Obando & Obando (No 2)
[2024] FedCFamC1F 612
•13 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Obando & Obando (No 2) [2024] FedCFamC1F 612
File number: SYC 924 of 2020 Judgment of: MCCLELLAND DCJ Date of judgment: 13 September 2024 Catchwords: FAMILY LAW – COSTS – Where the mother seeks indemnity costs against the father – Where the father seeks an order that each party should bear their own costs – Where the Court is not satisfied there are exceptional circumstances warranting indemnity costs – Consideration of factors under s 117(2A) of the Family Law Act 1975 (Cth) – Where the father was not unsuccessful in respect to the entirety of the proceedings – Where the father has a superior financial position to the mother – Where the father’s conduct during proceedings caused unnecessary costs to be incurred – Father to pay 60 per cent of the mother’s costs assessed on a party/party basis. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.14, 12.17
Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Cross & Beaumont (2008) 39 Fam LR 389; [2008] FamCAFC 68
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2009] HCA 27
I and I (No 2) (1995) FLC 92-625; [1995] FamCA 80
Obando & Obando [2024] FedCFamC1F 461
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Prantage & Prantage (Costs) [2014] FamCA 850
Ressel & Morath [2023] FedCFamC1A 145
Stoian & Fiening (Costs) [2014] FamCA 944
Division: Division 1 First Instance Number of paragraphs: 35 Date of last submissions: 14 August 2024 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Lonsdale & Associates Lawyers Solicitor for the Respondent: Unified Lawyers ORDERS
SYC 924 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS OBANDO
Applicant
AND: MR OBANDO
Respondent
ORDER MADE BY:
MCCLELLAND DCJ
DATE OF ORDER:
13 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Mr Obando pay 60 per cent of the costs incurred by Ms Obando subsequent to 14 March 2024, with those costs being assessed on a party/party basis, within 28 days of those costs being agreed or assessed.
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 the pseudonym Obando & Obando has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ:
On 10 July 2024, I handed down judgment in this matter.[1] The final orders that I made granted the mother sole parental responsibility for the parties’ two children, required the father to transfer his interest in the former matrimonial home to the mother and allowed the parties to file written submissions, limited to three pages, in respect to the question of costs. These reasons determine an application for costs made by Ms Obando (“the mother”) against her former husband, Mr Obando (“the father”).
[1] Obando & Obando [2024] FedCFamC1F 461 (“Obando”).
The mother relies on written submissions dated 24 July 2024. That document includes the following annexures:
(a)a letter from the Legal Aid Grants Division addressed to the mother dated 19 July 2024, which provides an update on costs; and
(b)a Costs Notice filed on 22 March 2024.
The father relies on his written submissions in reply dated 14 August 2024.
The mother seeks indemnity costs pursuant to r 12.14(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The costs are assessed at $25,943.32, including $14,000 in respect to private legal fees attributed to an unsuccessful Application in a Proceeding brought by the father in 2022 for unsupervised time with the parties’ children, and $11,943.32 for costs associated with the final hearing under a Legal Aid Charge Agreement Grant. The father opposes the mother’s application and seeks an order that each party should bear their own costs.
I have determined that the father should pay 60 per cent of the mother’s costs of the final hearing incurred after 14 March 2024, assessed on a party/party basis.
THE LAW – INDEMNITY COSTS
The mother argues that her costs should be paid on an indemnity basis because:[2]
·The father was “wholly unsuccessful” in relation to interim parenting orders and also in respect to final property and parenting orders.
·The father conducted the proceedings in an overly litigious manner that prolonged the proceedings unnecessarily.
·There was a wilful disregard of known facts or clearly established law, including ignoring the recommendations of the Court Child Expert set out in a Child Impact Report, the Family Report Writer and the Independent Children’s Lawyer.
·Offers to settle were rejected.
·The father provided significant disclosure late, causing the proceedings to be unnecessarily prolonged.
·The father pursued relatively minor property disputes on the balance sheet, which were disproportionate to the amount of legal costs incurred.
[2] Written submissions of the mother dated 24 July 2024, paragraph 13.
While I have had regard to those points, I am not satisfied that the circumstances of this case fall into the exceptional category that justifies an award of indemnity costs. The circumstances in which the court may order in indemnity costs were recently summarised by the Full Court in Ressel & Morath [2023] FedCFamC1A 145 at [80]–[84], as follows:
80 An order for indemnity costs is a significant departure from the normal standard and requires something exceptional (Harris & Dewell (No 2) (2018) FLC 93-863), where the Full Court said at [23]–[25]:
23. In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24. That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25. The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
(Footnotes omitted)
81 In the well-settled authority of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, Shepherd J provided some examples of circumstances that might justify the awarding of indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision those examples:
(a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts…
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c) Evidence of particular misconduct causing loss of time to the court and to other parties…
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…
(e) An imprudent refusal of an offer to compromise.
(Citations omitted)
82 That said, the categories of circumstances which enliven the discretion to award indemnity costs are not closed (Yunghanns v Yunghanns (2000) FLC 93-029 at [31]).
83 We consider that this is one of those exceptional cases where costs on an indemnity basis are appropriate. First, the appeal had no prospects of success. Second, the appellant sought to agitate that he had not sent more than 1,000 communications as the primary judge found, but rather only sent more than 200, many of which were truly awful. Given the abominable content of the many he was taken to at trial and conceded sending, debating quantum was therefore an undue prolongation of the case. Third, each time the appellant filed a document out of time, he put the respondent to the expense of considering the material.
84 Pursuant to r 12.13(4) of the Rules, a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement …
While I am not satisfied that the circumstances of this case justify an order for indemnity costs, I have determined that an order for costs should be made in favour of the mother to cover the costs of the final hearing.
I do not make an order in relation to the private fees sought by the mother in the sum of $14,000, which is attributed to an Application in a Proceeding filed by the father in 2022 for unsupervised time with the children. While the father was unsuccessful in respect to that aspect of his application, he was not wholly unsuccessful in that orders were made for the children to have supervised time with him.
CONSIDERATION
Pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”), parties generally bear their own costs. This is, however, subject to s 117(2) of the Act which provides that, if the court is satisfied that there are circumstances justifying it, the court may make an order as to costs as it considers just. Beyond the “essential preliminary” consideration of those matters set out in s 117(2A) of the Act, there is no “additional or special onus” on the applicant for the court to make an order for costs.[3]
[3] Penfold v Penfold (1980) 144 CLR 311 at 315.
In considering whether it is appropriate and just to make an order for costs in favour of a party, it is necessary to take into account and balance all relevant matters referred to in s 117(2A) of the Act.[4] However, that is not to say that one single matter may not ultimately be determinative, nor does any factor set out in that section have priority over another.[5]
[4] I and I (No 2) (1995) FLC 92-625 at 82,277.
[5] Prantage & Prantage (Costs) [2014] FamCA 850 at [12], citing Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at [41].
The following are what I consider to be the relevant s 117(2A) considerations.
The Parties’ Financial Circumstances (s 117(2A)(a) of the Act)
The parties’ respective financial positions are set out in my judgment of Obando & Obando [2024] FedCFamC1F 461. By way of summary, the father earns approximately $170,000 per year and it is likely that he will continue to enjoy that salary for the foreseeable future.[6] Meanwhile, the mother’s income since separation has encompassed social security benefits and child support payments. The mother left the workforce to support the parties’ children who have autism, which is likely to be a lifelong commitment.[7] As a result of that commitment, it is unlikely that she will be able to engage in full time employment.
[6] Obando at [364].
[7] Obando at [365].
I am satisfied that the father has the capacity to meet a costs order. In any event, the financial circumstances of the parties are not determinative of whether an order should be made where there are circumstances that justify the court in doing so.[8]
[8] Cross & Beaumont (2008) 39 Fam LR 389 at [60].
Receipt of Legal Aid (s 117(2A)(b) of the Act)
The mother is in receipt of Legal Aid.
The mother’s Legal Aid fees are repayable when the former matrimonial home is sold, transferred, or refinanced.[9] The father submits that there is no evidence that the mother intends to take any such action, as a significant feature of the mother’s case at final hearing was that she wished to retain the former matrimonial home so that she could continue to reside there with the children who required stability and routine due to their neurodiverse needs.[10]
[9] Written submissions of the mother dated 24 July 2024, paragraph 2.
[10] Written submissions of the father dated 14 August 2024, paragraph 10.
As such, it is argued by the father that the Court ought not order costs for the mother’s Legal Aid fees in circumstances where the precipitating event may never occur, and those fees may never be repayable.
That argument is rejected. While the immediate repayment may not be certain, the obligation remains, and the possibility of future repayment should be considered.
Conduct of the Parties (s 117(2A)(c) of the Act)
This is a highly relevant factor in this case.
There was considerable prevarication over the issue of the balance sheet which resulted in the filing of numerous written submissions from both parties and the need for two subsequent court events after the last day of the final hearing. In my reasons, I stated that “[t]hose communications and events have involved relatively trivial issues and have substantially delayed the delivery of judgment”.[11]
[11] Obando at [253].
In considering the father’s conduct, I acknowledge that both parties failed to settle on a joint balance sheet throughout the trial and following its conclusion. Both parties also consented to my proposal for parties to make written submissions on certain disputed items on the balance sheet, which were not able to be addressed in oral submissions due to time constraints.[12]
[12] Transcript 22 March 2024, p.254 line 40 to p.255 line 3.
However, I am satisfied that the father’s conduct contributed to incurring legal fees disproportionate to the property dispute, by pursuing disputes on relatively minor items on the balance sheet such as the proceeds of sale of the mother’s vehicle - Motor Vehicle 2.[13] The father was ultimately unsuccessful in his submissions regarding this balance sheet item.[14]
[13] Obando at [298].
[14] Obando at [307].
Furthermore, the father provided late disclosure in relation to a matter of significance in the matter. At [270] of my reasons, I observed:
… It was not until after the commencement of the hearing that the father raised, at the eleventh hour, the potential existence of a trust [in favour of the children]. There is no reason why the existence of the trust should not have been earlier disclosed by the father if he had such a genuine intention to create a trust in favour of the children. Indeed, there was a specific obligation to disclose the existence of the trust, had it existed.
The father also failed to provide full and frank disclosure for a valuation in relation to Motor Vehicle 1, instead only providing assertions of value in his oral testimony at the hearing.[15]
[15] Obando at [278].
The obligation of disclosure goes to the core of litigation. A party who fails to provide full and frank disclosure hinders that very process to the disadvantage of the other party. I am satisfied that the father’s failure to disclose is a factor warranting consideration in determining whether to make a costs order.
Wholly Unsuccessful (s 117(2A)(e) of the Act)
The term “wholly unsuccessful” relates to a situation in which proceedings as a whole have been unsuccessful.[16]
[16] Bant & Clayton (Costs) (2016) 56 Fam LR 31 at 34.
The father was not unsuccessful in respect to the entirety of the proceedings.
Nevertheless, the father’s lack of success in respect to the parenting proceedings is a factor that I have considered below.
Any other matters (s 117(2A)(g) of the Act)
The father acknowledged that he advised the Family Report Writer in an interview conducted for the preparation for her Report, that he was not seeking overnight time with the children.[17] This position was adopted by the father in circumstances where it was acknowledged that the children’s autism was such that any significant change in their routine would not be in their best interests.
[17] Transcript 22 March 2024, p.207 lines 28–30. See also Family Report of Ms H dated 10 August 2023, paragraph 9.
The Family Report was prepared on that understanding of the father’s position. Despite that understanding, in the father’s Case Outline Document filed on 14 March 2024, he proposed that the children spend time with him as follows:
5.1During the Children’s school term time, on a fortnightly basis commencing the first Saturday following the date of these Orders, at 6pm until the commencement of school (or 3pm if a non-school day) the following Monday.
The father pressed his application for overnight time during the final hearing despite the absence of supporting evidence that such an order would be in the children’s best interests. Indeed, the overwhelming weight of evidence was contrary to that proposal.
Consequently, a significant amount of hearing time being focussed on the risks to the children associated with the proposal for the children to spend overnight time with the father. I would estimate that more than half of the hearing time was devoted to the father’s application for parenting orders, a central part of which was for the children to spend overnight time with him.
DISPOSITION
Having regard to the above, I am satisfied that the father should pay 60 per cent of the mother’s costs incurred after 14 March 2024, being the date in which the father filed his Case Outline seeking overnight time, despite previously indicating to both the Court and the mother that he would not pursue that aspect of his application.
While r 12.17(1)(a) of the Rules empowers the Court to make an order for the payment of costs in a lump sum amount, a precondition to the making of such and order is that it is logical, fair and reasonable: Stoian & Fiening (Costs) [2014] FamCA 944 at [91].
The information provided to the Court does not enable a determination of costs incurred after 14 March 2024 and, on that basis, the order will be for the father to pay 60 per cent of the mother’s costs assessed on a party/party basis in respect to the period subsequent to 14 March 2024. Those costs are to be paid within 28 days of the costs being agreed or, in the absence of agreement, assessed.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland. Associate:
Dated: 13 September 2024
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