Rafferty and Rafferty

[2017] FCCA 855

FEDERAL CIRCUIT COURT OF AUSTRALIA

RAFFERTY & RAFFERTY [2017] FCCA 855

Catchwords:
FAMILY LAW – Consideration of costs of the Independent Children’s Lawyer.

Legislation: 

Family Law Act 1975, ss. 60, 68, 117

Commonwealth Evidence Act 1995, s.131       

Cases cited:
Re K (1994) 17 FamLR 537

Applicant: MR RAFFERTY

Respondent: MS RAFFERTY

File Number: NCC 947 of 2015

Judgment of: Judge Myers

Hearing date: 17 November 2016

Date of Last Submission: 17 November 2016

Delivered at: Newcastle

Delivered on: 16 January 2017

REPRESENTATION

Counsel for the Applicant: Mr Boyd

Solicitors for the Applicant:	Alex Irving Solicitors
Solicitors for the Respondent:	Cooney Harvey Doney

Solicitors for the Independent Children’s Lawyer: Fielden & Associates - Family & Relationship Lawyers

THE COURT ORDERS THAT:

1. The application for costs by the Independent Children’s Lawyer against the applicant father and respondent mother is dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 947 of 2015

MR RAFFERTY

Applicant

And

MS RAFFERTY

Respondent

EX TEMPORE`REASONS FOR JUDGMENT

1. This is a decision in the matter of Rafferty & Rafferty where the Independent Children’s Lawyer seeks costs against the applicant father Mr Rafferty and the respondent mother Ms Rafferty in the sum of $19,935.20 following the parties and the Independent Children’s Lawyer reaching a final agreement in respect of all parenting issues in dispute between the parties.  Both the father and the mother oppose the making of a costs order against them in respect of the costs of the Independent Children’s Lawyer. 

2. By way of background the father commenced proceedings filing an Initiating Application before the Court on 17 April 2015 in which he sought an order for sole parental responsibility and the children live primarily with him. 

3. The mother filed a Response in which she sought the then existing arrangement of equal time continue and the parties equally share parental responsibility.  The matter was listed for final hearing at Wauchope commencing on the 21 June 2016.  The matter was not reached and on 22 June 2016 the matter was listed for final hearing commencing 15 November 2016 allocating three days.  The Independent Children’s Lawyer submits the matter was listed for a three day hearing in Wauchope and after two days of failed settlement negotiations the matter was adjourned for final hearing for three days in Newcastle. 

4. Section 131(1) of this Commonwealth Evidence Act 1995 provides:

   Evidence is not to be adduced of a communication that is made between persons in dispute or between none or more persons in dispute and a third party in connection with an attempt to negotiate a settlement of the dispute.

Subparagraph (2) of that section provides a list of exceptions to the rule including an exception at subparagraph (2)(h) where:

the communication or document is relevant to determining liability for costs.

1. The Independent Children’s Lawyer is not prohibited from adducing evidence in respect of communications in connection with an attempt to settle.  The hearing commenced on 15 November 2016.  Following two days of hearing including cross-examination of the parties an agreement was reached whereby the existing arrangement of equal time continue, the father have sole parental responsibility for health issues in respect of the children and otherwise the parties equally share parental responsibility for the children.

2. Unlike other courts exercising an unfettered discretion in respect of costs, where the general rule is costs follow the event, this Court and others exercising jurisdiction under the Family Law Act may exercise discretion in respect of costs pursuant to section 117 of the Family Law Act1975. Section 117(1) provides that subject to various subsections each party to the proceedings shall bear his or her own costs. Subparagraph (2) provides the Court a discretion to make an order for costs following what might best be described as a two-step process where the Court can award costs if, firstly, the Court is of the opinion there are circumstances that justify making an order for costs and, secondly, that the Court make such an order that the Court considers just.

3. By way of guidance, subparagraph (2A) provides a list of matters the Court shall have regard to when determining whether the Court is justified in making an order for costs and whether the order is just. Such matters are set out at sections 117(2A)(a) through to (g) and include:

   (a)The financial circumstances 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 party 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 fact, production of documents and similar matters;

   (d)whether the proceedings were necessitated by a 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.

1. While subparagraphs (2)(a) through to (f) are prescriptive, subparagraph (g) allows the Court a discretion to have regard to other matters. Section 117(3) makes it clear that the Court may make an order for costs in favour the Independent Children’s Lawyer in that such section provides:

   To avoid doubt, in proceedings in which an Independent Children’s Lawyer for a child has been appointed, the Court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise as to the effect that each party to the proceedings bears, in such proportion as the Court considers just, the costs of the Independent Children’s Lawyer in respect of the proceedings.

2. It is the case that to my knowledge of those matters over which I presided during the past some five years I have never been asked to make a decision in respect of security for costs of the Independent Children’s Lawyer nor have I been asked to make an order by consent for security of costs. The legislation is clear, however, the Court is by virtue of section 117(4)(c) seized of the jurisdiction to do so. The Court is aware that the Legal Aid Commission from time to time requests parties to proceedings to make a voluntary contribution towards the costs of the Independent Children’s Lawyer. It is the view of the Court such a practice is a prudent one that has possibly led to an outcome where the Legal Aid Commission rarely if ever, at least in my docket, has resorted to making an application for security for costs.

3. Section 68L of the Family Law Act1975 provides the Court may appoint an Independent Children’s Lawyer where it appears to the Court a child’s interests ought to be independently represented by a lawyer.  The appointment is made to promote the best interests of the child.  The reasons for appointment of an Independent Children’s Lawyer are set out by the Full Court in a non-exclusive list in the decision of Re K (1994) 17 FamLR 537 and includes such things as there is a high level of longstanding conflict between the parties or what is sometimes termed as an intractable conflict; there are real issues of cultural or religious difference affecting the child; the sexual preference of either or both parties is likely to affect the child’s welfare; there are allegations of abuse of the child; where one or both parents or a significant person or child has had a significant medical, psychiatric or psychological illness or personality disorder; the child is estranged from one or both parents; the child is mature and expressing strong views; it is planned that the siblings be separated; one parent wishes to move away with the child that will greatly reduce the time the child spends with the other.

4. While section 68L(5) provides the Court can make an order allowing the Independent Children’s Lawyer to ascertain the views of the child the Note that precedes section 68L(6) makes it clear section 60CE prevails in that a person cannot require a child to express his or her views and further, section 68L(6) makes it further clear that subparagraph (5) does not apply where compliance would be inappropriate because of age or maturity or some other special circumstance.

5. Independent Children’s Lawyers typically undergo significant training and are accredited in New South Wales by the Legal Aid Commission of New South Wales.  They are, for want of another expression, best interest advocates.  The Australian Government Institute of Family Studies (AIFS) report titled Independent Children’s Lawyer Study Final Report, 2^nd Ed June 2014 found the role of the Independent Children’s Lawyer includes facilitating the participation of the child/young person in the proceedings, evidence gathering and litigation management often assuming the role as honest broker in case management and settlement negotiations.

6. AIFS found the role of the Independent Children’s Lawyer is one regarded by judges as bringing an independent, impartial and child-focused perspective to the way in which the matter is litigated.  I agree with this assessment and am grateful to the Legal Aid Commission of New South Wales for both their training and accreditation of in-house and external lawyers as Independent Children’s Lawyers of rigorous high standard. 

7. The cost of providing representation by an Independent Children’s Lawyer does not come cheap.  The Court notes the costs sought by the Independent Children’s Lawyer in this matter in the sum of $19,935.20.  The Court notes no submissions were made on behalf of the either the father or mother as to the quantum of the costs sought by the Independent Children’s Lawyer.  The appointment of capable well-qualified Independent Children’s Lawyer and the high cost of funding the expense of the Independent Children’s Lawyer is demonstrative of a system of family law that prioritises the best interests and safety of the child. 

8. Noting the paramount principle of the best interests of the child a consideration of the appointment of an Independent Children’s Lawyer should not be fettered by reason of fiscal constraint by parties to the proceedings. To this end it is the view of the Court section 117 subparagraph (4) importantly provides a bar to the recovery of costs in proceedings in which an Independent Children’s Lawyer has been appointed in particular circumstances. Section 117 subparagraph (4) provides in proceedings in which an Independent Children’s Lawyer has been appointed if:

   (a)A party to the proceedings has received legal aid in respect of the proceedings;  or

(b)the Court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the Independent Children’s Lawyer;

the Court must not make an order under subsection (2) against that party in relation to the costs of the Independent Children’s Lawyer.

1. Subparagraph (4) in effect provides a prohibition on the ordering of costs in respect of two circumstances, one objective and the other subjective.  Subsection (4)(a) make no distinction in respect of the currency of a grant of legal aid to a party to the proceedings in respect of the proceedings.  Thus, where a party had received a grant of legal aid earlier on in the proceedings and has no grant at, for instance, the time of the final hearing the Court must not make an order for costs against that party. 

2. Section 117(4)(b) provides what the Court might describe as a protection for parents and other parties in parenting proceedings against being caught with a legal bill for the Independent Children’s Lawyer they cannot afford. Section 117(4)(b) puts in place a protection to ensure that the best access to justice is not out of reach of ordinary Australians and that justice is not only available to the wealthy and privileged few. The protection afforded by section 117(4)(b) is drafted with the intent such test is to be met with a relatively low bar. If the Court considers as opposed to, for instance, finds or determines that a party would suffer financial hardship if that party had to bear a proportion of the costs of the Independent Children’s Lawyer the Court must not make an order for costs of the Independent Children’s Lawyer against that party.

3. There is no suggestion that either the father or mother in these proceedings has a current or has had a previous grant of legal aid in these proceedings.  Both the father and mother suggest they will suffer financial hardship should the Court make an order they bear a proportion of the costs of the Independent Children’s Lawyer.  The children the subject of the proceedings have what is best described noting the submissions on behalf of the mother as significant medical needs.  The Court considers the affidavit material and having heard the evidence of the parties during cross-examination accepts that description.

4. The mother’s evidence as to her financial position following the payment of expenses as contained in her affidavit reveal little if any surplus funds following expenses.  The Independent Children’s Lawyer in submission makes the concession that both children have significant medical diagnoses and require ongoing specialist treatment and medication.  The Independent Children’s Lawyer submits that the costs of the same are largely as opposed to exclusively borne by the public health system with the costs of medication subsidised by the Pharmaceutical Benefits Scheme. 

5. The reality of the parties’ circumstances are as follows.  The father’s partner, Ms P, is not employed.  The father owns a property at Property S.  The father gives evidence of the property being worth some $220,000.00 and having a mortgage of $187,000.00.  The net equity is some $33,000.00.  The father owns a shop premises at Property M.  The father gives evidence as being worth $167,500.00 and having a mortgage of $141,000.00.  The net equity in the property appears to be some $26,000.00.  The father’s combined equity in both properties is $59,000.00. 

6. The total debt is $328,000.00.  The net equity position expressed as a percentage is some 15.4 per cent.  If either property were sold agent’s commission would reduce the net sum available further.  The father gives evidence of having loans and credit card debts totalling $47,000.00.  Perhaps unrealistically, as the Court often sees in property proceedings, the father suggests he has home contents of $20,000 and what is described as a dog trailer worth $11,500.00.  The father gives evidence of having a Ford (omitted) van worth $15,000.00.  The father gives evidence of earning $1000.00 per week and receiving rent of $660.00 per week.  He lists expenses as loan repayments $755.00 per week, groceries of a paltry $125.00 per week, car insurance of $80.00 per week and medical expenses as $30.00 per week.

7. The father makes no monetary allowance for the costs of expenses where he gives evidence he will incur additional expenses that include specialist visits, dental costs, (hobby omitted) and (hobby omitted) for the two children.  The father would in the view of the Court noting his income and expenses live week to week or, for want of another phrase, live pay cheque to pay cheque.  The high level of the father’s borrowings and total debts secured by way of mortgage see the father with little net assets.  The father has equal care of the children.  He is solely responsible for making decisions about their health.  The children have high needs.  The Court considers the father will suffer financial hardship if he had to pay even a proportion of the costs of the Independent Children’s Lawyer. 

8. The mother gives evidence of having land at (omitted) worth $60,000.00 that she has listed for sale to pay her legal fees.  The mother gives probably more realistic evidence than that of the father that she has $1000.00 worth of furniture and effects and a Nissan (omitted) worth $50,000.00.  The mother gives evidence of having a loan of $50,000 with (omitted) Finance, an (omitted) Bank personal loan of $8000.00 and an (omitted) Bank credit card debt of $1000.00.  The mother’s total equity appears to be some $52,000.00. The mother owns no dwelling.  The net equity does not take into account selling expenses, agent’s commission or possible capital gains tax if any. 

9. The mother gives evidence of having a net income of $1588.00 per fortnight and pays the following fortnightly expenses including (omitted) Bank credit card $85.00, (omitted) rates $80.00, rent $580.00, Origin Energy $100.00, (omitted) Finance $479.02, (omitted) Bank personal loan repayment $215.00 and a more realistic amount for groceries $300.00.  Total fortnightly expenses are some $1839.00.  The mother is currently living well beyond her means.  Whilst it is not normally the role of the Court to be critical in respect of the management of a party’s finances, the Court is critical that the mother having viewed her low income, a mother who has two children with high needs was able to obtain finance from (omitted) Finance in the sum of $50,000 requiring total fortnightly loan repayments of $479.02. 

10. The criticism is made more against a finance company that is prepared to provide to a person with a low income that sort of loan.  The mother is in a financially unsustainable position.  She has little by way of net assets and expenses greater than her modest income.  Noting the mother will have equal care of the children who have high needs, the Court considers the mother will suffer financial hardship if she had to pay even a proportion of the costs of the Independent Children’s Lawyer. 

11. The Court notes the submissions of the Independent Children’s Lawyer that under the Legal Aid Act a mechanism is provided for parties to obtain a waiver of their share of the Independent Children’s Lawyer’s costs if they are likely to suffer financial hardship due to having to make a contribution to such costs.  Further submissions were made that enquiries with the Legal Aid Commission and with the parties’ solicitors have established neither party obtained a waiver from the Legal Aid Commission in respect of the Independent Children’s Lawyer’s costs on the basis of financial hardship.

12. Noting the provisions of section 117 there can, of course, be no suggestion that there is any starting position where any party must share in the costs of the Independent Children’s Lawyer. What the submission of the Independent Children’s Lawyer in effect points to is a sensible position adopted by the New South Wales Legal Aid Commission where early on in proceedings they seek to internally form some view about the financial capacity of the parents to meet a costs order without financial hardship. And where the Legal Aid Commission internally forms a view about that circumstance notifies a parent or parents the Legal Aid Commission will or will not in effect waive their rights to pursue costs pursuant to section 117.

13. The waiver has no binding effect upon the Court’s determination of costs pursuant to section 117 but in the view of the Court allows the Legal Aid Commission to save the expense and the Court’s time by self-determining not to seek costs where the Legal Aid Commission has formed a view about the likelihood of obtaining costs considering section 117 subparagraph (4)(b).

1. The Independent Children’s Lawyer submits aside from the significant issues of sole parental responsibility for medical and health issues, the father was highly unsuccessful in his application.

2. Such submission in the view of the Court, at least in part, confuses the provisions of section 117(2A) subparagraph (3) that requires the court to take into account whether any party to the proceedings has been wholly unsuccessful in the proceedings. It does not require the Court to consider whether any party has been wholly successful. In this case, the father was not wholly successful but for the purpose of the section he was also not wholly unsuccessful. It is a matter the court can consider pursuant to s117(2A)(g).

3. The Independent Children’s Lawyer submitted that the issue of financial hardship that might be experienced by either party could be mitigated by giving the parties additional time to pay the Independent Children’s Lawyer’s costs.

4. The financial circumstances of the parties is such that an order providing time to pay would only serve to defer a costs order that will on the face of the evidence simply defers financial hardship as opposed to mitigating against it.

5. A final submission was made by the Independent Children’s Lawyer that the New South Wales Legal Aid Commission has recently sustained funding cuts particularly to the family law section and that in such a funding climate the capacity of Legal Aid to continue to provide legal representation to disadvantaged clients and to assist the Court with the family law duty solicitor scheme and other services is under threat.

6. The ultimate submission made by the Independent Children’s Lawyer on this point was that requiring parents to make a contribution to costs that were incurred by the public purse as a result of their private family law dispute helps to offset the funding cuts and ensure the continued availability of legal aid for disadvantaged and vulnerable clients in the future. The submission is one made at a time of governmental fiscal constraint. The submission in whole disregards the provisions of section 117 subparagraph (5) that provides:

   In considering what order (if any) should be made under subsection (2) in proceedings in which an Independent Children’s Lawyer has been appointed the court must disregard the fact that the Independent Children’s Lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.

1. Section 117(5) in effect means that the Court must disregard the public purse and in the view of the Court protects judicial independence whilst maintaining the separation of powers.

2. For the above reasons the court finds the application by the Independent Children’s Lawyer must fail.  The court makes the following order.  The application for costs by the Independent Children’s Lawyer against the applicant father and respondent mother is dismissed.  Those are the orders and the reasons for my decision.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Myers

Date: 24 May 2017