Ralph and Medlock (No 2)

[2014] FamCA 655

FAMILY COURT OF AUSTRALIA

RALPH & MEDLOCK (NO 2) [2014] FamCA 655

FAMILY LAW – COSTS – where the mother made an application for costs – where the father’s financial position is poor – where the mother seeks an alternative order that the father’s partner, a non-party, pay costs – where the Court has jurisdiction to make a costs order against a non-party – where an Order for costs is not made – application dismissed.

Family Law Act 1975 (Cth)

Batey-Elton & Elton (Costs) [2010] FamCAFC 219

APPLICANT: Mr Ralph

RESPONDENT: Ms Medlock

INDEPENDENT CHILDREN’S LAWYER: Barbara Fox

FILE NUMBER: BRC 6966 of 2009

DATE DELIVERED: 14 August 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: Submissions filed 19 May and 10 June 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Mr Stevenson

A Ace Solicitors

SOLICITOR FOR THE RESPONDENT: Mr Holloway
Holloway Jenkins

Orders

1. The Mother’s Application for costs filed 24 April 2014 is dismissed.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 6966 of 2009

Mr Ralph

Applicant

And

Ms Medlock

Respondent

REASONS FOR JUDGMENT

1. In March this year, over five days, I presided at a trial of competing parenting orders and property adjustment applications. The parties to the proceedings were the father and the mother of the subject child and an Independent Children’s Lawyer. I pronounced orders and delivered written reasons for judgment on 28 March 2014.

1. Sole parental responsibility for the child was conferred on the mother and orders made that the child live with the mother and not spend any time with, nor communicate with, the father. The property adjustment orders provided for the mother to pay to the father $12,209.11, effectively to discharge his then current debt to the Child Support Agency in respect of the child support assessment pertaining to the subject child. Otherwise pursuant to those orders, the father was to transfer his interest in a real property to the mother, she was to refinance the mortgage debt on it and to indemnify him in respect of all other debts owed by them, each is to retain their own accumulated superannuation interests and some other items of property. 

2. On 24 April, 2014, an application was made by the mother for orders that the father and/or his current wife pay the mother’s costs of and incidental to the proceedings as set out in the mother’s submissions. A timetable for the filing of written submissions was then set by me, pursuant to which written submissions were received from each of the mother and the father.

3. In the mother’s written submissions, it is made clear that the mother seeks an order that her costs “as agreed or fixed at $89,348” be paid by the father and/or his partner. An amount of $51,950 is sought as an alternative figure, made up of counsel’s fees for the five day trial and the solicitor’s costs of conducting that trial.

4. The father opposes the application and argues that no order as to costs should be made.

The law as to costs

1. The parties agree that the general principle, contained in s 117(1) of the Family Law Act, is that each party bears their own costs, but that it is subject to exception where the Court is of the opinion that there are circumstances that justify making a costs order that the Court considers just (s 117(2)).

2. In deciding whether the circumstances justify the making of a costs order, the Court’s discretion must be exercised having regard to the matters that are set out in s 117(2A), as far as they are relevant.

Is a costs order against the father justified?

1. For the mother, it is submitted that the father’s conduct in continuing to prosecute his parenting orders application in the face of the evidence that was presented by the mother and the ICL against the appropriateness of the outcome he was seeking, as well as his knowledge of the quantum of the legal costs the mother was incurring, justifies a costs order being made against him.

2. There is a great deal of merit in the submission, particularly considering the additional fact that the mother shoulders all of the practical and financial responsibility of caring for a highly autistic child whose need for a high level of care will go on for many years into his adulthood. However, at the same time, I am satisfied that the father was motivated in the parenting orders proceedings by a firm belief, albeit, in the circumstances, a completely misguided belief, that it would be in his child’s best interests to have an ongoing relationship with him.

3. The father’s financial circumstances must be considered. For the mother, it is submitted that little is known of the “true state” of the father’s financial circumstances (and those of his partner). However, these were property adjustment proceedings as well as parenting orders proceedings. I was satisfied that the father was not employed earning a salary or a wage, but rather was trying to build his own small business. Whilst I was satisfied that he had made choices to go down this course rather than to continue to exploit a greater earning capacity in paid employment, I was satisfied that he was earning very little from his business. My property adjustment orders saw him retain nothing other than his meagre superannuation interest and a few personal possessions as well as relieving him from the ongoing burden of a child support arrears of about $12,000 that he had no immediate prospect of paying. I was satisfied he has no other assets of value and very little income at all, and is without great prospects of that changing in the foreseeable future.  

4. Additionally, it cannot be said that he was wholly unsuccessful in the proceedings, as in both the property adjustment proceedings and the parenting orders proceedings, I made orders that were not wholly in accord with the position advanced by the mother.

5. No evidence of written offers to settle the proceedings, or any part of them, has been put before the Court or referred to, although I do accept that it was always the mother’s position that it would not be in the child’s best interests to spend any time with or communicate with his father.

6. Any order for the father to pay costs in either of the amounts alternatively sought by the mother is, I am satisfied, unlikely to be able to be paid by the father and, as is submitted for him, might potentially force him into bankruptcy with little benefit to anyone.

7. Ultimately, most particularly having regard to the father’s very poor financial circumstances, I am not persuaded that the circumstances justify the making of an order for costs against the father and I will not do so.

What of the application for costs against the father’s partner, a non-party?

1. As to the mother’s application for the father’s partner to pay her costs, I accept the submission that the father’s partner assisted the father to prosecute his case with a great degree of zeal. She clearly supported him and helped him throughout the entire proceedings. Further, on the evidence that was before me in the trial, I am satisfied that she probably has more assets than the father does. However, I do not make any more specific findings about that issue in this application that take the matter further, there being absolutely no submissions having been made for the mother going to any such findings, save for the submission that I have already referred to that little is known about the “true state” of the finances of the father and his partner.  

2. The solicitor for the father, in his written submissions, stated that he did not represent the father’s partner and did not make submissions on her behalf. However, he then went on to make some submissions anyway.

3. His submission was that the partner was not a party to the proceedings, that the application had not been “made against [the partner] herself” and that, accordingly, the Court “would be outside of their jurisdiction to award costs against her”. He nevertheless then went on to baldly submit that if the Court does have jurisdiction it would be unjust to make an order against her as such an order “effectively denies [her] natural justice”.

4. I respectfully reject those submissions. It has been determined that this Court has the power to make costs orders against non-parties. In Batey-Elton & Elton (Costs) [2010] FamCAFC 219 the Full Court of this Court summarised the position in relation to the Court’s jurisdiction to make costs orders against non-parties pursuant to s 117(2). Their Honours, May, Boland and Strickland JJ (at 8, 9, 10) said:

   [8] It is beyond doubt that this court has the power to make a costs order against a non-party. In their joint judgment in McAlpin & McAlpin (1993) FLC 92–411 Nicholson CJ and Maxwell J (at 80,215), after considering the High Court decision in Knight v FP Special Assets Ltd (1992) 174 CLR 178, said:

It seems clear from the above authority that while a discretion to order costs against a non-party should be exercised sparingly the jurisdiction to do so, at least in relation to cases governed by legislation similar to that contained in s 5 of the Judicature Act (1890) is unlimited. Further, where cases fall into the category identified by their Honours, they appear to consider that the court should make such an order.

In our view, on a natural reading of s 117(2) of the Family Law Act, this court's jurisdiction to order costs is similarly unlimited. It is true that s 117(1) and (2A) refer to "parties" but s 117(2) is not so limited and is expressed in the widest possible terms. We therefore see no reason to confine the jurisdiction of this court in this area.

If this view be incorrect then the cross vested jurisdiction of the State and Territory Supreme Courts would seem to confer such a power, subject to any limitations contained in particular State or Territory legislation. See Gilbert and Gilbert (1988) FLC 91–966.

[9] Similarly in Re P (a child): Separate Representative (1993) FLC 92–376 Nicholson CJ and Fogarty J (at 79,904) found:

In any event, the power of this court to make an order about costs is not confined to a party to the proceedings. The court has power to make an order against a non-party in the circumstances illustrated in such cases as Aiden Shipping Co Ltd v Interbulk Ltd (1986) 1 AC 965; Bent v Gough (1992) 36 FCR 204, Knight v F.P Special Assets Ltd (1992) 174 CLR 178, and Burns Philp & Co Ltd v Bhagat(1993) VR 203. The views of the Full court of this court in Collins and Collins (1985) FLC 91–603 esp. at pp 79,878 and 79,886 to the contrary no longer represent the law.

However, this latter power should only be exercised if the special circumstances of the individual case justify that course and within the parameters which the above cases illustrate.

(see also Yunghanns & Ors v Yunghanns & Ors; Yunghanns (2000) FLC 93–029).

[10]In respect of costs orders against a non-party r 19.11 of the Family Law Rules 2004 is also relevant. That rule provides:

(1)Before making an order for costs against a lawyer or other person who is not a party to a case, the court must give the lawyer or other person a reasonable opportunity to be heard.

(2)If a party who is represented by a lawyer is not present when an order is made that costs are to be paid by the party or the party's lawyer, the party's lawyer must give the party written notice of the order and an explanation of the reason for the order. (our emphasis)

1. I am more than satisfied that the father’s partner had notice of the application against her and was, by my orders of 28 April 2014 giving her the right to file written submissions by 9 June 2014, given the opportunity to be heard on the application. I have no doubt that the father would have made her aware of the application being made against not just him, but also against her. I have no doubt that he would have made her aware of my orders giving her the right to file written submissions. I expect the decision not to file any submissions in response was probably based on the father’s solicitor’s incorrect belief that no order could be made against her as a non-party.

2. All that said however, having determined that a costs order against the father is not justified in all of the circumstances of the case, and being conscious of the need to be particularly cautious when considering any application to make a costs order against a non-party, the fact that I am simply not satisfied that the father’s partner’s financial circumstances are such that justice demands that she be ordered to pay some of the mother’s costs. This lack of satisfaction is sufficient to cause me to dismiss this part of the mother’s application too.

3. Accordingly, the mother’s application for costs filed 24 April 2014 is dismissed.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 14 August 2014.

Associate: 

Date:  14 August 2014