Parker & Jacks (No.3)
[2009] FMCAfam 993
•8 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PARKER & JACKS (No.3) | [2009] FMCAfam 993 |
| FAMILY LAW – Costs – relevant considerations – non disclosure in financial proceedings –indemnity costs sought – costs sought against solicitor and wife – conduct of solicitor. |
| Family Law Act 1975 (Cth) ss.117(I), 117(2A), 117AB Child Support (Assessment) Act 1989 (Cth) s.100 Federal Magistrates Court Rules 2001 (Cth) Schedule 1, r 21.07 |
| Parker & Jacks (No.2) [2009] FMCAfam 743 Penfold v Penfold (1980) 144 CLR 311 Cassidy & Murray (1995) FLC 92-633 Kohan and Kohan (1993) FLC 92-340 Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FLR 225 Brown v Brown (1998) FLC 92-822 Roberts & Roberts (No.2) [2009] FMCAfam 1065 C & C & Anor [2006] FMCAfam 229 Sharma & Sharma (No.2) (2007) FamCA 425 Charles & Charles [2007] FamCA 276 Greedy & Greedy (1982) FLC 91-250 Oriolo and Oriolo (1985) FLC 91-653 Briese & Briese (1986) FLC 91-713 Re P; Separate Representative (1993) FLC 92-376 Yunghanns v Yunghanns (2000) FLC 93-029 Briese & Briese (1986) FLC 91-713 Luciano & Luciano [2000] FamCA 401 Giannarelli v Wraith (1988) CLR 543 LGM v CAM (Contempt) (No.2) (2008) FLC 93-355 |
| Applicant: | MR PARKER |
| Respondent: | MS JACKS |
| File Number: | MLC 236 of 2008 |
| Judgment of: | O'Sullivan FM |
| Hearing date: | Written Submissions |
| Date of Last Submission: | 11 November 2009 |
| Delivered at: | Melbourne (by telephone link) |
| Delivered on: | 8 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr M. Pavone |
| Solicitor for the Applicant: | Littleton Hackford & D’Alessandro |
| Counsel for the Respondent: | Ms K. McMillan SC Ms B. Tulloch |
| Solicitors for the Respondent: | Jane M Curtis & Associates |
ORDERS
That the wife and Ms Curtis be jointly and severally liable to pay the husband’s costs of his application filed on 10 January 2008 on a party/party basis, as agreed or in default to be taxed.
That the wife and Ms Curtis be jointly and severally liable to pay the husband’s costs of his application in a case filed 9 December 2008 on a party/party basis as agreed or in default to be taxed.
The costs orders referred to in orders (1) and (2) herein be stayed until the wife’s appeal filed 14 August 2009 is determined or a Notice of Discontinuance is filed.
That the Registrar of the Federal Magistrates Court of Australia be requested to provide the Legal Services Commissioner with a copy of these reasons to pursue such investigation into the conduct of
Ms Curtis as that organisation believes is appropriate.
IT IS NOTED that publication of this judgment under the pseudonym Parker & Jacks is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 236 of 2008
| MR PARKER |
Applicant
And
| MS JACKS |
Respondent
REASONS FOR JUDGMENT
Introduction
The litigation between these parties has been ongoing for some considerable time. These reasons concern an application for costs arising out of the most recent skirmish in a protracted dispute between two parents over child support and a child support agreement (“the Agreement”).
Background
For the purposes of these reasons it is not necessary to rehearse the background to these proceedings which is set out in Parker & Jacks (No.2) [2009] FMCAfam 743.[1] The level of disquiet expressed in those reasons[2] about the attitude of the parties has simply been reinforced by the turn of events since those reasons were delivered.
[1] Parker & Jacks (No.2) [2009] FMCAfam 743, paras.(5)-(12)
[2] see para.12 in Parker & Jacks (No.2) [2009] FMCAfam 743
So far as it relevant for present purposes on 22 July 2009 orders were made which provided:
“1.…
3.That the respondent and her solicitor separately file and serve submissions as to why an order as to the costs of the proceedings ought not be made against them within 14 days.
4.The applicant file and serve any submissions in reply within a further 14 days.
….”
Following that hearing (at the request of the wife’s solicitors) the parties reached agreement on an extension of time for compliance with the filing of submissions referred to in the above orders and on
3 August 2009 orders were made as follows:
“(1)The time for filing of submissions in orders (3) and (4) of the orders of 22 July 2009 be varied as follows:
(a)the respondent and her solicitor separately file and serve submissions as to why an order as to costs of the proceedings ought not be made against them by not later than 4.00 pm on 19 August 2009; and
(b)the applicant file and serve any submissions in reply by not later than 4.00 pm on 2 September 2009.”
A notice of appeal in relation to all of the orders of 22 July 2009 was filed on behalf of the wife on 14 August 2009. Also filed that day was an application for the stay of the same orders which the Registry made returnable on 2 November 2009.
On 20 August 2009 the husband’s solicitor requested the matter be listed for mention as the wife had not complied with the orders referred to in paragraph 4 above. Later that day correspondence was received from the wife’s solicitor indicating that she would overseas until
4 September 2009.
The same day the Court contacted the wife’s solicitors leaving a message, requesting a phone number on which she could be contacted whilst she was overseas so the matter could be mentioned. No response was received.
An amended notice of appeal was filed on the wife’s behalf by her solicitors on 24 August 2009.
On 27 August 2009 the husband’s solicitor requested that the matter be listed for mention. Correspondence was sent to the parties listing the matter for mention on Tuesday 1 September 2009 at 9.00 am. The wife and either her solicitor and/or Counsel who appeared at the hearing in the substantive application were asked to attend and were able to do so if necessary by telephone. Counsel who had appeared at that hearing told the Court she did not hold instructions to appear.
On 1 September 2009 the matter was listed for mention. On that occasion Mr Pavone of Counsel appeared for the husband and there was no appearance for the wife or her solicitor.[3] The following orders were made:
[3] See transcript of 1 September 2009
“1.The transcript of proceedings this day be ordered.
2.The transcript will be provided to the Respondent, Respondent’s Solicitor and Ms Tulloch.
3.The matter be adjourned to 9 September 2009 at 10.00 a.m. for mention at the Federal Magistrates Court of Australia at Melbourne for the purposes of giving the parties referred to in the transcript ordered in Order 2 the opportunity to respond to the issues raised at today’s mention by the Applicant.”
On the adjourned date of 9 September 2009 Mr Pavone appeared for the husband, Ms McMillian SC and Ms Tulloch of Counsel appeared for the wife and, the Court was subsequently told, the wife’s solicitor. The following orders were made, by consent:
“1.Paragraphs 1 and 2 of the orders made 22 July 2009 be stayed pending the hearing of the appeal filed by the wife.
2.The wife’s application in a case filed 14 August 2009 be dismissed and the hearing date listed for 2 November 2009 be vacated.
3.On or before 4.00 pm on 21 October 2009 the husband file and serve submissions including particulars of the costs orders sought by him including indemnity costs.
4.On or before 4.00 pm on 4 November 2009 the wife and Ms Curtis file and serve a response to the submissions including particulars referred to in paragraph 3 of these orders, such response being also in compliance with paragraph 3 of the orders made 22 July 2009 and to that extent paragraph 3 of the orders made 22 July 2009 shall be extended to 4 November 2009.
5.On or before 4.00 pm on 11 November 2009 the husband shall file and serve any reply.
6.Costs of this day be reserved.
AND THE COURT NOTES:
A.That upon receiving the submissions referred to in these orders it is envisaged that the Court will determine all outstanding matters on the papers.
Submissions on costs
The husband in his submissions filed on 21 October 2009 sought that the Court make the following orders:
“1.…
(a)That the Wife and Ms Jane Curtis be jointly and severally liable to pay the Husband’s costs of and incidental to his application filed on the 10th January 2008 on an indemnity basis, such costs to include the hearings on the 1st September 2009 and 9th September 2009. In default of agreement such costs to be taxed.
(b)That the Wife and Ms Jane Curtis be jointly and severally liable to pay the Husband’s costs of and incidental to his application in a case filed the 9th December 2008. In default of agreement such costs to be taxed.”
It was the husband’s position that those orders were appropriate as inter alia:
“3.…
(i)The Husband has been wholly successful in his applications to the Court and the Wife has been wholly unsuccessful. The Applicant herein is referring to his application for final orders filed on the 6th March 2008 and, secondly, his application in a case filed the 9th December 2008. In respect of his application for final orders filed 6th March 2008 in closing submissions, the applicant sought orders that:
(a) clause 3 of the child support agreement dated 3rd September 2002 be varied by deleting the words “one half of” therein appearing;
(b) that the Husband and the Wife each pay one half of the rental payments of the children [X] and [Y];
(c) that otherwise the Wife’s application filed 6th March 2008 be dismissed;
(d) that the Wife pay the Husband’s costs of and incidental to his application filed 10 January 2008.
(ii)The Wife in her closing submissions sought the following orders:
(a) the child support agreement dated 3rd September 2002 be discharged on 1st January 2007;
(b) the Wife be assessed to pay child support in the sum of nil per week for the benefit of the child [Z] from 1 January 2007 until he turns 18 years, completes school or earlier child support terminating event;
(c) pursuant to the provisions of s. 98(2) of the Child Support Assessment Act 1989 (as amended prior to 1 July 2008) the Husband pay all of the school fees and expenses of [Z] attending [G] School from the 2007 academic year until he completes his secondary education;
(d) that the Husband within fourteen days pay the Wife the sum of $11,300 to reimburse her for his share of adult child maintenance paid by the Wife for the benefit of [Y] during 2007;
(e) that the Husband within fourteen days pay to the Wife a sum equivalent to $200 per week from 1st January 2008 to the date of these orders to reimburse her for his share of adult child maintenance paid by the Wife for the benefit of [Y];
(f) from the date of these Orders until the completion of her tertiary education the Husband pay directly to [Y] the sum of $200 per week by way of adult child maintenance;
(g) that the Husband pay the Husband’s costs of these proceedings.
4.The Orders of the Court in its judgment delivered on the 22nd July 2009 are identical to the Orders sought in paragraphs 1, 2 and 3 of the Husband’s submissions (the question of costs yet to be determined), and made no order in accordance with the Orders sought by the Wife.
5.In respect of the application in a case filed 9th December 2008 again the Husband was wholly successful in that application. The wife in refusing to consent to those orders sought and forcing the matter to come before the Court on three occasions, namely the 12th December 2008, 20th February 2009 and 19th March 2009 unnecessarily extended the costs of these proceedings. The matter sought to be ventilated by the Husband in that application were found by the Court in its judgments of the 19th March 2009 and 22nd July 2009 to have been relevant and ought to have been disclosed by the Wife and indeed, the Court found failed (sic) in its judgment delivered on the 22nd July 2009 at paragraph 38 that “The Court is satisfied notwithstanding the submissions advanced on her behalf (see affidavit filed 19th December 2008 and paragraphs 66 to 71 of submissions) that there has been deliberate non-disclosure on the Respondent’s part.”
6.Neither party is in receipt of legal aid and the court has before it and has made determinations of the parties’ respective financial positions and it is submitted on behalf of the Applicant that the Court ought to be satisfied that the Respondent has the financial capacity to meet the Order for costs sought by the Husband.
7.It is submitted by the Applicant that the conduct of the wife and her legal advisers is a highly relevant matter in determining the issue of whether costs ought to be made. As set out earlier in this submission the Court found at paragraph 38 of its judgment delivered on the 22nd July 2009 that “There has been deliberate non-disclosure on the Respondent’s part”. The non-disclosure relates to the fact that the Respondent on the 8th September 2005 filed a Writ in the County Court of Victoria against Clancy & Triado, as first defendants and Stanley Fookes as second defendant. Those proceedings were settled following a mediation and in late December 2005 the Wife received the net sum of $34,996.50. The Wife in these proceedings with the assistance of her solicitor, Ms Jane Curtis (who was also her solicitor in the negligence proceedings) swore two affidavits in these proceedings and also swore an affidavit of documents. In none of those documents was any reference made to the settlement moneys received in December 2005 and for what purpose those moneys were received. In her affidavit sworn on the 19th February 2008 at paragraph
5 the Wife swore as follows: “Following the judgment of Her Honour Justice Brown I continue to pay all of the children’s school fees and expenses at [G] School for 2003, 2004, 2005 and 2006. I was only able to manage this as my parents did not seek payment of the rental on the home in which I was living and I applied for and received bursaries from [G] School.”
8.In her affidavit sworn 24th October 2008 the Respondent swore at paragraph 20 the following: “As previously deposed I met all the children’s private school fees in 2003 and 2006 and [Y]’s in 2007. … The payment by me of the children’s fees in the past and for 2008 for [Y] has caused me serious financial hardship. I have not been able to save any money, purchase a motor vehicle or take the children or myself for any sort of break or holiday as all of my income has been devoted to their education.”
9.The wife’s viva voce evidence was to the effect that she paid the school fees between 2003 and 2007 from her income, the generosity of her parents and from bursaries received from [G] School. It is clear from the judgment and in particular paragraph 38 of the judgment that the Court did not accept that evidence. In particular the Respondent herself conceded in cross-examination on the 19th March 2009 that moneys received from the negligence action were used by her to pay private school fees. A further relevant matter is that the Wife (and her legal advisers) deliberately misled the Court in breach of a specific order of this Court, namely Order 3(c) of the order of FM O’Sullivan dated 20th February 2008, namely that she make discovery of all documents relevant to these proceedings and in particular but not limited to (c) evidence of the source of payments of the children’s fees for the period 2004 until the present time. At no stage in the proceedings on the 5th November 2008 did the Wife or her legal advisers attempt to correct the non-disclosure of the negligence proceedings. It is submitted it is clear that the Wife and her legal advisers took the view that they would no t (sic) be found out and accordingly made no reference to the negligence action. It is therefore submitted on behalf of the Applicant that in this case the normal rules whereby each party bears their own costs, ought to be diverted from and it is appropriate in all the circumstances for an order to be made for the Husband’s costs to be paid I (sic) this case.”
The husband sought an order for indemnity costs relying on inter alia the wife’s deliberate non disclosure[4] and s.117AB(2) of the Family Law Act 1975 (“the Act”).
[4] see paras.10-12 of the husband’s submissions filed 21 October 2009
The husband’s submissions also addressed orders he sought that those costs be paid “jointly and severally by the wife and her solicitor, Jane Curtis.”[5]
[5] see paras.13-17 of the husband’s submission filed 21 October 2009
The wife’s submissions were filed 4 November 2009. Submissions were also filed that day on behalf of Ms Curtis, solicitor for the wife (as had been required by the orders of 22 July 2009 and time for which had been extended, by consent, on 9 September 2009).
Those submissions made plain that the wife had sought and obtained independent legal advice and in so far as the husband also sought costs against her solicitor, the wife had elected to make no submissions (in her own right on that issue) and not be separately represented.
The orders sought by the wife (which were also adopted by Ms Curtis in submissions filed on her behalf) were:
“1.That each party bear their own costs of these proceedings, alternatively, the costs of each party be reserved pending the finalisation of the appeal in this proceeding.
2.If the court does order any costs in favour of the husband then the wife seeks a stay of payment of such costs pending the finalisation of the appeal in this proceeding.”
In accordance with the orders of 9 September 2009 the husband filed his submissions in reply on 11 November 2009. In those submissions the husband responded separately to those filed on behalf of the wife and Ms Curtis. The husband maintained his application for the Court to make orders as referred to earlier.[6]
[6] see para.22 of the husband’s submissions
Approach to Costs
The substantive proceedings were in relation to a dispute over the Agreement. Pursuant to s.100 of the Child Support (Assessment) Act 1989 the question of costs in child support proceedings is governed by the provisions of the Family Law Act 1975 (“the Act”).
The normal rule in proceedings under the Act is that each party bear their own costs pursuant to s.117(1). The Court may however make an order for costs if it is satisfied that in the particular circumstances of the case it should do so.
Section 117(2) of the Act provides that in an appropriate case the Court may make an order for costs against one or other parties notwithstanding the general rule described in s.117(1). Section 117(2A) of the Act sets out the factors to which the Court shall have regard when considering an order for costs and provides:
“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.”
The High Court in Penfold v Penfold (1980) 144 CLR 311 has said that the wording of s.117 does not create an onus on either of the parties. Further, it is for the Court to consider, having regard to the matters in s.117(2A) of the Act, whether in a particular case to exercise the discretion to order costs or not to order costs.
The husband’s submissions made plain he sought costs on an indemnity basis. The husband referred to s.117AB which provides for costs where false allegations or statements are made:
“Section 117AB(1) This section applies if
(a) proceedings under this Act are brought before the Court; and
(b)the Court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.
Section 117AB(2) The Court must order that party to pay some or all of the costs of the other party or other parties to these proceedings.”
Costs were also sought against Ms Curtis, the wife’s solicitor because of what was claimed was her conduct in the substantive proceedings.
On the issue of costs against a solicitor in Roberts & Roberts (No.2) [2009] FMCAfam 1065, Bender FM said:
“16.The court has power to order costs against a lawyer and that is set out in Rule 21.07 of the Federal Magistrates Court Rules 2001.
17.Rule 21.07 provides as follows:
·Order for costs against lawyer
(1) The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
(a) to be incurred by a party or another person; or
(b) to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
(2) A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
(a) to attend, or send another person to attend, the hearing; or
(b) to file, lodge or deliver a document as required; or
(c) to prepare any proper evidence or information; or
(d) to do any other act necessary for the hearing to proceed.
(3) An order for costs against a lawyer may be made on the motion of the Court or Registrar, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) The order may provide:
(a) that the costs, or part of the costs, as between the lawyer and party be disallowed; or
(b) that the lawyer pay the costs, or part of the costs incurred by the other person; or
(c) that the lawyer pay to the party or other person the costs, or part of the costs, that the party has been ordered to pay to the other person.
(5) Before making an order for costs, the Court or Registrar:
(a) must give the lawyer, and any other person who may be affected by the decision, a reasonable opportunity to be heard; and
(b)may order that notice of the order, or of any proceeding against the lawyer be given to a party for whom the lawyer may be acting or any other person.
18.In C & C & Anor [2006] FMCAfam 229 at paragraph 7, Chief Federal Magistrate Pascoe succinctly summarised the extensive case law that exists in relation to the court’s discretion to award costs against parties, and in particular lawyers, as follows:
7.The Court’s jurisdiction and its discretion to award costs against a non-party is not limited (Knight v FP Special Assets Ltd (1992) 107 ALR 585 at [589], per Mason CJ and Deane J (with whom Gaudron J agreed) and affirmed in Da Souza v Minister for Immigration, Local Government and Ethnic Affairs[1993] FCA 146; (1993) 114 ALR 708 at [712], per French J; MZWOR v Minister for Immigration[2005] FMCA 845, at [25], per Riethmuller FM). The primary object of the Court in ordering costs against a lawyer is not to punish the lawyer but to protect the party who has suffered loss or injury (Myers v Elman[1940] AC 282 at [289], per Viscount Maugham and at [319], per Lord Wright; Cassidy v Murray[1995] FamCA 91; (1995) 124 FLR 267 at [281-2], per Fogarty, Kay and Hase JJ; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at [229], per Goldberg J). The discretion of the Court to order costs against a lawyer will generally be exercised in circumstances where there is some misconduct on the part of the lawyer or a serious dereliction of duty or gross negligence (Edwards v Edwards[1958] 2 All ER 179 at [186], per Sachs J; Harley v McDonald[1999] 3 NZLR 545 at 564-5), per Tipping J; R & T Thew Ltd v Reeves (No 2)[1982] QB 1283 at [1285-6], per Lord Denning MR; Ridehalgh v Horsefield[1994] 3 WLR 462 at [482], per Sir Thomas Bingham MR). It is not, however, necessary to establish mala fides or other obliquity on the part of the lawyer, though it may be that if mala fides is established that might turn the scale in a particular case (Edwards (supra)), however the Court’s discretion must be exercised sparingly and with care and only in exceptional cases (Da Souza (supra)) particularly where the order sought is indemnity costs (Deputy Commissioner of Taxation v Levick[1999] FCA 1580; (1993) 43 ATR 621 at [627], per Hill J; McKewins Hairdressing and Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation(2000) 34 ACSR 92 at [133], per Gummow J; Re Yunghanns [2000] FamCA 681; (2000) 26 Fam LR 331 at [339-40], per Lindenmayer and Holden JJ). Evidence of particular misconduct causing loss of time to the Court and to other parties may in some circumstances justify an order for indemnity costs (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Federal Court, 3 May 1991, unreported) and affirmed in Colgate Palmolive Co v Cussons Pty Ltd[1993] FCA 536; (1993) 46 FCR 225 at [233], per Sheppard J). However there must be some special or unusual feature in the case to justify the Court in making an order an indemnity basis (Colgate (supra); Preston v Preston[1982] All ER 41 at [58], per Brandon LJ; Re:Wilcox; Ex parte Venture Industries Pty Ltd (No 2)(1996) 72 FCR 151 at [152], per Black CJ; John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd(1994) 52 FCR 201 at [203], per Hill J; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Others [1988] FCA 202; (1989) 81 ALR 397 at [400], per Woodward J).”
Given the recitation of the relevant authorities set out above, the Court is satisfied given the provisions of s.117 and the Rules that there is a general power to make an order for costs including against Ms Curtis. (See also Re P (a child); Separate Representative (1993) FLC 92-376 and Cassidy & Murray (1995) FLC 92-633).
Regard should also be had to the relevant provisions of the Federal Magistrates Court Rules 2001 (“the Rules”) including those that provide for an order for costs against a lawyer[7] which will be addressed where necessary in the course of these reasons.
[7] see Rule 21.07 of the Federal Magistrates Court Rules 2001
Factors relevant to the application
The financial circumstances of each of the parties to the proceedings
The husband’s initial submissions on this factor are extracted at paragraph 13 above. The wife’s submissions on this issue were set out at paragraphs 2(a) through to (n) of her submissions filed 4 November 2009. The wife’s submissions on this issue were in summary:
“Given the overwhelming financial consequences for the wife if a costs order was made against her, it is submitted that no such costs order should be made on this basis alone.”
In his submissions in reply at paragraphs (1) to (4), the husband’s position was that were the Court to accept the wife’s position this would mean that allegedly impoverished parties could litigate without fear of an order for costs being made notwithstanding that in all other respects it would be justified and just for the Court to make a costs order.
The husband conceded the respective financial circumstances of the parties is one matter the Court must take into account. The wife submitted that neither party has the capacity to pay legal costs from their income and both will be reliant on their assets and resources.
In the decision published on 22 July 2009 the Court made clear because of the wife’s non disclosure it could have no confidence in what she said about her financial circumstances[8]. However the Court will weigh in the balance what was said in submissions on her behalf on this issue.
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
[8] see para.37 Parker & Jacks (No.2) [2009] FMCAfam 743
There were no submissions made before the Court by any party to suggest this factor was relevant for the purposes of these proceedings.
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
The husband’s initial submissions on this factor are extracted at paragraph 13 above. The wife’s submissions were set out at paragraphs 3(a) through (f) of her submissions. The wife’s submissions noted:
“3(d)If the court is inclined to make a costs order against the wife on the basis of sub-section 117(2A)(c) of the Act, then the costs awarded to the husband should be confined to the costs incurred by him as a consequence of that conduct. The costs of the hearing on 5 November 2008 arose as a consequence of the husband bringing proceedings before the court and would have been incurred by him in any event, regardless of the wife’s conduct. It is only the costs relating to the husband’s application in a case filed 9 December 2008 that arose as a consequence of the wife’s conduct. In those circumstances, the husband should only be granted a costs order in his favour in relation to the costs arising from that application in a case and the subsequent hearing.”
In his submissions in reply to those filed on behalf of the wife, the husband took issue with the wife’s contentions regarding her conduct and her submission that there had been no evidence of any breach of any order of the Court. It was the husband’s position that:
“8.It is submitted that this assertion simply flies in the fact of the evidence given in this matter and the undisputed facts, namely:
(i)an order was made by FM O’Sullivan on 20 February 2008 which order obliged the Wife to make discovery of all documents relevant to these proceedings and in particular but not limited to (c) evidence of the source of payments of the children’s fees for the period 2004 to the present time;
(ii)the wife subsequently swore an affidavit of documents on the 26th August 2008 in which she failed to discover any documents in relation to the County Court proceedings;
(iii)the wife swore affidavits on the 19th February 2008 and 24th October 2008 in which she failed to disclose the County Court proceedings;
(iv)the wife gave viva voce evidence on the 5th November 2008. At no time did she inform the Court of the County Court proceedings and the fact that she settled those proceedings for the sum of $50,000 inclusive of costs;
(v)at the hearing conducted on 19th March 2009 the wife conceded that the sum of moneys were used by her to pay private school fees;
(vi)the findings by the Court in paragraph 35 and 38 of its judgment delivered on the 22nd July 2009.”
When considering this it is appropriate to recall the initial submissions of the husband filed on 21 October 2009 on this factor which were:
“7.It is submitted by the Applicant that the conduct of the wife and her legal advisers is a highly relevant matter in determining the issue of whether costs ought to be made. As set out earlier in this submission the Court found at paragraph 38 of its judgment delivered on the 22nd July 2009 that “There has been deliberate non-disclosure on the Respondent’s part”. The non-disclosure relates to the fact that the Respondent on the 8th September 2005 filed a Writ in the County Court of Victoria against Clancy & Triado, as first defendants and Stanley Fookes as second defendant. Those proceedings were settled following a mediation and in late December 2005 the Wife received the net sum of $34,996.50. The Wife in these proceedings with the assistance of her solicitor, Ms Jane Curtis (who was also her solicitor in the negligence proceedings) swore two affidavits in these proceedings and also swore an affidavit of documents. In none of those documents was any reference made to the settlement moneys received in December 2005 and for what purpose those moneys were received. In her affidavit sworn on the 19th February 2008 at paragraph 5 the Wife swore as follows: “Following the judgment of Her Honour Justice Brown I continue to pay all of the children’s school fees and expenses at [G] School for 2003, 2004, 2005 and 2006. I was only able to manage this as my parents did not seek payment of the rental on the home in which I was living and I applied for and received bursaries from [G] School.”
8.In her affidavit sworn 24th October 2008 the Respondent swore at paragraph 20 the following: “As previously deposed I met all the children’s private school fees in 2003 and 2006 and [Y]’s in 2007. … The payment by me of the children’s fees in the past and for 2008 for [Y] has caused me serious financial hardship. I have not been able to save any money, purchase a motor vehicle or take the children or myself for any sort of break or holiday as all of my income has been devoted to their education.”
9.The wife’s viva voce evidence was to the effect that she paid the school fees between 2003 and 2007 from her income, the generosity of her parents and from bursaries received from [G] School. It is clear from the judgment and in particular paragraph 38 of the judgment that the Court did not accept that evidence. In particular the Respondent herself conceded in cross-examination on the 19th March 2009 that moneys received from the negligence action were used by her to pay private school fees. A further relevant matter is that the Wife (and her legal advisers) deliberately misled the Court in breach of a specific order of this Court, namely Order 3(c) of the order of FM O’Sullivan dated 20th February 2008, namely that she make discovery of all documents relevant to these proceedings and in particular but not limited to (c) evidence of the source of payments of the children’s fees for the period 2004 until the present time. At no stage in the proceedings on the 5th November 2008 did the Wife or her legal advisers attempt to correct the non-disclosure of the negligence proceedings. It is submitted it is clear that the Wife and her legal advisers took the view that they would no to be found out and accordingly made no reference to the negligence action. It is therefore submitted on behalf of the Applicant that in this case the normal rules whereby each party bears their own costs, ought to be diverted from and it is appropriate in all the circumstances for an order to be made for the Husband’s costs to be paid…”
In cases such as Greedy & Greedy (1982) FLC 91-250 and Oriolo & Oriolo (1985) FLC 91-653 the Full Court discussed the issue of costs being awarded where a party wrongfully fails to disclose his or financial circumstances or causes to be put into issue unnecessarily, details of his or her financial circumstances. The Full Court in Oriolo & Oriolo (supra) cited the judgment of Smithers J in the case of Briese & Briese (1986) FLC 91-713 where he said:
“...the need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding...”
Smithers J went on to state at page 80,256:
“...the fact that in the present case it is not a question of ultimate non-disclosure of matters relevant to the orders made, but is of a different nature being relevant to delay and expense, does not in my view prevent the principle being applicable here as to the matter of costs. There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing as expeditiously as may reasonably be done.”
The matters referred to above including those set out at paragraphs 35 and 36 above in my view indicate that it was the wife’s conduct in the proceedings, which put the husband to additional expense.
Whilst, an award of costs based upon the conduct of one of the parties must bear some relation to the conduct of the proceedings by the parties (see Greedy & Greedy (1982) FLC 91-250), in my view, the conduct of the wife in this case does weigh in favour of the husband’s costs application (see Briese & Briese (1986) FLC 91-713).
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
In submissions made before the Court by the wife it was contended this factor did not warrant an order for costs in the husband’s favour.
The husband in submissions maintained the wife had breached orders of the Court requesting her to make discovery of all documents relevant to the proceedings.[9] This position was maintained in his submissions in reply.[10]
[9] see for example para.9 of husband’s submissions filed 21 October 2009
[10] see submissions extract at para.32 above
In relation to this factor not only has the wife’s conduct throughout the proceedings been found wanting but her attitude to and compliance with orders is also a matter that tells in favour of the husband’s application for costs.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The husband’s submissions on this factor are extracted at paragraph 13 above. The wife’s submissions on this issue were at paragraphs 4(a) through (c) of her submissions filed 4 November 2009. The wife’s position was that she had not been wholly unsuccessful in the substantive part of these proceedings.
The husband in his submissions in reply addressed this issue at paragraphs 10-14. It was the husband’s submission, which I accept, that:
“11.The Wife seeks to cloud this issue by relying on the fact that in his original application the Husband did not seek any orders for adult child maintenance for [Y]. The Wife conveniently forgets that at all times the Husband was prepared to make a contribution towards the upkeep of his two adult daughters, [X] and [Y] and further that his uncontradicted evidence was that he made payments throughout 2008 and 2009. The Wife’s submission also ignores the fact that the Husband in his closing submission sought an order from the Court that he contribute 50% of the rental payments in respect of the said children’s accommodation. The Court acceded to that application.”
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
There were no submissions made before the Court by any party to suggest this factor was relevant for the purposes of these proceedings.
Such other matters as the court considers relevant
The wife in her submissions noted the husband had made no submissions on ss.117(2A) (d),(f) and (g) and on that basis assumed the husband did not rely on same.
Should an order for costs be made
The authorities make clear that the weight to be attached to any of the considerations is s.117(2A) is wholly discretionary. As Kay J said in Brown v Brown (1998) FLC 92-822 at 85,347:
“In many cases there will be an outstanding feature …that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other s.117(2A) considerations.”
In the reasons for decision published on 22 July 2009[11] the wife was found to have deliberately portrayed her financial position as less favourable than it really was. It is noted that one of the reasons she gave in evidence before the Court for non disclosure was she wished to protect the reputation of her solicitor who acted on her behalf.[12]
[11] see Parker & Jacks (No.2) [2009] FMCAfam 743
[12] see para.34 in Parker & Jacks (No.2) [2009] FMCAfam 743
I reject the implication in the submissions advanced on behalf of the wife that the findings of non disclosure said to relate to a relatively small amount of money somehow mitigate against that conduct warranting sanction.
As said in Luciano & Luciano [2000] FamCA 401:
“If there is non-disclosure in the relevant sense, then the failure to disclose undermines the whole process of adjudication of the proceedings in relation to financial matters.”
In this case the wife’s non disclosure (and her conduct) so dominates the scene that it outweighs any of the other considerations.
In relation to the husband’s application for costs under s.117 for the reasons set out above the Court comes to the view that the wife should bear the husbands costs.
Should an order for indemnity costs be made
The husband had sought an order for costs on an indemnity basis.
The husband contended as a result of matters arising from the evidence in the substantive proceedings and the separate ground upon which the husband sought costs that additional considerations to be taken into account pursuant to ss.117AB(1) and (2) were:(a)whether the court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings; and
(b)whether the court should order that party pay some or all of the costs of the other party.
Turning to the first of those issues, in his submissions filed 21 October 2009, the husband’s position was:
“10.The Court has clearly the power pursuant to Rule 21.03(3) of the Federal Magistrates’ Court Rules to make an order for indemnity costs in this matter. Relevant case law: In Zh and N (2005) Fam.CA 828 (4 May 2005) a Full Court decision of the Family Court, the Court stated as follows at paragraph 13:
‘13.In Ross v. Quinn (2005) Fam.CA 6, an unreported decision of the Full Court delivered on the 6th January 2005, the Court considered the question of indemnity costs. In that case Their Honours referred to the decision of the Full Court in JEL v. DDF (No. 2) (2001) FLC 93-013 at 88,441-2 where the Full Court said “The category of cases in which it would be appropriate to make an order for indemnity costs does not appear to have been fully defined. The Full Court has, however, set out some general principles.
14.I do not intend to repeat the long quotes from JEL v. DDF that their Honours then referred to, suffice it to say that that case considers a number of authorities, including the well known case of Colgate Palmolive Co. v. Cussins Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248, a number of Federal Court authorities, Family Court authorities, including Yunghanns v. Yunghanns (2000) FLC 93-029 where again the Full Court specifically acknowledged the category of cases that may give rise to an indemnity order not being closed. At page 87-471 the Court in Yunghanns said as follows: ‘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 parties 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 party basis (per Sheppard v. Day and Colgate Palmolive Co v. Cussins Pty Ltd.)’
11.In Fraser and Moedt (unreported 30th December 1997)[13] the Full Court of the Family Court upheld an appeal by the wife in a property case against the decision of the trial Judge who had ordered the Husband pay one half of the taxed costs of the Wife. The Full Court held that in circumstances where the Husband had made “blatant and deliberate non-disclosure” of large sums of money, the Wife was entitled to receive all of her costs on a solicitor own client basis. The Full Court stated the Wife “should not have to bear the costs consequences of the Husband’s intentional tactics” given that the Husband’s behaviour may be described as having been intentionally obstructionist.
12.The Court is also referred to section 117AB(2) of the Family Law Act and submits that this section has been met in that the Wife knowingly made a false statement in the proceedings, namely the manner in which she funded the payment of school fees since 2003 and in those circumstances the Court must order the Wife (subject to further submissions herein) to pay some or all of the costs of the Husband in these proceedings. It is further submitted that the payment of costs on a party party basis in accordance with Schedule 1 of the Federal Magistrates’ Court Rules would not cover all of the Husband’s costs in these proceedings, an example being that there is no provision in the Rules for payment of Counsel’s fees in drawing submissions, nor as in this case the considerable correspondence between solicitors. It is submitted again in all the circumstances that the Husband’s costs in their totality ought to be met by the Wife and/or her legal advisers.”
[13] See CCH Australian Family Law and Practice at pages 47-283
The wife’s position in her submissions at paragraph 6 was as follows:
“6.Section 117AB of the Act – Costs where False Allegation or Statement Made
(a)Section 117AB is an alternate basis to Sub-section 117(2A) for the making of a costs order against a party. It does not provide a means by which a costs order to be made against a non-party, such as a legal practitioner.
(b)Unlike Sub-sections 117(2) and (2A) which guide the court in the exercise of its discretion, Section 117AB is a mandatory provision in circumstances where the court determines that the appropriate criteria is met.
(c)It is submitted that in this case there has been no finding that “a party to the proceedings knowingly made a false allegation or statement in the proceedings”. The court should therefore not made (sic) a costs order against the wife on the basis of this section.
(d)The husband’s submissions appear to be relying on section 117AB of the Act on the issue of indemnity costs. It is submitted that this is an erroneous application of the section. Section 117AB is relevant to whether or not a costs order should be made against a party per se. The power to make an indemnity costs order is derived from the relevant cases.”
In his submissions in reply to those filed on behalf of the wife the husband’s position was that:
“15.The wife in her submission at paragraph 6(c) stated that “it is submitted that in this case there has been no finding that ‘a party to the proceedings knowingly made a false allegation or statement in the proceedings’ the Court should therefore not make a cross (sic) order against the wife on the basis of deception”. It is submitted on behalf of the Husband that there is clear evidence that the wife knowingly made a false statement in these proceedings, namely:
(i)paragraph 5 of her affidavit sworn 19th February 2008 where the Wife swore “following the judgment of Her Honour Justice Brown I continued to pay all of the children’s fees and expenses at [G] School for 2003, 2004, 2005 and 2006. I was only able to manage this as my parents did not seek payment of the rental on the home in which I was living and I applied for and received bursaries from [G] School.”
(ii)her evidence on the 5th November 2008 wherein the wife gave evidence to the effect that she managed to pay the private school fees from her income, the generosity of her parents and scholarships;
(iii)the wife’s evidence on the 19th March 2009 wherein for the first time she conceded that the settlement moneys from the County Court action were in part utilised by her to pay to the private school fees of the children.
16.In both circumstances it is submitted that there is clear evidence from which this Court ought conclude that “a party (namely the wife) to these proceedings knowingly made a false allegation or statement in the proceedings.”
17.It is interesting to note and again it would be hard to see how in any event it could be argued that nowhere in any submissions filed on behalf of the wife, in any affidavit sworn by the wife or in any viva voce evidence given by the wife has it been asserted that the non-disclosure of the County Court action was innocent or a mistake. At best is has been asserted by the Wife that it was in her opinion (and presumably her legal adviser) as not being relevant. See paragraph 68 of the wife’s submissions filed 22 April 2009.”
In the reasons for judgment[14] at paragraphs [30] to [38], the Court made the following findings about the wife and the money she had received as a result of litigation in the County Court concerning the Agreement. Whilst brevity may dictate that those findings not be referred to in full, for the purposes of these reasons it is necessary to so do (albeit with footnotes omitted).
[14] see Parker & Jacks (No.2) [2009] FMCAfam 743
“30.As was made clear in Parker & Jacks [2009] FMCAfam 290 the applicant alleged the respondent had failed to disclose money she had received. It is now clear these monies were received by the respondent as a result of the settlement of a professional negligence claim she made, (with her current solicitor acting for her), against her former legal representatives over events leading up to (and associated with) the making of the Agreement. In submissions filed on behalf of the applicant it was said that:
“…the non disclosure by the wife casts a shadow over all the evidence she has given in this Court. The Court ought to be very concerned in accepting any of her evidence given the blatant non disclosure by her …particularly when she swore affidavits to the effect that she paid school fees without any reference being made to the Court that the wife utilised the settlement moneys (sic) in that regard.”
31.Submissions filed by the respondent addressed the issue of the veracity of the applicant’s evidence at paragraphs 51-55. Those submissions then went on to audaciously ask (in light of the respondent’s conduct before the Court) to make a finding that the applicant was not a witness of truth. In the circumstances the Court is not prepared to make such a finding. However that is not the end of the matter given the issue of the respondent’s non disclosure.
32.In Luciano & Luciano [2000] FamCA 401 O’Ryan J provided the following summary, at [373], of principles from the non-disclosure cases.
· In proceedings in the family law Courts in relation to financial matters there is an obligation of each party to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto;
· The obligation arises because of the necessity for the court in such proceedings to consider all aspects of the financial circumstances of each party;
· The obligation is not created by the rules or practice of the court and the rules simply set out the procedure by which that obligation may be fulfilled;
· If there is a deficiency in the practice adopted for the purpose of making such a disclosure mere compliance with the requirements of the relevant rule, if deficient, is not enough;
· If there is non-disclosure, in the relevant sense, then the failure to disclose undermines the whole process of adjudication of the proceedings in relation to financial matters;
· A finding of non-disclosure may, in appropriate cases, depending upon the circumstances, result in the other party being granted, without more, the relief sought.
33.There is also the decision In the Marriage of Hickey [2003] FamCA 395 at [40] where the Full Court said:
“... each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto.” (Emphasis added)
34.The applicant made the following submissions regarding the impact of the respondent’s non disclosure on her credibility at paragraph [61] to [66] of his submissions:
“61.The application to re-open the case was based on the fact that after the hearing had concluded on the 5th November 2008, Counsel for the Husband became aware of the fact that on the 6th September 2005 the Wife caused to be issued out of the County Court of Victoria a Writ in which she alleged that her previous legal practitioners, Clancy & Triado and Stanley Fookes, were negligent in the manner in which they had represented her in “relation to her matrimonial disputes arising from the break up of her marriage to Mr Parker (the matrimonial proceedings).” See paragraph 3 of the Writ.
62.In paragraph 13 of the Writ the Wife alleged:
“By reason of the matters aforesaid, the Plaintiff has suffered and will continue to suffer loss and damage.
Particulars
(a) one half of the school fees for the attendance of the Plaintiff’s children at [G] School;
(b) the legal costs incurred by the Plaintiff in the matrimonial proceeding.”
63.Exhibit “CDA-1” of Mr D’Alessandro’s affidavit is a letter sent by him to the Wife’s solicitors Jane Curtis dated the 26th November 2008 in which he sought from Ms Curtis the following:
(i) confirmation that proceedings were instituted by your client in respect to the Child Support Agreement;
(ii) the amount and date of the compromise/settlement or judgment in respect of these proceedings.
64.Exhibit “CDA-2” of Mr D’Alessandro’s affidavit is a response forwarded by Ms Curtis dated the 27th November 2008. In that letter Ms Curtis advised:
(i) our client is not in a position to respond to your first request as she has agreed to be bound by a confidentiality clause in respect of this issue.
(ii) any information that has come to your attention in relation to our client instituting proceedings for professional negligence must have been provided to you in breach of a confidentiality clause contained in the terms of settlement which finalised those proceedings. There is no lawful basis for that information to have been provided to you. In any event, the terms of settlement referred to in paragraph (i) in herein are not relevant to the matters the Court is required to determine in this case.
(iii) Furthermore our client has made full and frank discovery of all relevant financial matters in respect of the current application. The failure by your firm or your counsel to read and consider our client’s discovered documents (which were provided to you well prior to the commencement of these proceedings) is not a proper basis upon which to re-open the proceedings.
Our client will strenuously oppose any application made by you to re-open this matter and this letter will be produced to the Court on the question of costs.
65.The application to re-open the hearing was heard on the 19th March 2009 and after submissions, the Court acceded to the Husband’s application. The Wife was cross-examined. It is submitted on behalf of the Husband that the following arises from that cross-examination:
(i) The Wife received the sum of $34,996.50 (net of costs) in settlement of the Writ filed 6th September 2005 on the 22nd December 2005 and the 28th December 2005.
(ii) The damages related solely to reimbursing the Wife for “one half of the school fees for the attendance of the Plaintiff’s children at [G] School”.
(iii) The only plausible reading of the Writ is that the Wife complained that as a result of the manner in which she was represented by her previous legal representatives that she was left with the full burden of paying the children’s private school fees when she had “instructed the Defendant that she was prepared to settle the child support proceedings between herself and the said Mr Parker (“the Husband”) on the basis, inter alia, that she and the Husband each respectively pay one half of the reasonable school fees and education expenses associated with the attendance of the children at [G] School (“the Plaintiff’s instructions”).
(iv) The Wife incurred legal costs of $37,228.07 in respect of the matrimonial proceedings. Annexed to her affidavit sworn the 9th December 2008 in annexure B were copies of accounts from Clancy & Triado as follows:
24/4/2001 $962.20
29/6/2001 $1,927.86
9/10/2001 $3,354.16
18/12/2001 $3,270.08
29/8/2002 $18,913.54
13/9/2002 $8,836.23
(v) The Wife conceded in cross-examination that the overwhelming proportion of those accounts related to the property proceedings and that the only accounts that included any items relating to child support occur in the account dated 19 August 2002 in which there are 8 items claimed. As such any attempt by the Wife to rely upon the fact stated in the Writ the second head of damages claimed namely the recovery of legal costs incurred in these proceedings is relevant, has no substance whatsoever. The costs incurred in relation to the property proceedings were properly incurred and as such could not have formed the basis for any claim of damages. It is also interesting to note that in the submissions filed by Counsel for the Wife at no stage in those submissions is it submitted by her Counsel that in reality the sum received by the Wife in late 2005 is in any way referable to her legal costs.
(vi) The legal costs incurred in the matrimonial proceedings were all paid as at 22/12/2005.
(vii) All school fees in relation to the children were paid as at 22/12/2005.
(viii) The Wife conceded the funds received in respect of the negligence claims were the funds used by her to pay private school fees. At no time in the proceedings conducted on the 5th November 2008 or in the two affidavits sworn by the Wife was there any evidence that the school fees were in fact funded from this source of funds.
(ix) The Wife accordingly was in breach of Order 3(c) of the Orders of FM O’Sullivan dated the 20th February 2008, namely that she make discovery of all documents relevant to these proceedings and in particular but not limited to (c) evidence of the source of payments of the children’s fees for the period 2004 until the present time.
(x) The Wife offered the following excuses for the non-disclosure of the negligence claim:
(a) her counsel submitted she failed to do so, as if she had she could have jeopardised the settlement;
(b) in cross-examination she stated the reason was she wished to protect the reputations of the solicitor and barrister who acted on her behalf;
(c) in the letter from Jane Curtis dated 27th November 2008:
(1)a confidentiality clause;
(2)irrelevant;
(3)in any event full and frank disclosure had been made and if those representing the Husband had been competent they would have discovered the settlement.
(66)None of those reasons bear scrutiny. The Deed of Release dated November 2005 was tendered in evidence. The relevant clause in the Deed dealing with this issue of confidentiality is clause 8 which read as follows:
“8. Subject to clause 7 the parties to this Deed agree to keep the terms of this Deed confidential and shall not disclose those terms to any third person without the prior written consent of the other parties to this Deed, save that they may disclose the terms to their legal advisers, accountants, auditors and insurers (or where they are required to do so by law.)”
35.The respondent has failed to disclose certain aspects of her true financial position to the applicant and to the Court. The Court will not for the purposes of these reasons further rehearse the reasons the respondent gave for this in her most recent affidavit. However suffice it to say the Court does not accept her evidence. Moreover the Court rejects the submission advanced on behalf of the respondent that she did not have to disclose the settlement or that including entries from a bank statement was adequate.
36.As the applicant’s submissions put it:
“Apart from the application for adult child maintenance for [Y] this whole case was about private school fees and in particular who in all the circumstances should be responsible for their payment. The fact that in late 2005 the wife received $35,000 as damages for “one half of the school fees for the attendance of the parties children at [G] School” and then adopts the position in these proceedings that notwithstanding having received those moneys (sic) the husband should be solely responsible for the payment of [Z]’s school fees at [G] School for the years 2007 to 2012 inclusive absolutely make the proceedings and subsequent settlement highly relevant.”
37.As a result of the respondent’s conduct the Court is in the position of having no confidence about the respondent's true financial position. However the Court is driven to the ineluctable conclusion that in these proceedings she has at various times deliberately portrayed it as less favourable than it really is.
38.In the circumstances the Court is satisfied notwithstanding the submissions advanced on her behalf that there has been deliberate non-disclosure on the respondent’s part. It will be necessary to return to this issue and what action should be taken against those involved in it at the end of these reasons.”
The wife’s submissions also addressed the issue of on what basis any order for costs made should be calculated as follows:
(1)Indemnity costs
(a)It is not disputed that the court has the power to make an indemnity costs order.
(b)Ordinarily where a court order that the costs of one party be paid by the other the payment should be on a party and party basis. 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”: Kohan and Kohan (1993) FLC 92-340 at p79,614; Yunghanns v Yunghanns (2000) FLC 93-029 at pp87,470-1).
(c)In the Federal Court Sheppard J stated that there should be some “special or unusual feature in the case to justify the court in departing from the ordinary practice”, Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225.
(d)In the Family Court Holden CJ in Munday v Bowman (1997) FLC 92-784 at p 84,660 drew from the Colgate-Palmolive case some examples of circumstances warranting the exercise of the discretion to award costs on an indemnity basis:
(i) Where it appears that an action has been commenced or continued in circumstances where a party advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced for some ulterior motive or because of some wilful regard for the known facts;
(ii) Making allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
(iii) Evidence of particular misconduct causing loss of time to the court and to other parties;
(iv) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and
(v) An imprudent refusal of an offer of compromise.
(e)It is conceded as asserted by the husband’s counsel that the categories in which the discretion to award indemnity costs may be exercised is not closed. However the mere existence of facts warranting an indemnity costs order does not mean that the court is obliged to make such an order. Furthermore the court must ultimately exercise its discretion having regard to the matters in Sub-section 117(2A) of the Act.
(f)In his submissions, the husband relies upon the unreported decision of Fraser and Moedt (30 October 1997) (“Fraser”). Indemnity costs were ordered in that case against a husband who had made “blatant and deliberate non-disclosure of large sums of money”. The facts in this case should be distinguished from Fraser. The findings of non-disclosure relate to a relatively small sum of money (being net of her legal fees $34,996.50). This money was received by the wife in December 2005, being more than 2 years prior to the commencement of the proceedings. The uncontested evidence in this matter was that by the time the wife filed her documents including her Form 13 financial statement, the money had been spent by her and was no longer in existence.
(g)Costs, if ordered in favour of the husband should be taxed on a party and party basis.
(h)Costs, if ordered in favour of the husband should be in a quantum to be agreed and in default of agreement should be taxed.”
In his submissions in reply the husband took issue with the wife on this question as, in his submission, there were “circumstances of an exceptional kind justifying the departure.”[15]
[15] see paras.18-19
Ryan J stated in Sharma & Sharma (No.2) (2007) FamCA 425:
“The factors which would ordinarily influence the Court’s discretion about whether an order would be made at all (s.117(2A) purport to relate only to the exercise of that discretion and not to the separate issue of the quantum of a costs order which s.117AB mandates. Nonetheless, s.117(2A) contains a useful structure of relevant considerations when determining the quantum of a s.117AB order.” (see paragraph 15)
The consideration of the matters in section 117(2A) has already been set out above and whether the husband’s application for indemnity costs was being pursued independently of s.117AB or not this Court has the power to award costs on an indemnity basis (see Kohan v Kohan (1993) FLC 92-340).
In Colgate Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FLR 225, Sheppard J considered the cases on costs and conferred the ordinary rule or practice that such orders are to be on a party and party basis. His Honour held that the Court must not make an order on another basis unless the circumstances of the case warrant it departing from the usual practice. In exercising its discretion the Court would look to the particular facts and circumstances of the case and consider whether they warrant the making of an order other than on a party and party basis.
However more is required than was available to the Court here before making an order for costs on an indemnity basis. Whilst the Court was not referred to this decision in submissions, in LGM v CAM (Contempt) (No.2) (2008) FLC 93-355 the Full Court dealt with an appeal where such an order for indemnity costs had been made where there was no evidence of the basis on which costs were charged. The Full Court in that case referred to the decision in Kohan (1993) FLC 92-340 at 79, 611 where it was said:
“…We are of the opinion that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered, where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matters to which the trial Judge should have regard, when considering the financial circumstances of each of the parties to the proceedings under s.117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.”
In order to be satisfied that the wife knowingly made a false statement, the Court must find that the wife made an untrue statement and she made it knowing it to be untrue. As Cronin J said in Charles & Charles [2007] FamCA 276 at paragraph 24:
“For a court to be satisfied that a person knowingly made a false allegation or statement in the proceedings must mean that a court can be comfortably satisfied that a lie has been told and to so find requires a careful analysis of two things. The first is that the proper version of fact is untrue but that it is put knowing it to be untrue. The court must then be cautious about such a finding because of the mandatory consequence. The finding must be elevated above the probable level set in s.140(1) of the Evidence Act1995 to consider the matters contemplated in s.140(2) of that Act.”
The Court is satisfied beyond doubt that the findings in paragraphs [30] to [38] in the reasons for judgment published on 22 July 2009 fall into the category of finding that the wife deliberately and, I am satisfied given the matters referred to above, knowingly making a false statement about those monies and that the Court can make an order against the wife on that basis.
However in the circumstances, and notwithstanding that the wife’s conduct could be said to fall into the category of cases where the conduct was exceptional, the Court is unable to accede to the application for costs on an indemnity basis as there is no evidence of how the husband’s costs are calculated or whether they were subject to an agreement (see Kohan & Kohan (1993) FLC 92-340).
The wife’s submissions contended if there was to be an order the husband should at most have the costs of the application in a case. However for the reasons set out above the Court has determined the wife should bear the husband’s costs. It was necessary as a result of the wife’s non disclosure for a further hearing to be held on 19 March 2009. In the circumstances the Court is satisfied the husband ought have his costs of that hearing as well. There are also the costs of the hearing on 1 and 9 September 2009 the circumstances of which were set out earlier in these reasons to consider and the Court is satisfied it is appropriate that the husband have those costs as well.[16]
[16] see husband’s submissions at paragraph 13 above
Should an order for costs be made against solicitor
There is also the involvement and conduct of Ms Curtis, the wife’s solicitor, in this matter to consider given the husband’s application that she be jointly and severally liable for his costs.
I have already referred at paragraph 26 above to the authorities that make clear the Court can make an order for costs against Ms Curtis.
In Cassidy & Murray (supra) the Full Court set out at paragraph 35 the following matters as relevant for this purpose as follows:
“1.Pursuant to s.117(2) Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.
2.The court should not make such an order without giving the person to be affected by the order an opportunity to be heard.
3.The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.
4.The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor's client.
5.A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.
6.The jurisdiction is compensatory.”
Despite the suggestion referred to in paragraph 17 above, that she would make no submission in relation to any costs sought against her solicitor, the wife’s submissions were critical of the husband for suggesting that costs should be paid “jointly and severally” by the wife and her solicitor.[17]
[17] see page 7 & 8 of the wife’s submissions
Ms Curtis was given every opportunity to be heard on the issue of whether an order for costs ought be made against her[18]. The submissions of Ms Curtis on this issue were at paragraphs 4 though 6 of the submissions filed on 4 November 2009.
[18] see para.129 in Parker & Jacks (No.2) [2009] FMCAfam 743 and following orders
In his submissions in reply to those filed on behalf of Ms Curtis the husband set out the background to why this question was being considered at paragraph 1 of those submissions. Addressing the submissions filed on behalf of Ms Curtis the husband’s submissions squarely addressed the issue of her involvement as solicitor for the wife in those proceedings.[19]
[19] see paras.1-6 of submissions filed 11 November 2009
It was the husband’s position that the Court could be satisfied
Ms Curtis knew the following:“(i)Ms Jacks was extremely unhappy with the outcome of the initial property and child support proceedings;
(ii)Ms Jacks initiated action against Clancy & Triado and Stanley Fookes as a result of their representation of her in the initial proceedings;
(iii)that the essence of the claim by Ms Jacks against her previous legal representation sought damages for one half of the school fees for the attendance of the Plaintiff’s children at [G] School school;
(iv)those proceedings were settled on the basis of a payment to the Wife of $50,000 inclusive of costs in late 2005;
(v)that the Wife received the net sum of $34,996.50 on the 22nd December 2005 and 28th December 2005;
(vi)Ms Curtis was the solicitor on the record in relation to the County Court proceedings and the current Family Law proceedings;
(vii)Ms Curtis as the solicitor for Ms Jacks, prepared two affidavits in these proceedings in which no reference at all is made of the County Court proceedings;
(viii)affidavits of the Wife sworn on the 19th February 2008 at paragraph 5 states “Following the judgment of Her Honour Justice Brown I continued to pay all of the children’s school fees and expenses at [G] School for 2003, 2004, 2005 and 2006. I was only able to manage this as my parents did not seek payment of the rental on the home in which I was living and I applied for and received bursaries from [G] School.” We know that this statement is incorrect;
(ix)Ms Curtis prepared an affidavit of documents on behalf of the wife which affidavit of documents did not disclose any documents relating to the County Court proceedings. Ms Curtis as the solicitor for the wife was aware of the order of FM O’Sullivan dated the 20th February 2008 wherein the wife was obliged to discover the source of payments of the children’s fees for the period 2004 to the present time;
(x)As an officer of the Court Ms Curtis’ obligation was to ensure that affidavits that she prepared and were sworn in her presence by her client, are accurate in every detail;
(xi)Ms Curtis attended Court on the 5th November 2009 to instruct Counsel;
(xii)Ms Curtis was present at all times when Ms Jacks gave her evidence and in particular when Ms Jacks gave evidence to the effect that she had managed to pay the children’s private school fees post 2003 from her income, the generosity of her parents and scholarships. At no time during her evidence did Ms Jacks refer to the County Court proceedings;
(xiii)Ms Curtis made no attempt to have the record corrected to ensure that the Court (and husband) became aware of the fact that she had in late 2005 receive the sum of approximately $35,000 by way of damages for one half of the school fees of the children at [G] School;
(xiv)Ms Curtis has provided no explanation to the Court of the above events.”
In the reasons for judgment at paragraph 30[20] the Court found that
Ms Curtis, who had at all times acted for the wife in these proceedings, had also acted for her in the County Court in the proceedings concerning the Agreement. In those reasons the Court also referred to the husband’s submissions on the wife’s evidence about her reasons for non disclosure.[21] Those reasons also recorded the import of the finding of non disclosure by the wife in the context of the substantive proceedings.[22][20] see Parker & Jacks (No.2) [2009] FMCAfam 743
[21] see para.65(x) of the submissions extracted at para.34 In Parker & Jacks (No.2)
[22] see paras.30-38 in Parker & Jacks (No.2) [2009] FMCAfam 743
In the context of the conduct of the parties in these proceedings and in particular the conduct of the wife it is timely to recall (leaving to one side for present purposes the disclosure obligation which parties in financial proceedings have (see for e.g. In the Marriage of Hickey [2003] FamCA 395)) the duties that solicitors such as Ms Curtis have to the Court where proceedings concerning the obligation of disclosure in financial proceedings are before the Court.
The duties owed to the Court by solicitors are well known (see Giannarelli v Wraith (1988) CLR 543) and include the obligations that solicitors have not to mislead the Court.
These are also clearly set out in inter alia the ‘Best Practice Guidelines for Lawyers doing Family Law Work’ prepared by the Family Law Council and the Family Law Section of the Law Council of Australia dated August 2004 at paragraphs 7.8 to 7.11 which provides that:
“Disclosure
7.8.The parties must make full and frank disclosure of all material facts and relevant documents. This requirement is ‘ongoing’, that is, if fresh material and relevant documents come to light later in the case, these must also be disclosed.
7.9.The lawyer should advise the client in writing of the obligation of disclosure and explain that the obligation is ongoing.
7.10.The lawyer should direct the client’s attention to the relevant provisions of the Family Law Act, Rules and Regulations and the relevant case law, and advise the client of the possible consequences of failing this obligation. The Family Law Rules 2004 emphasis the duty of disclosure (see for example Schedule 1 Part 1(4); Part 2(4); Rules 12.02, 12.05 13.04 and 13.07).
7.11.If the client declines to provide appropriate disclosure, the lawyer is bound by both a duty of confidentiality to the client and a duty not to misled the court. If non-disclosure may result in the lawyer misleading the court, the lawyer should cease to act for the client.” (emphasis added)
Relevantly for present purposes the husband’s initial submissions on this issue, were:
“16.It is submitted that the improper conduct by Ms Curtis in this case is as follows:
(i)preparing two affidavits on behalf of the Wife which she knew contained falsehoods and not properly explaining to the Court (and Husband) the true sources of moneys used by the wife to pay the children’s private school fees;
(ii)preparing an affidavit of documents on behalf of the Wife knowing that that document did not disclose details of the negligence actions and subsequent settlement;
(iii)not instructing Counsel to correct the record when the Wife gave evidence on the 5th November 2008 which she knew was deliberately misleading the Court. The Applicant further refers to and relies upon paragraphs 68 to 74 inclusive of his submissions filed 7th May 2009;”
As the husband’s submission in reply noted whilst it is true that in this case it was the wife who swore the affidavit as being true and correct the Court is of the view that:[23]
“(i)a solicitor cannot settle an affidavit and have a client swear that affidavit as being true and correct when they know the contents are in fact not true and correct;
(ii)a solicitor cannot settle an affidavit of documents and have her client swear that affidavit of documents as disclosing all relevant documents when they know in fact the relevant documents are not being disclosed;
(iii)a solicitor cannot sit mute in court when her client gives evidence that she knows is not accurate and does nothing to ensure that the record is corrected.”
[23] see para.6 submissions filed 11 November 2009
Contrary to the claim in submissions there was evidence that Ms Curtis was involved in the County Court proceedings.[24] On what is before the Court the conclusion the Court comes to is that it is possible to find that Ms Curtis prepared affidavits in these proceedings “which she knew contained falsehoods” (albeit by omitting relevant financial information and thus not creating an accurate picture of the parties financial circumstances) and she failed to ensure her client “properly explain[ed] to the Court (and Husband) the true sources of moneys used by the wife to pay the children’s private school fees” and prepared “an affidavit of documents on behalf of the Wife knowing that that document did not disclose details of the negligence actions and subsequent settlement.”
[24] see Exhibit CDA4 to affidavit of Clem D’Alessandro filed 9 December 2008
Ms Curtis in acting for the wife in these proceedings, was required to certify that her client had complied with her duty of disclosure and as the findings referred to earlier make clear the wife did not do so.
The Best Practice Guidelines referred to earlier make clear if the wife did not provide full and frank disclosure then Ms Curtis, particularly given her position and previous involvement, was required to cease to act. She did not do so and moreover sat in Court throughout the proceedings and did not draw the issue to the Court’s attention.
As the husband said in submissions and I accept:
“She was the solicitor acting on behalf of the wife in the negligence proceedings and as such it could not be said that she was unaware of those proceedings and the subsequent settlement. It is inconceivable that she would not have appreciated that that litigation and the subsequent settlement would have been highly relevant matters which out have been disclosed to the Court.”[25](emphasis added)
[25] see para.17 of submission filed 21 October 2009
In the circumstances the Court is satisfied the husband incurred costs because of the conduct that Ms Curtis was involved in and that conduct saw that the Court was misled by her client.
Should an order for indemnity costs be made
In relation to whether Ms Curtis should pay some or all of his costs or do so on an indemnity basis, in his submissions filed 21 October 2009 the husband’s position was:
“13.It is submitted that in this case there ought to be made an Order that the Husband’s costs on an indemnity basis should be paid jointly and severally by the wife and her solicitor, Jane Curtis. It is submitted that in this case given the conduct of Ms Curtis it is appropriate that she be jointly and severally liable with the Wife for the payment of the Husband’s costs. It has long been accepted that the power to order a lawyer of one party to pay costs incurred by the other party is an exception to the general rule that a person who is not a party to the proceedings cannot be ordered to pay the costs of the proceedings. See Myers v. Leman (1940) AC 282, Edwards and Edwards (1958) P 235, Gardiner and Gardiner (1977) FLC 90-304; Jachimowicz and Jachimowicz (1986) FLC 91-702; Collins and Collins (1985) FLC 91-603; and as to the power to order costs against a non-party see the decision of the High Court in Knight & Anor v. FP Special Assets Limited & Ors (1992) 174 CLR 178.
14.The power to make an order for costs directly and personally against a lawyer arises at common law from the inherent jurisdiction of the Court over lawyers in their capacity as officers of the Court and from the duty of the lawyer to conduct litigation with propriety (see Collins case above at page 79,878).
15.The Full Court of the Family Court had cause in Cassidy and Murray (1995) FLC 92-633 to set out the principles relevant, at the time in the exercise of the jurisdiction to award costs against a lawyer under the Family Law Act. The Full Court referred with approval to the decision of the Master of the Roles, Sir Thomas Bingham, in Ridehalgh v. Horsefield (1994) 3 All ER 848 at 858 in holding at page 82,365 that:
(i)pursuant to s. 117(2) of the Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party;
(ii)the Court should not make such an order without giving the person to be affected by the Order an opportunity to be heard;
(iii)the Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct;
(iv)the solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor’s client;
(v)a mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence any of which are found by a Court would be of a serious nature may be sufficient to justify an order;
(vi)the jurisdiction is compensatory.
16.It is submitted that the improper conduct by Ms Curtis in this case is as follows:
(i)preparing two affidavits on behalf of the Wife which she knew contained falsehoods and not properly explaining to the Court (and Husband) the true sources of moneys used by the wife to pay the children’s private school fees;
(ii)preparing an affidavit of documents on behalf of the Wife knowing that that document did not disclose details of the negligence actions and subsequent settlement;
(iii)not instructing Counsel to correct the record when the Wife gave evidence on the 5th November 2008 which she knew was deliberately misleading the Court. The Applicant further refers to and relies upon paragraphs 68 to 74 inclusive of his submissions filed 7th May 2009;
(iv)not appearing or instructing Counsel to appear on behalf of the Wife on the hearing on the 1st December 2009;
(v)in writing the letter to Messrs Littleton Hackford and D’Alessandro, and copying same to the Court, on the 31st July 2009 which read as follows:
“We refer to previous correspondence. Our client’s mother passed away on the 12th July 2009 and in the circumstances she seeks a two week extension of Order No. 3 of those made on the 22nd July 2009, does your client consent.”
That letter implies that the Wife sought that extension of two weeks to enable her to file submissions as to the question of costs and conduct as ordered by Order 3 of the Orders of the 22nd July 2009. It is clear that at no stage was the Wife ever intending to file any such submissions.
17.In all the circumstances of this case it is submitted that it is appropriate that Ms Curtis also be ordered to be jointly and severally liable for the Husband’s costs of these proceedings. She was the solicitor acting on behalf of the Wife in the negligence proceedings and as such it could not be said that she was unaware of those proceedings and the subsequent settlement. It is inconceivable that she would not have appreciated that that litigation and the subsequent settlement would have been highly relevant matters which ought to have been disclosed to the Court. The Court found that it had been deliberately misled and it is submitted on behalf of the Husband that Ms Curtis was a willing participant in that deception.”
For the same reasons set out at paragraph 67 above the Court is unable to make an order for indemnity costs.
Conclusion
The Court has considered and taken into account all of the submissions that have been filed in this matter.
The husband had sought an order that the wife and Ms Curtis be jointly and severally liable to pay his costs in the application in the substantive proceedings (including the hearing on 1 and 9 September 2009) and of his application in a case. This was opposed by the wife and Ms Curtis.[26]
[26] see for e.g. para.7 of wife’s submissions
Given the broad discretion contained in s.117(2) of the Act, as noted in the authorities, the Court is satisfied that an order that the wife and
Ms Curtis be jointly and severally liable for costs is appropriate given the particular circumstances of this case.In coming to that view I have of course considered the submissions advanced in opposition to such an order.[27] The Court was not referred to any authority telling against such an order and in the peculiar circumstances of this matter it is an order that appropriately addresses the conduct involved.
[27] see for e.g. para.4 of Ms Curtis’ submissions
For the reasons set out above the Court has come to the view that orders should be made for the wife and Ms Curtis to pay the husband’s costs on a party/party basis as agreed or to be taxed. In doing so the Court again notes the failure to disclose (which went on here and which both were involved in) undermines the whole process of adjudication of proceedings in relation to financial matters.[28]
[28] see Luciano v Luciano [2000] FamCA 401
In the event the Court made an order for costs, the wife and Ms Curtis had sought that the payment of such an order be stayed pending the finalisation of the appeal. The husband opposed this but as set out earlier the wife has lodged a Notice of Appeal in relation to the substantive proceedings. In the event the wife is successful there may be a different order as to costs.
In the circumstances including the orders referred to in paragraph 11 above the Court will stay the order for costs until the wife’s appeal is determined or a Notice of Discontinuance is filed.
Finally, the conduct of Ms Curtis is such that I have formed the view that she should be referred to the appropriate disciplinary body for investigation. I will request that the Registrar of the Federal Magistrates Court forward a copy of these reasons and any other relevant material for that body to pursue such investigation as they believe is appropriate.
For the reasons set out above there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM
Associate: Rachelle Lombardo
Date: 8 December 2009
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