
1.The applicant wife’s Application in a Proceeding filed 29 June 2022 be dismissed.
2.Each party shall pay their own costs of the application.
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 O’Khelleher & O’Khelleher has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings for costs brought by the applicant wife (“the wife”) seeking costs either on what is described as a solicitor/client basis or in accordance with scale. The costs application arises in a context where it is contended amongst various other assertions that the respondent husband (“the husband”) failed to comply with his obligations of disclosure, failed to comply with drug and alcohol testing requirements, breached orders, and failed to return the wife’s personal property.
The wife relied upon the following documents:
(1)Application in a Proceeding filed 29 June 2022;
(2)Affidavit of wife filed 28 June 2022;
(3)Affidavit of wife filed 4 August 2022;
(4)Written submissions as to costs; and
(5)Written Submissions in Reply.
The husband relied upon the following documents:
(1)Response to an Application in a Proceeding filed 1 September 2022;
(2)Affidavit of husband filed 1 September 2022;
(3)Affidavit of treating psychiatrist filed 1 September 2022; and
(4)Written submissions as to costs.
Some background to the application is necessary to put in context some of the submissions that are made by each of the parties. In that respect these reasons should be read in conjunction with my reasons delivered in O’Khelleher & O’Khelleher [2022] FedCFamC1F 393 (“O’Khelleher & O’Khelleher”).
The wife commenced proceedings seeking financial and parenting orders on 22 December 2016. The parenting aspect of the proceedings was resolved by a judge of the then Federal Circuit Court of Australia on 6 October 2020. It would appear that there were numerous appearances before the docketed judge and ultimately on 26 March 2021, according to submissions of the husband, the Federal Circuit Court judge described the matter as complex and transferred the matter to the then Family Court of Australia.
The matter first came before me for the purposes of allocation of hearing dates on 10 December 2021. On that date, the matter was listed for hearing for three days commencing 16 May 2022. Judgment was delivered on 1 June 2022.
The pool of assets for division between the parties was approximately $1.5 million. One of the issues in the proceedings was the treatment of the husband’s pension entitlements as a consequence of his employment in the Australia Defence Force (“ADF”). There was nothing complex about the proceedings.
I note that I recorded the following in my judgment of O’Khelleher & O’Khelleher:
20.The wife sought orders that saw the pool of assets as determined by her divided as to 70% to the wife and 30% to the husband (Exhibit 2). To achieve that outcome, the wife sought the sale of the [C Town] property and that she receive that entire net proceeds of sale with a further payment to her to achieve a 70% split. Alternatively, she sought that the home at [C Town] be sold and that the proceeds be paid as to 70% to her and an equal split of the husband’s superannuation entitlements.
21.The husband in his Case Outline sought that the pool of assets as determined by him be divided as to 70% to the husband and 30% to the wife. To achieve that outcome, the husband sought a set sum be paid to the wife and that there be a superannuation split of $80,000 from the husband’s defined benefit fund in the growth phase.
…
27.In my view and for the reasons set out below, neither of the positions of the parties represents a just and equitable outcome.
28.Each of the parties have incurred a significant debt in relation to legal fees (Exhibit 9). In the case of the wife, the costs notice indicates that she has paid $71,195 and still owes in excess of $364,000. This is a huge sum of money that is disproportional to both the size of the pool and the issues in the proceedings, which are not complex.
29.The husband’s costs notice evidences that he has incurred fees of $78,000.
30.There has been a complete lack of focus and proportionality brought by the parties in relation to what are relatively straightforward financial proceedings arising out of their 8 year relationship. Perhaps emblematic of the absence of focus in the proceedings is the reliance by the wife on a tender bundle comprising some 1,197 pages of which, at best, 75 pages were tendered in evidence.
31.The husband was no better. He failed to comply with directions, was consistently tardy in his obligations as to disclosure, and filed his affidavits late.
…
58.Much of the evidence in the affidavits was of limited assistance and much of it amounted to broad ranging submissions and criticisms of the other party’s behaviour or conduct, which was irrelevant. Its irrelevancy was highlighted by the absence of cross-examination on many of the assertions, or any submission by each of the parties’ representatives as to its relevance.
…
85.Large sections of her affidavit were devoted to an analysis of expenditure by the husband in the period post-separation. The purpose of doing so remains illusory. On the one hand she seems to have established that large sums of money received by the husband post-separation have been expended on lifestyle issues, thereby, I presume contending waste, whilst on the other hand, contending that there were monies that were retained by him or otherwise, in some sense, not brought to account. Initially the wife contended that there was approximately $800,000 that was unaccounted. By the time submissions closed, it had reduced to the amount identified by her at Item 22, which was characterised as a financial resource. Ultimately, the matter was not properly articulated by the wife’s counsel as to how the Court should otherwise treat these monies other than in a very generic way under s 75(2). The Court remains unclear as to whether it was contended this should be characterised as waste or undisclosed funds
86.Notwithstanding suggestions of there being a fund of money available and undisclosed, I do not accept such a proposition. I do not accept it because it is inconsistent with much of the wife’s evidence about the husband spending large sums of money post-separation, and it is inconsistent with the evidence of the husband and his partner, which I accept.
87Parties do not live in suspended animation in the period post-separation. It is unrealistic to suggest that parties should not spend their own money nor does the Court expect there to be an audit or accounting of funds received in the period post-separation, particularly in circumstances where it is represented by a period of approximately six and-a-half years. I do not propose to do so in this case.
88.The wife was also critical of the husband in converting his superannuation into a pension and seemed to suggest this was done to defeat an order. It was suggested that in response to her making an enquiry as to his superannuation, the husband converted the superannuation into a pension. I do not accept this submission. I accept the husband’s evidence as to the circumstances in which he obtained the pension, which indicates that the process commenced 12 months before the wife made any enquiries in relation to his superannuation.
89.There were also suggestions of the transfer of assets by the husband into his wife’s name such as cars to defeat an order but I note these are in the pool of assets for division.
90.I recognise that in the period post-separation, the husband has had occupation of the former matrimonial home. The wife sought to contend that the husband has had the benefit of approximately $38,000 by reference to various applications made by him to the mortgagee for financial relief. I recognise, however, that the mortgage balance at the time of separation was $584,769 (wife’s affidavit, paragraph 86) and when the husband first sought financial relief from the bank, it was approximately $572,000. I note that it currently is approximately $562,000. Contrary to the wife’s suggestion, the mortgage balance on the above evidence has reduced by approximately $22,000.
91.I do not accept that it is appropriate to undertake some form of accounting to determine the benefit of the financial relief to the husband in a mathematical sense. It is inconsistent with the holistic exercise that I am required to undertake. I do, however, recognise that the husband has had the benefit of occupation of the former matrimonial home to the exclusion of the wife. I note, however, as well, that the property has increased in value, which is to the benefit of the parties.
…
111.The wife made a number of submissions in relation to non-disclosure by the husband and in relation to what was described as monies under his partner's control and her savings of $159,000. I have made findings that I do not accept that there is an undisclosed sum of money. The husband’s partner did contribute $159,000 to the relationship with the husband and it has all gone. I have identified earlier that this money no longer exists.
112.The wife also submitted that there has been waste by the husband in relation to gambling and alcohol, suggesting in her Case Outline that during the relationship it totalled $13,408 and post-separation it totalled $92,411. In relation to the amount pre-separation, I note the parties agreed to an addback of $10,737, whilst in relation to the post-separation amount I also take into account that the husband has suffered significant mental illness and recognise the evidence of his psychiatrist that he has used alcohol to deal with his psychiatric conditions.
113.I accept that the husband has been tardy and lackadaisical in relation to his obligations of disclosure and refer to those parts of his affidavit where he admits as much. It has not, however, been established before me that there exists property that has not been disclosed or that is not otherwise captured in the current assets of the parties.
…
117The effect of that adjustment means that the wife will receive a property settlement in percentage terms as to 45%.
Observations in my judgment about the lack of proportionality were in vain. The wife’s affidavit in support of the application for costs referenced over 425 pages of exhibits. Her costs in making the application are said at scale to be nearly $13,000.
The wife’s written submissions identify that she seeks costs as a consequence of the following:
(1)The failure of the husband to comply with drug/alcohol testing orders;
(2)The failure by the husband to spend time in accordance with various orders;
(3)Costs incurred by the wife in seeking access to her personal property;
(4)Costs incurred as a consequence of seeking various restraints in the parenting proceedings;
(5)Costs incurred arising out of alleged contraventions;
(6)Costs incurred as a consequence of the husband failing to comply with his obligations of disclosure; and
(7)Costs incurred in relation to an ex parte application.
The husband’s counsel contends that the wife’s costs in relation to that part of the application which relates to parenting proceedings should, in accordance with r 12.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), have been made within 28 days of a final order. In that context, it is contended that the final parenting orders were made on 6 October 2020 and no application in a case was filed until 29 June 2022, which is nearly two years later.
I do not accept the husband’s counsel’s submission. The rule references a final order in the proceedings. A final order in the proceedings was not made until 1 June 2022.
The husband also contends in relation to the question of costs generally that he suffered from post-traumatic stress disorder (“PTSD”) characterised by alcohol misuse and that his illness in part explains his failure to comply with various obligations. It is further contended that in relation to his inability to spend time with the child, the husband advised the wife on most occasions when it was that he was unable to spend time.
The husband in his affidavit opposing the application for costs contends as follows:
16. In 2015 I was officially diagnosed with [a number of psychiatric conditions] arising from my tours of duty to [Country D], [Coutnry E] and [Country F] where I witnessed the most violent atrocities. I came under the care of [Dr H], Consultant Psychiatrist [in early] 2015 and I remain under his care to this day. I have suffered and continue to suffer episodes of depression and hopelessness. I became dependent on alcohol by way of self-medication as a means to escape the flashbacks and to try to relieve the pressure I was under relating to the property and parenting proceedings instigated by the wife. I have been hospitalised on a yearly basis since diagnosis. Annexed 1md marked "8" is a report from [Dr H] dated [mid-2022].
17. I was unable to comply with the wife's Solicitor's constant requests as I was unwell. I suffered from disordered thinking and the inability to concentrate. I was mentally unable to comply with the demands of the Applicant's Solicitors. There were occasions when I could not face seeing William due to my mental illness and not being able to see my son broke my heart and I would spiral. The Applicant showed no empathy or understanding for my condition. It was a constant bombardment of demands and threats from both her and her Solicitor. There was a period of some months that I could not respond to my own Solicitor and at one point I was self-represented. Ms Wyman has always given my family and myself much support and understanding throughout these difficult periods. Annexed and marked “C” is a list of my hospitalisations throughout the matter.
18. I say that during this time, my mental illness was at its worst. I was always compliant in attending CDT testing when I could…
19. In relation to the issue of financial disclosure, I say that disclosure was made on 13 May, 2020 by way of email. Notwithstanding my Solicitor forwarding a letter to the wife's solicitors on 14 May, 2020 apologising for the delay and explaining the circumstances for such delay in that I had been recently hospitalised and therefore was unable to comply with Orders, the Wife filed a Contravention Application and Affidavit to the Court on 14 May, 2020. Annexed and marked “D” ls a copy of a letter from my Solicitor to the Applicant's Solicitor dated 14 May, 2020.
20. I made full and frank disclosure whenever I was in a position to do so. Annexed and marked “E” is a copy of my Solicitor’s Certification detailing all disclosure and the dates of the disclosure. This document was forwarded to Judge Kemp's Associate on 21 August 2020. I concede that there were periods that I was unwell and was not able to comply with the Solicitor's requests. I suffered from disordered thinking and the inability to concentrate. I would be hospitalised, however upon discharge from hospital, I was able to comply with requests from the Wife’s Solicitor where I could.
The husband’s evidence is largely consistent with the evidence that was adduced at trial, which was not the subject of any challenge. I accept the husband’s assertions.
The husband relied upon evidence from his treating psychiatrist Dr H, who produced a report dated 18 August 2022. Relevantly, he reports:
His psychiatric conditions are complex and severe. As a result of his severe psychiatric conditions and chronic pain his ability to cope with stress, planning und organising his activities has been impaired. He had significant difficulty coping with the protracted legal proceedings in relation to financial and child custody issues with his former wife. As a result of his severe symptoms and cognitive difficulties he was not able to comply with demands. During the period of the legal proceedings, he had exacerbation of his symptoms due to stress going through the legal proceedings and meeting the demands. He had exacerbation of his symptoms of post-traumatic stress disorder, major depressive disorder, and anxiety disorder. He had multiple hospitalisations to manage the exacerbation of his symptoms, His recent hospitalisations in June 2019 and April 2020 were to manage his exacerbation of symptoms of his mental illness due to his inability to cope with stress.
In my opinion, [Mr O'Khelleher’s] severe mental health conditions, his inability to cope with the stress, exacerbation of his symptoms due to stress and his hospitalisations were the reasons for the delay in him meeting the demands of the matter and complying with orders.
(Affidavit of Dr H filed 1 September 2022, Annexure A)
There is no challenge to the doctor’s evidence. No request was made was to cross-examine the doctor. I accept his evidence.
I have read all of the material relied upon by both parties, including the numerous documents referenced in the affidavits. As a consequence of a lack of clarity arising from the quantum of costs sought by the wife, the matter was required to be relisted. The relisting revealed errors in the amount sought by the wife.
An amended re-calculation revealed that the wife sought costs on a solicitor client basis in the amount of $209,898.50 and on a party/party basis in the amount of $136,945.46.
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(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. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
Justice Sheppard in Colgate Palmolive Company and Another v Cussons Pty Ltd (1993) 118 ALR 248 observed as follows at 256–257:
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client 88as and when the justice of the case might so require’’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo:88the categories in which the discretion may be exercised are not closed’’. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724(Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
The category of cases in which a court may make an indemnity costs order are not closed and are not limited to those identified by Shepard J. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471, the Full Court said:
… It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some ''particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis'': per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
There was nothing exceptional about the circumstances of this matter particularly when seen against my overall findings and aspects of the case brought by the wife in which she was completely unsuccessful. The circumstances necessary for the making of an indemnity costs order have not been made out.
The issue therefore becomes whether I consider in the exercise of my discretion it is just to make an order for costs on a party/party basis and if so in what amount. The Rules and authorities make plain that I can fix an amount for costs. As McClelland DCJ observed in Pascoe & Larsen (No 2) [2022] FedCFamC1A 126:
27.Rule 12.17 of the Rules sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
28.In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
29.Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which provides a general rule that each party to proceedings should bear their own costs.
Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).
In Penfold and Penfold (1980) 144 CLR 311, the plurality in the High Court determined that to make an order under s 117(2), the Court needs to make a finding of justifying circumstances as a preliminary prerequisite to the making of an order. Their Honours also observed that terms such as an exceptional case, special circumstances or a clear case are not necessary determiners of whether or not an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123, the Full Court observed:
41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs
Dealing now with the relative subsections in s 117(2A).
(a) the financial circumstances of each party to the proceedings
Neither party has filed a financial statement. Notwithstanding that, I have had regard to my findings in the judgment. Neither party could be described as wealthy. The consequence of the litigation and the husband’s health issues have impacted considerably on each of the parties. That said, impecuniosity is not a basis for not making a costs order.
(b) whether the parties are in receipt of legal aid
Not relevant.
(c) the conduct of the parties to the proceedings
The wife contends that the husband’s conduct is relevant to the granting of a costs order.
What is relevant is conduct of a party, which in some way or other leads to an increase in costs by the other party. Such factors may include uncooperative behaviour, obstruction, prolonging litigation or the bringing of unreasonable or unmeritorious applications. It may include non-disclosure or a failure to comply with the Rules of Court in relation to disclosure.
There is no issue that the husband did not comply with orders for testing. He has provided some context and explanations as to why. The husband does not dispute that there were multiple occasions in which he did not spend time with his son as provided by orders. He says that on many occasions, he provided the wife with notice. I accept that the husband was tardy in respect of arrangements in relation to access to the wife’s personal property and in relation to matters of disclosure and providing arrangements in relation to valuation of various assets. I note the wife’s submissions in reply contend that the husband “failed to provide sufficient disclosure” (at paragraph 16). I do not know what that means and make reference to my findings above, including that the wife was unsuccessful at the hearing in establishing non-disclosure by the husband. I accept that the wife was successful in obtaining the orders that she sought in the contested aspects of the parenting proceedings and in relation to an ex parte hearing.
I accept that the husband’s conduct in the proceedings is a matter that goes to the determination as to whether a costs order should be made. However, such conduct is but one aspect in the consideration of costs.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
The proceedings related to parenting and financial relief. The parenting proceedings were resolved for the most part by consent. There were aspects that required a determination that resulted in reasons being delivered by a judge of the then Federal Circuit Court of Australia. The financial proceedings required a hearing and judgment. It could not therefore be said that the proceedings were necessitated by a failure to comply with a court order. They were necessitated by the parties’ failure to compromise and reach agreement.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 Fam LR 31).
The husband was not wholly unsuccessful.
(f) whether any party has made an offer in writing
No reference was made to any offer in writing.
(g) any other matter the Court considers relevant
The husband was a member of the ADF. During his service, he undertook tours of duty in overseas locations. He was medically discharged in 2017. His military service has had a profound effect upon him, leaving him with a number of psychiatric conditions. He is unlikely to ever return to his pre-illness level of functioning. It is the consequence of his psychiatric conditions that explains much of the conduct that the wife relies upon as founding the costs application.
I also take into account what I regard as an extraordinarily disproportionate incurring of costs by the wife in the proceedings. It is completely unfathomable how the wife could have incurred legal fees in excess of $438,000 in the circumstances of this matter. It is neither justified nor proportional. The reasonableness is questionable.
Apposite to the above, the husband’s written submissions recorded the following:
5. The parenting evidence relied on by the wife, was over detailed, at times historical and in many aspects irrelevant to the issues then before the Court, given her concentration on problems with the father ' s behaviour in 20 l 5 and 2016, at a time he was very ill and his [psychiatric conditions were] undiagnosed. Just prior to the parenting hearing on 10 August, on 24 July, 2020 the mother filed an affidavit of 214 pages and 386 pages of tender documents. The husband was required to address the issues raised at this late stage.
…
14. At a Directions/Interim hearing conducted by telephone on 8 July, 2020 the applicant wife sought that the Court deal with multiple applications, one filed on 7 July, the day before the hearing and supporting affidavits. There were 4 Applications and 5 Affidavits. His Honour Judge Kemp noted “I have been subjected to an avalanche of documents, 155 pages including an Application filed on 6 July and documents associated with it. So many pages my associate was unable to print out the documents.” These Applications included a Contravention application, applications for further disclosure, for appointment of a Forensic Accountant and for a joinder of the respondent's wife [Ms N] as a party. These multiple interlocutory applications complicated the matter, to the extent His Honour Judge Kemp ultimately expressed a view, the property matter requires transfer to the Family Court.
15. At the Directions Hearing on 25 March, 2021 a submission was made on behalf of the wife, that there existed $1.8M which should be added back into the property pool and that the undisclosed property required the engagement of a forensic accountant. As His Honour Judge Kemp previously foreshadowed, he then made the order to transfer the matter to the Family Court, as the matter had become 'Complex'. It was, at that time and remained the husband's case, the matter was not complex and should be allocated a hearing date and that any alleged lack of disclosure by the husband, which was denied, could be dealt with by His Honour applying the principles in Black & Kellner. His Honour decided to transfer the matter to the Family Court. At the final hearing of the property proceedings in May, 2022 whilst there were issues between the parties as to the application of funds, no large sums of hidden or undisclosed funds were found to exist.
16.…
After filing her Initiating Application, the wife filed amended Initiating Applications on 24.02.2017, 20.03.2021, 24.06.2021.
The wife filed Applications in a Case on;
22.12.2016, 18.10.2018, 30.10.2018, 17.10.2019, 20.05.2020, 06.07.2020,
and a Contravention Application on 14.05.2020
17. The wife's trial affidavit consists of 89 pages plus exhibits of l, 197 pages. Together with a voluminous tender bundle. It is submitted, this constituted an excess of material, much of which was not relevant or material to the decision required of the Court.
18. At the final hearing of the property matter the husband relied on an affidavit of I 6 pages with 69 annexure pages, an affidavit by his wife [Ms N] of 47 pages including annexures and a Tender Bundle of23 pages, all of which were relevant documents. Thus, the husband's case was contained in 155 pages plus his Financial Statement.
19. At the final hearing, the wife relied on a Tender Bundle of 1,197 pages of which at best, 74 pages were formally tendered, therefore indicating in excess of 1,000 pages had no relevance, but required inspection in preparation for the hearing.
(As per the original)
None of these paragraphs were put in issue by the wife in her submissions in reply. There is much force to these submissions.
I also note s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA”) is as follows:
67 Overarching purpose of family law practice and procedure provisions
(1) The overarching purpose of the family law practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Note 1: See also paragraphs 5(a) and (b).
Note 2: The Federal Circuit and Family Court of Australia (Division 1) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(2) Without limiting subsection (1), the overarching purpose includes the following objectives:
(a) the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 1);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court’s overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3) The family law practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(4) The family law practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:
(a) the Rules of Court;
(b) any other provision made by or under this Act, or any other Act, with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
The overarching purpose is reinforced by the Rules and the Central Practice Direction - Family Law Case Management (CPD), especially the core principles including that parties must conduct the proceedings (including negotiations for settlement of the dispute) in a way that is consistent with the overarching purpose. Further, legal practitioners are expected in the conduct of proceedings to take account of the duty imposed by s 67(1) and s 190(1) of the FCFCOA.
I am not satisfied that either party has complied with the overarching purpose of family law practice and procedure. The wife’s costs are disproportionate to the issues and the quantum of the pool. She failed to establish much of what she asserted. To order cost in such circumstances would not be just. Having regard to all of the circumstances, I am not satisfied that I should depart from the usual order.
Accordingly, I will dismiss the wife’s application other than to record that each party shall pay their own costs of the application.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 27 September 2022
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