Phillips & Hansford - [2020] FamCAFC 28

FAMILY COURT OF AUSTRALIA

PHILLIPS & HANSFORD

[2020] FamCAFC 28

FAMILY LAW – APPEAL – COSTS – Written submissions on the issue of costs – Indemnity costs awarded to the mother – Exceptional case where the payment of costs assessed only at scale would not be appropriate or just – Where the father is in a better financial position than the mother – Where the appeal was wholly unsuccessful – Where considerable expense would have been spared if the father had accepted the mother’s written offer of settlement – Where the father should not have prosecuted the appeal – Father to pay the mother’s costs of the appeal and this application for costs in a fixed sum.

Family Law Act 1975 (Cth) ss 11F, 60CC, 117

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
D & D (Costs) (No. 2) (2010) FLC 93-435; [2010] FamCAFC 64
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364
Hansford & Phillips (No. 3) [2019] FCCA 912
J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178
Phillips & Hansford(No. 2) (2019) FLC 93-917; [2019] FamCAFC 165

APPELLANT:

Mr Phillips

RESPONDENT:

Ms Hansford

INDEPENDENT CHILDREN’S LAWYER:

Legal Services Commission

FILE NUMBER:

ADC

4008

2013

APPEAL NUMBER:

SOA

2019

DATE DELIVERED:

12 February 2020

PLACE DELIVERED:

Sydney

PLACE HEARD:

In Chambers

JUDGMENT OF:

Strickland, Ainslie-Wallace & Aldridge JJ

HEARING DATE:

Heard by way of written submissions

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

28 February 2019

LOWER COURT MNC:

[2019] FCCA 912

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr McQuade

SOLICITOR FOR THE APPELLANT:

Jacqui Ion Lawyers

COUNSEL FOR THE RESPONDENT:

Ms O’Connor SC

SOLICITOR FOR THE RESPONDENT:

D’Angelo Lawyers

COUNSEL FOR THE INDEPENDENT

CHILDREN’S LAWYER:

Mr Hemsley

SOLICITOR FOR THE INDEPENDENT

CHILDREN’S LAWYER:

Legal Services Commission

Orders

The appellant pay the respondent’s costs of and incidental to the appeal fixed in the sum of $30,511.10.
The appellant pay the respondent’s costs of this application for costs fixed in the sum of $3,081.29.

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

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

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE

Appeal Number: SOA 21 of 2019
File Number: ADC 4008 of 2013

Mr Phillips

Appellant

And

Ms Hansford

Respondent

And

Independent Children’s Lawyer

REASONS FOR JUDGMENT

Introduction

On 4 October 2019, we dismissed Mr Phillips’ (“the father”) appeal against interim parenting orders made by a judge of the Federal Circuit Court of Australia in Adelaide. Ms Hansford (“the mother”) now seeks an order that the father pay her costs of the appeal and of the application for costs assessed on an indemnity basis or, alternatively, at scale.

Background

The appeal concerned the parties’ two children who were aged 15 years and nearly 12 years at the time of the appeal hearing.
On 21 January 2015, a judge of the Federal Circuit Court of Australia in Canberra made orders that provided for the children to relocate with the mother to Adelaide. If the father also moved to Adelaide, which he in fact did, the children were to spend equal time with each of their parents.
In September 2017, the mother filed an application seeking to vary those orders. It was subsequently dismissed.
On 16 November 2018, the younger child was due to return to the care of the father, but did not, and remained living with the mother.
Following an incident on 6 December 2018, the elder child refused to spend time with the father.
The reasons why the children acted as they did are explained in the principal judgment and do not need to be repeated (Phillips & Hansford(No. 2) (2019) FLC 93-917).
On 12 February 2019, the father filed an Amended Application in a Case which sought a recovery order in relation to both children. The mother responded with an Initiating Application filed on 21 February 2019, which sought to vary the orders made on 21 January 2015 so that the children spent less time with the father.
These competing applications came before the primary judge on 28 February 2019. The proceedings were adjourned to 21 May 2019 so that a report pursuant to s 11F of the Family Law Act1975 (Cth) (“the Act”) as to the views of the children could be obtained. An order was made that on 21 May 2019 the parties should be in a position to make submissions as to whether it was in the best interests of the children for the parenting orders made on 21 January 2015 to be reconsidered.
The primary judge also made the order, the subject of the appeal, that pending further order, the children spend only each alternate weekend with the father. The order specified four dates leading up to 21 May 2019 as the dates when that time should commence. The children were also to spend one week of the school holidays in April 2019 with the father.
That order was made in an attempt to preserve the relationship between the children and the father and because “[i]t is time that the pressure should be taken off a little bit to ensure that that risk does not eventuate” (Hansford & Phillips (No. 3) [2019] FCCA 912 at [22]).
As can be inferred from the form of the order itself and its purpose, it was intended to operate only for a short time so that the report pursuant to s 11F could be obtained and a decision could be made as to whether the orders made on 21 January 2015 should be reconsidered. We shall return to that aspect of the matter shortly.

Costs

Although the usual position in proceedings under the Act is that each party shall bear his or her own costs (s 117(1)), if there are circumstances that justify it doing so, the Court may make such an order as it considers just (s 117(2)). In considering whether such an order should be made, the Court must have regard to the matters set out in s 117(2A).
The first consideration raised by s 117(2A) is the financial circumstances of each of the parties (s 117(2A)(a)).
The mother receives Centrelink benefits and has been given a grant of Legal Aid for the parenting proceedings which continue in the Federal Circuit Court of Australia.
The father’s present income is stated to be $1,900 per week in his Financial Statement filed on 28 November 2019. Ordinarily, it has been $2,226 per week but a payslip for the pay period of 27 June 2019 to 10 July 2019 shows that the father “purchased” leave in the amount of $682.79, thus reducing his income (Annexure “H-2” to the mother’s affidavit filed on 4 December 2019). The father owns a home that he values at $500,000 which is subject to a mortgage in the sum of $465,849. The father says that he owes $570,000 to his parents and that he pays the children’s school fees of $348 per week and contributes $49 per week towards the children’s health insurance.
Neither of the parties is in a strong financial position but the father is significantly better off than the mother.
The appeal was wholly unsuccessful (s 117(2A)(e)).
Both parties rely upon written offers between the parties to settle the proceedings (s 117(2A)(f)).
In considering the written offers between the parties, it is helpful to recall that the Notice of Appeal was filed on 27 March 2019 and an Amended Notice of Appeal was filed on 4 July 2019. The appeal was heard on 19 July 2019.
On 5 June 2019, the father’s solicitors sent a written offer to the mother’s solicitors. Significantly, the letter said “it is not open to your client to agree to some but not all of the offer. It is to either be accepted or rejected in its entirety” (Annexure “A” to the affidavit of the father’s solicitor filed on 28 November 2019).
The letter dated 5 June 2019 proposed orders for the parties to have equal shared parental responsibility for the children who were to live with the mother and spend time with the father “as agreed between the parties or in accordance with the wishes of the children”. This was followed by 17 further proposed orders, most of which added detail to the major parenting orders on unexceptional subjects such as communication, school, medical appointments and the like. Two of the further proposed orders required the mother to obtain and use a school card. A binding child support agreement was also proposed. As to the appeal, the proposal was that it be withdrawn along with an Application in an Appeal and there be no costs.
The mother’s solicitors replied on 6 June 2019 accepting the general thrust of the father’s proposed orders but significantly amending many of them. The mother’s proposed orders made no reference to a school card or a binding child support agreement. Detailed orders in relation to the payment of the children’s school fees were sought, as was an order preventing the father from setting off the children’s school fees against his child support obligations. The father was asked to pay the mother’s costs for the appeal and the Application in an Appeal in the sum of approximately $9,000 on a solicitor/client basis.
The response sent from the father’s solicitors was dated 20 June 2019. It said “[t]here are several aspects of your client’s counter proposal with which my client cannot agree, but I want to raise with you three (3) in particular”. The letter dated 20 June 2019, went on to discuss those three issues in some detail and concluded by saying that, although there were other issues to be discussed, if there was no movement on the three critical topics then the proceedings would have to continue.
On 25 June 2019, the mother’s solicitors sent an email to the father’s solicitors enclosing schedules of the mother’s costs of the appeal and of her Application in an Appeal which were assessed on an indemnity and party/party basis. It made no reference to the earlier letters between the parties and was limited to the issue of costs.
That email included the following:
…Should your client elect to also withdraw his Appeal proper within 14 days of the date hereof then our client has instructed us that she will similarly confine her claim for costs to the party/party claim ($11,390.49). This offer is put forward on the basis of the principles in Calderbank & Calderbank and supercedes [sic] our client’s previous offer…
(Annexure “SLA-3” to the affidavit of the mother’s solicitor filed on 31 October 2019) (As per the original)
There was no response from the father.
On 11 October 2019, which was after the appeal was heard and determined but before the written submissions on costs were due, the mother’s solicitors wrote to the father’s solicitors, again dealing with the issue of costs. This time an application for indemnity costs was foreshadowed and an offer was made to resolve the issue on the basis that the father pay the mother’s costs on a party/party basis in the sum of $27,766.34.
Again, there was no response from the father.
We consider that nothing of significance can be drawn from the first three letters which contain complex parenting proposals and counter proposals which went beyond the issues of the appeal.
No such difficulties attend the email of 25 June 2019 from the mother’s solicitors to the father’s solicitors. Whilst the mother offered no discount on the costs that had already been incurred by her, both parties would have been spared considerable expense if the offer had been accepted by the father.
The final letter dated 11 October 2019 carries only little weight because the costs of the appeal had already been incurred and it relates only to saving the expense of preparing the written submissions on the issue of costs.
Taken together, these three considerations (ss 117(2A)(a), (e) and (f)) amply justify a costs order in favour of the mother.
The next consideration is, should the mother’s costs be paid on an indemnity basis?
Indemnity cost orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).
In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at 5).
In our principal reasons we described the father’s submissions made under Grounds 1, 2 and 4 as being “fundamentally misconceived”. We said:
26.The central point made by these grounds and the submissions in support of them was that the primary judge should not and, indeed, could not make any parenting orders of any kind at all (urgent, interim or otherwise) without first undertaking a hearing as to whether it was in the best interests of the children for the parenting orders to be reconsidered.
27.As we will explain, this submission is fundamentally misconceived for two reasons. Firstly, there is no such principle as that suggested. Secondly, the primary judge accepted that there should not be a fundamental change in parenting orders unless it was in the best interests of the children and fixed the matter for a determination of whether there had been such a change in circumstances that reconsideration of the existing orders was warranted.
28.As to the first proposition, we note that no authority was cited in support of it. We are not aware of any.
We found Ground 3, which asserted a lack of reasons, difficult to understand because contrary to the father’s submissions, the reasons were replete with a discussion of the children’s views and the weight to be given to them. The father’s further submissions to the effect that the primary judge erred by not engaging in specific consideration of s 60CC(3)(f) and s 60CC(3)(i) failed because no such submissions had be made to his Honour at the hearing.
Finally, Ground 5, which was widely expressed, was reduced in the course of oral submissions at the appeal hearing to an asserted error that was found by us to be “entirely trivial” and lacking “any materiality whatsoever” (at [56]).
The weaknesses in the appeal were manifest and properly advised, the father should not have prosecuted the appeal.
On 6 June 2019, the mother offered to resolve the appeal and the father’s Application in an Appeal, on the basis that they be withdrawn, and her costs then totalling the sum of approximately $9,000 be paid by the father. As the father’s appeal entirely lacked merit, the father should have accepted this offer. It was imprudent not to do so. It was also imprudent of him to have not accepted the subsequent offer of $11,390.49 made on 25 June 2019, which superseded the previous offer.
There is another consideration. This was an appeal against short term interim orders which were intended to operate from 28 February 2019 until 21 May 2019. On 21 May 2019, the primary judge was to conduct a hearing as to whether it was in the best interests of the children, having regard to relevant changes in circumstances, that there should be a reconsideration of the parenting arrangements.
What then is the utility of an appeal against such orders which was heard on 19 July 2019 and determined on 4 October 2019?
If the appeal had succeeded and the orders had been set aside, the application would have been remitted for rehearing, which is precisely the course that was already being undertaken. Of course, if that had been the case, consideration would have been given to what interim orders should be in place pending the rehearing of the application by a judge of the Federal Circuit Court of Australia. The obvious course would have been to maintain the existing orders until the matter could be listed before a judge of that Court unless the orders had already been varied in the course of the continuing parenting proceedings.
In short, the appeal would have been entirely pointless, even if it had been entirely successful.
In our opinion, appeals of such nature form another category of case in which the payment of costs on an indemnity basis may be considered.
Taking these matters into account, we are satisfied that this is an exceptional case where the payment of costs assessed only at scale would not be appropriate or just.

Conclusion

The mother seeks an order that the father pay her costs of the appeal in the sum of $30,511.10 inclusive of GST. Whilst the father submitted that these fees are excessive, the father’s written submissions did not descend into any detail as to why this might be so.
There will be an order for the father to pay the mother’s costs of the appeal in the sum sought by the mother.
The father will also be ordered to pay the mother’s costs of this application fixed in the sum of $3,081.29.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace & Aldridge) delivered on 12 February 2020.

Associate:

Date: 12 February 2020