Pottinger and Bainton (Costs)

[2009] FamCA 231

FAMILY COURT OF AUSTRALIA

POTTINGER & BAINTON (COSTS) [2009] FamCA 231

FAMILY LAW – COSTS – Whether there should be an order for costs on an indemnity or party-party basis (if at all) – the applicable principles – consideration of s117(2A) – whether the findings attract such principles

Family Law Act 1975 (Cth) ss 61C, 61DA, 117(1), 117(2), 117(2A)

Penfold v Penfold (1980) FLC 90-800
Robinson and Higginbotham (1991) FLC 92-209
Pennisi and Pennisi (1997) FLC 92-774
Kohan and Kohan (1993) FLC 92-340
Yungmanns and Yungmanns (2000) FLC 93-029

APPLICANT: Mr Pottinger

RESPONDENT: Ms Bainton

INDEPENDENT CHILDREN’S LAWYER: Legal Aid Commission of New South Wales

FILE NUMBER: SYF 2170 of 2006

DATE DELIVERED: 30 March 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Rose

HEARING DATE: 27 February 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: G. Johnston

SOLICITOR FOR THE APPLICANT: H A Miedzinski Solicitors

COUNSEL FOR THE RESPONDENT: J. Lloyd

SOLICITOR FOR THE RESPONDENT: Paltos & Co

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Ms Soloman

Orders

1. That the father pay to the mother one-third of her costs of and incidental to the substantive proceedings determined on 25 February 2009 on a party-party basis assessed and agreed upon or failing agreement as taxed.

2. That the mother pay an amount equal to two-thirds of the costs sought by the Independent Children’s Lawyer in paragraphs 1(a) and 2 of Exhibit C on or before 5pm 15 may 2009.

3. That the father pay to the Independent Children’s Lawyer an amount equal to one-third of the costs sought against the mother set forth in paragraphs 1(a) and 2 of Exhibit C on or before 5pm 15 may 2009.

4. That all other applications for costs are dismissed.

5. That the proceedings be removed from the Active Pending Cases List.

IT IS NOTED that publication of this judgment under the pseudonym Pottinger & Bainton (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2170 of 2006

MR POTTINGER

Applicant

And

MS BAINTON

Respondent

REASONS FOR JUDGMENT

Introduction  

1. On 25 February 2009, I delivered judgment (“the Judgment”) and made parenting orders in relation to the child of the parties (“the orders”). Pending applications for orders for costs, including costs sought by the Independent Children’s Lawyer were stood over to a date and time to be fixed.

2. On 27 February 2009, an order for costs on an indemnity basis was sought by the mother against the father. The quantum of orders so sought is $197,399. In addition, the mother sought orders that the father pay her share of the Independent Children’s Lawyer’s costs, the child expert’s fees and costs of her application for orders for costs. The orders so sought are set forth in Exhibit A.

3. The father sought orders that the mother’s application for orders for costs be dismissed and that she pay his costs on a party/party basis of and incidental to the proceedings for the period calculated from 1 July 2008. The orders so sought are set forth in Exhibit B.

4. The Independent Children’s Lawyer sought orders that each of the parties pay particular amounts of costs incurred by the Independent Children’s Lawyer and that they equally pay any outstanding costs of the single expert. The orders so sought are set forth in Exhibit C.

5. Counsel for the mother relied upon the Judgment, the terms of the orders and the affidavit of his instructing solicitor P. Milevaski sworn 26 February 2009 (“the affidavit”).

6. Counsel for the father also relied upon the same material except that so far as the affidavit of the mother is concerned, he made submissions in relation to certain aspects of it.

7. Issue was not taken with the quantum of the costs orders sought by the Independent Children’s Lawyer, nor the basis of her application.

8. In accordance with conventional procedure, submissions were made by counsel on the Papers. The mother’s solicitor was not required for cross-examination.

9. After the hearing commenced and prior to submissions being made, I informed counsel of my concern that I only had sparse evidence of the financial circumstances of the mother and father which solely comprised evidence that they gave during the course of the hearing of the substantive proceedings. I raised the issue as to whether or not the proceedings should be adjourned to enable the parties to have an opportunity to file and serve a Statement of Financial Circumstances. Counsel for the mother and father did not seek an adjournment and the matter proceeded. At the conclusion of submissions, an order was made by consent that the father pay the Independent Children’s Lawyer costs of $3137.20 on or before 5pm 9 April 2009. Judgment was reserved to a date to be fixed in view of the need to continue a part-heard trial without loss of further court time and my interstate and leave commitments.

Section 117(1) and (2)  

1. Section 117(1) provides the general principle that each party to proceedings under the Family Law Act 1975 shall bear his or her own costs subject to certain specific exceptions, none of which are relevant in the proceedings between these parties.

2. It has been established for many years in accordance with the leading High Court judgment in Penfold v Penfold[1] that section 117(1) is subject to the wide discretionary power provided in section 117(2) to make an order for costs should circumstances be established that the order is considered just. In that regard a “special” circumstance is not required to be established.[2]

   [1]  (1980) FLC90-800

   [2]  Ibid

3. As is apparent from the fact that an order for costs is sought by each of the parties, it is implicit that counsel for the parties submitted that a circumstance had been established that justified the exercise of discretion to make an order for costs, albeit that each of them relied on a different circumstance for that purpose.

4. Counsel for the wife submitted that the husband had been unsuccessful in relation to the major parenting issues that were determined in the judgement. In addition, reliance was placed by him upon the offers for settlement, particularly the first one made by the wife being annexure “M” to the affidavit.

5. Counsel for the father submitted that the mother had been “wholly unsuccessful” in that the orders sought by her for periods of time to be spent by the father with the child were on a supervised basis only, whereas the orders made, in part, provided for unsupervised periods of time.

6. Counsel for the father also relied upon certain of the offers for settlement made by his client referred to in the affidavit and in particular his offer set out in annexure “Q” to the affidavit whereby the father sought agreement to the proceedings being dismissed.

7. I have concluded that “circumstances” have been established thereby meeting the threshold requirement the subject of section 117(2). One of such circumstance is based upon the offers for settlement made by each of the parties on commencement of the substantive hearing. The weight to be attached (if any) to one or more such offers for settlement is a different matter and which I will consider as part and parcel of whether it is just that the discretion be exercised to make an order for costs. The further circumstance is that the mother’s case was accepted in relation to her allegations of violence and abuse by the father and the implication so far as rebuttal of the presumption of equal shared parental responsibility and the consideration of the terms and conditions upon which the father may spend periods of time with the child.

Section 117 (2A)

1. For the purpose of considering “what order (if any) should be made under subsection (2)” I am required to have regard to the particular matters set forth in section 117(2A) implicitly so far as they are relevant. I will proceed to make findings in relation to such matters.

2. As earlier observed in this judgment, I have sparse evidence of the financial circumstances of each of the parties.

3. So far as the mother is concerned, there is no evidence of her income (if any). No submission was made in that regard. The mother lives with her partner, Mr RM, his son and the child in a property owned by her partner. The mother’s assets comprise $10,000, clothing, personal effects and perhaps a motor vehicle. The parties had previously settled property settlement proceedings. The large amount of funds that had been paid by the father to the mother pursuant to that settlement seem to have been largely expended upon legal costs.

4. The mother has a financial resource represented by the benefits received as a result of living in a property owned by her partner, his implicit meeting of living expenses and payments made on account of her legal costs. Reference was made from time to time in the evidence in the substantive proceedings to the mother’s partner being “a wealthy man”. Other than the fact that he also owns a residential property in Sydney, occupied by members of his extended family and personal property, I do not have further evidence of his financial position and the extent to which it otherwise is or may represent a financial resource of the mother.

5. The father has income from part-time work of approximately $6,000 per annum. He owns his home in Sydney which he has listed for sale. I do not have evidence of the approximate equity that he holds in that property. The father owns one, possibly two motor vehicles, household contents and personal effects. I do not have evidence of any other significant aspects of his financial circumstances.

6. I accept the evidence of the financial circumstances of the parties which I have summarised and make findings accordingly.

7. Neither of the parties is in receipt of a grant of legal aid.

8. I accept the submission that the father filed a series of Contravention Applications which were subsequently withdrawn. No other matter was a subject of submissions in relation to section 117(2A)(c).

9. I do not accept the submission made on behalf of the father that the mother was “wholly unsuccessful”. Whilst it is correct that the mother sought orders which provided for supervised periods of time to be spent by the father with the child, she was partly successful in that regard as is demonstrated by Orders 5 and 7(a).

10. The father was partly successful in the orders sought by him in that subject to compliance with Order 6(a), other of the parenting orders made provision for him to spend unsupervised periods of time with the child.

11. Written offers of settlement of the proceedings were made by each of the parties to which I have already made brief reference. Those offers are annexures to the affidavit. The following is a summary of those offers:-

    i)By letter dated 12 July 2007 from the mother’s solicitors to the father’s solicitors, the mother proposed that:-

    ·    Joint parental responsibility.

    ·    Each party have daily parental responsibility.

    ·    The child live with the mother.

    ·    Increasing periods of time spent by the father with the child.

    ·    The nominee of the father take part in changeover of the child from the care of the mother to the father.

    ·    Removal of the child’s name from the Airport Watch-list.

    ·    Ancillary orders.

    It was clear from this offer of settlement that the periods of time suggested to be spent by the father with the child were on an unsupervised basis.[3]

    [3]  Annexure “M”.

    ii)By letter dated 20 July 2007 from the father’s solicitors to the mother’s solicitors the father put forward the following counter-offer:-

    ·    Joint parental responsibility.

    ·    Each party have daily parental responsibility for the child whilst the child is in his or her care.

    ·    Increasing periods of time that the child spend with the father. In that regard, it represented in substance a greater degree of periods of time than had been proposed by the mother.

    ·    Ancillary orders.[4]

    [4]  Annexure “N”

    iii)By letter dated 7 September 2007 from the mother’s solicitors to the father’s solicitors, the mother proposed:-

    ·    Periods of time with the father each Saturday.

    ·    Changeover to take place at Centrecare Contact Centre.[5]

    [5]  Annexure “O”

    iv)By letter dated 12 July 2007 from the mother’s solicitors to the father’s solicitors, the mother proposed:-

    ·    The father spend time with the father each Saturday.

    ·    That changeover occur at Centrecare Contact Centre.

    ·    That certain Interim Orders be suspended.

    It is clear that this particular order for settlement was on an interim basis only.[6]

    [6]  Annexure “P”p2

    v)By letter dated 5 June 2008 from the father (unrepresented) to the mother’s solicitors sent by facsimile transmission at 17.41 hours he proposed:-

    ·    That he withdraw all applications.

    ·    All previous orders are discharged.

    ·    The mother not seek a costs order.

    ·    Notation: “That it is my intention that at no time in the future will I commence proceedings with respect to spending time with [the child] unless [the mother] predeceases me.”

    I note that a date for acceptance of this offer was not stipulated.[7]

    [7]  Annexure “Q”

    vi)By letter dated 9 June 2008 from the father to the mother’s solicitors sent by facsimile transmission at 10.02 hours the father withdrew his offer of settlement dated 5 June 2008. He stated that the withdrawal was effective as at “0900 Monday 09 June 2008”.[8]

    [8]  Annexure “R”

    vii)By letter dated 25 June 2008 from the father’s solicitors to the mother’s solicitors, the father proposed:-

    ·    The child live with the mother.

    ·    Discharge of orders providing for periods of time to be spent by the father with the child.

    ·    All applications dismissed.

    ·    “That each party pay their own legal costs save and except for Order 4 of the Minutes of Consent Orders made in the Family Court of Australia on 17 June 2008.” This was a reference to costs order.

    ·    The matter be removed from the Active Pending Cases List.

    ·    “A notation that it is the father’s intention that at no time in the future he will commence proceedings with respect to spending time with the child […] unless the mother [Ms Bainton] predeceases him.”

    The offer was noted to be open for seven (7) days from the date of the letter.[9]

    [9]  Annexure “S”

    viii)By letter dated 1 July 2008 from the mother’s solicitors to the father’s solicitors, the mother proposed:-

    ·    All prior orders discharged except Order 4 of the orders made 17 June 2008. That was a reference to a costs order.

    ·    Sole parental responsibility to the mother.

    ·    The child live with the mother.

    ·    No orders in relation to any periods of time of the child being in the father’s care.

    ·    The mother permitted to move the child from the Commonwealth of Australia without the father’s consent.

    ·    The child’s name removed from the Airport Watch-list.

    ·    The father restrained from commencing parenting proceedings without leave.

    ·    All applications and responses dismissed.

    ·    The father pay the mother’s costs of $40,000 subject to such an order being stayed which would then be discharged on the institution of parenting proceedings by the father in relation to the child.

12. No other matters were the subject of submissions, so far as section 117(2A) is concerned, although submissions were made as to the weight to be given to one or more of the matters that I have referred to pursuant to that subsection.

Conclusion

1. I accept the submission made by counsel for the mother that parenting proceedings do not represent a particular category of case which restrains the exercise of discretion to make a costs order. That submission is supported by the Full Court’s judgment in I and I (No.2).[10]

   [10]  (1995) FLC92-625 at 82,277

2. The offers of settlement exchanged by the parties represent a factor to which I have given significant weight in accordance with Full Court judgments.[11]

   [11]  Robinson and Higginbotham (1991) FLC92-209 at 78,417; Bennisi and Bennisi (1997) FLC92-774 at 84,547

3. The offer of settlement made by the mother by her solicitor’s letter dated 12 July 2007[12] contained reasonable terms for settlement that included, but were not limited to, periods of time to be spent by the father with the child on an unsupervised basis. Other matters were addressed, including a matter of some contention namely removal of the child’s name from the Airport Watch-list. That offer was rejected as is made clear by the father’s counter-offer by letter dated 20 July 2007.[13] However the terms for ongoing periods of time to be spent by the father with the child appeared to be reasonable in part and at least should have formed a basis for ongoing constructive dialogue. It is clear that removal of the child’s name from the Airport Watch-list was not the subject of agreement. Unfortunately, constructive dialogue did not continue, no doubt against the background of increasing violent behaviour and abuse by the father, the subject of the evidence and my findings in the Judgment.

   [12] supra

   [13] supra

4. I do not attach any weight to the father’s letter dated 5 June 2008 whereby he proposed that all applications be withdrawn and previous orders discharged. A parenting order was not sought. Although the period for acceptance was not stated in his letter of 5 June 2008, it was withdrawn by his letter 9 June 2008.[14] He effectively gave one full working day for the purpose of the mother’s solicitor obtaining instructions and replying. Quite clearly that was unreasonable.

   [14] supra

5. A significant offer of settlement was made by the father by his solicitor’s letter dated 25 June 2008.[15] It had the effect of an order being made that the child live with the mother, interim orders being discharged and all applications dismissed. Whilst the notation to that letter was not binding, it had evidentiary value in relation to any future parenting proceedings which may have been instituted by him. The offer was open for seven days. In my view that provided a reasonable time in which the mother could have given instructions to her solicitor and for him to reply.

   [15]  supra

6. The last mentioned offer of settlement was responded to by the mother’s solicitors in their letter of 1 July 2008.[16] It essentially accepted the proposal of the father in relation to parenting orders with two significant exceptions. They were that the mother had sole parental responsibility for the child and that the child’s name be removed from the Airport Watch-list. It was implicit in the father’s offer of settlement dated 25 June 2008 that the presumption of equal shared parental responsibility would apply given the provisions of section 61DA(1). There was also further condition put forward on behalf of the mother, namely that the father pay her costs of $40,000 subject to an order for that amount being stayed, which in turn would be discharged on the institution of parenting proceedings by him in relation to the child. Whilst I do not accept the colourful description of “blackmail” made by counsel by the father, I do accept his submission that it could not be reasonably accepted that a court would make such an order, even if sought by consent. It was tantamount to providing a financial penalty to the father in the event of him instituting parenting proceedings. That penalty would apply even if the institution of the further parenting proceedings was reasonably based having regard to the best interests of the child. At the very minimum, litigation between the parties in that context would have been broadened as no doubt the father may then have made an application to discharge the proposed order to which I have referred. In my view the order so proposed by the mother was contrary to public interest in that it has been established over many years that parties cannot be restrained from instituting further parenting proceedings subsequent to final orders being made as the best interests of the child may necessitate further proceedings being so instituted. That is, of course, subject to a person being declared a vexatious litigant or proceedings being summarily dismissed.

   [16]  supra

1. I do not accept the submission by counsel for the mother that the proposed order to which I have referred represented an extension or recognition on a monetary basis of the notation to the father’s offer of settlement dated 5 June 2008 earlier described in this judgment. Even if it could be described in that fashion, it would not have resulted in an order being made in the terms sought for the reasons given by me.

2. There were significant advantages to the parties had the father accepted the mother’s offer of settlement as set forth in her letter of 12 July 2007. Likewise, there were obvious and substantial advantages arising out of the father’s offer of settlement dated 25 June 2008. The former offer, if accepted, would have meant a regime of increasing periods of time that the father would spend with the child on an unsupervised basis. So far as the latter is concerned, litigation would have been brought to an end without parenting orders being made in relation to periods of time that the father would spend with the child. Otherwise, an order would also have been made that the child live with the mother. The parties’ rights in relation to parental responsibility would have continued in accordance with sections 61C and 61DA.

3. In view of those significant and contrasting offers of settlement which I have briefly summarised in the last paragraph and otherwise more extensively reviewed earlier in this judgment, I have concluded that the weight that I attach to each of them is no greater than the other and consequently does not lead me to conclude that on the basis of one of those offers or the other, an order for costs should be made.

4. However, I have determined there will be an order for costs in favour of the mother representing one third of her costs of and incidental to the proceedings on a party/party basis for the following reasons.

5. The essence of the mother’s case was that there should be supervised periods of time spent by the father with the child until such time as the father receives and responds positively to consultations and/or therapy from a suitably qualified and experienced psychiatrist or psychologist and upon that occurring the periods of time should then move to an unsupervised basis. The mother relied upon her allegations of violence and abuse perpetrated by the father to her and/or her partner at times in the presence or hearing of the child. The mother confirmed her case in that regard during the course of her oral evidence.

6. The thrust of the mother’s case referred to by me in the last paragraph was contested by the father. He had a right to do so. However as in all litigation in this Court and other courts, the case for one party may be preferred to that of the other and the underlying allegations of fact may be accepted and reflected in findings made by the trial judge. That is precisely what occurred in the substantive proceedings.

7. As is apparent from the Judgment, I have made findings in favour of the mother so far as the allegations of violence and abuse were concerned. Indeed the father made a number of significant admissions under cross-examination, also referred to in the Judgment. On the last day of the hearing he provided an undertaking to undergo psychological therapy. His contest of those allegations had little, if any, merit.

8. Ultimately, parenting orders were made which provided for the father to have supervised periods of time with the child and that upon compliance with his undertaking to the Court as varied by me in terms of the order that was made, such periods of time would move to take place on an unsupervised basis.

9. Consequently, the mother’s case was successful. A great deal of the evidence was devoted to the allegations of violence and abuse. Properly advised (which I can only assume occurred) the father should have known that upon family violence being established, the presumption of equal shared parental responsibility would be rebutted pursuant to section 61DA(2)(b) and that there would then be a probability that an order for sole parental responsibility would be made in favour of the mother. That ground was established and the order to which I have last referred was made.

10. However, there were other issues that remain to be determined and to that extent each of the parties was partly successful.

11. It was submitted on behalf of the mother that an order for indemnity costs should be made. It was accepted for counsel for the mother that the authorities have provided principles or guidelines to the effect that it is only in an unusual case that the Court should depart from the ordinary practice of an order for costs on a party-party basis.[17] I am not persuaded that an order for indemnity costs should be made. There were legitimate parenting issues that were the subject of determination by me including but not limited to whether periods of time to be spent by the child with the father should indeed be supervised, the terms and conditions of such an order, the regime of periods of time, the terms and conditions of changeover of the child from the care of one party to the other and whether the important restriction of the Airport Watch-list should apply.

    [17]  Kohan and Kohan (1993) FLC92-340; Yungmanns and Yungmanns (2000) FLC93-029

12. I was not furnished with an assessment of the mother’s costs on a party-party basis. Consequently, the order will be in the usual terms.

13. With regard to the orders sought by the Independent Children’s Lawyer that the mother pay costs of $1,487.20 and that she meet an equal proportion of outstanding costs of the Single Expert Associate Professor Q, the mother does not caval with the quantum of orders so sought. Rather, the mother’s position is that the father should meet what might otherwise be her liability in that regard.

14. I have determined that the father should pay one-third of the mother’s costs which she will be otherwise required to pay to the Independent Children’s Lawyer. My reasons are the same as those previously set forth in relation to costs as between the mother and father.

15. With regard to the mother’s application for an order for costs in relation to this particular costs application, I have concluded that the circumstance has not been established which may make it just for such an order to be made. The submissions made on behalf of each of the parties were cogent and as a result, the general principle that each party pay his or her own costs pursuant to section 117(1) will apply.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose.

Associate: 

Date:  30 March 2009