REAGLE & ALTO
[2020] FCCA 936
•1 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| REAGLE & ALTO | [2020] FCCA 936 |
| Catchwords: FAMILY LAW – Costs – Applicant to parenting proceedings and paying assessed child support – where Applicant to parenting proceedings excluded from parentage of the subject child during proceedings – where Respondent purports to have doubted Applicant’s parentage of child from prior to commencement of proceedings – where basis for Respondent’s doubt as to paternity not communicated to Applicant until months into proceedings – where Applicant consented to parentage testing upon receipt of basis for Respondent’s doubts – where costs sought under section 143 of the Child Support (Assessment) Act 1989 (Cth) – where costs sought under section 117 of the Family Law Act 1975 (Cth) – where section 143 costs consented to close to final hearing of costs applications – where a party found to have prolonged proceedings – where found appropriate to make a costs order – whether costs should be assessed on party/party, indemnity, or ‘special costs order’ basis – where found appropriate to make a special costs order. |
| Legislation: Child Support (Assessment) Act 1989 (Cth), ss.107, 143 |
| Cases cited: Penfold v Penfold (1980) 144 CLR 311 |
| Applicant: | MR REAGLE |
| Respondent: | MS ALTO |
| File Number: | WOC 270 of 2019 |
| Judgment of: | Judge Morley |
| Hearing date: | 23 October 2019 |
| Date of Last Submission: | 23 October 2019 |
| Delivered at: | Sydney |
| Delivered on: | 1 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Dart |
| Solicitors for the Applicant: | Family Law Matters |
| Counsel for the Respondent: | Mr Cook |
| Solicitors for the Respondent: | Sydney Family Law Specialists Pty Ltd |
ORDERS
THE COURT ORDERS THAT:
The Respondent pay the Applicant’s costs of the proceedings fixed in the sum of $15,000.00, such payment to be made by the Respondent to the Applicant within 12 months.
IT IS NOTED that publication of this judgment under the pseudonym Reagle & Alto is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 270 of 2019
| MR REAGLE |
Applicant
And
| MS ALTO |
Respondent
REASONS FOR JUDGMENT
Introduction
These parenting proceedings were commenced by the Applicant Mr Reagle (‘the Applicant’) in relation to the child X born in 2018 (‘the Child’). The Respondent is the Child’s Mother, Ms Alto (‘the Mother’).
The Applicant commenced the proceedings on 18 March 2019 by filing an Initiating Application in which he sought interim and final orders. On a final basis, he sought orders in relation to equal shared parental responsibility and spend-time with arrangements providing for the Child to live with her Mother and spend time with him each alternate week from Friday until Monday and each alternate week from Wednesday to Friday.
The first return date was 20 May 2019 and, at that time, personal service of the Initiating Application had not been effected on the Mother. An order for substituted service was made by the Registrar and the matter adjourned to 24 July 2019.
The Mother filed a Response and affidavit on 18 July 2019, six days before the next Court date. The Mother sought an interim order that parentage testing be carried out at the equal shared cost of the parties, and final orders that:
a)In the event that the Applicant was found to not be a parent of the Child, that a declaration be made under section 107 of the Child Support (Assessment) Act 1989 (Cth) (‘the Assessment Act’) that the Applicant should not be assessed in respect of the costs of the Child because the Applicant is not a parent of the Child;
b)The Applicant’s Initiating Application filed 18 March 2019 be dismissed; and
c)The Mother be given leave to amend her Response in the event that the Applicant was found to be a parent of the Child.
On 24 July 2019, the matter came before Judge Altobelli and orders were made providing for the following:
a)By consent, orders were made for a parentage procedure to be carried out, with the Mother to pay $500.00 towards the cost of that testing and the balance of the costs to be paid by the Applicant, and that the balance paid by the Applicant be reimbursed by the Mother if the Applicant was found to be a parent of the Child;
b)By consent and on a without admissions basis, an order was made restraining both parties from using illicit substances and for the Mother to undergo urinalysis testing within 24 hours of a request from the Applicant’s legal representative, the cost of such testing to be met by the Applicant;
c)By consent, an order was made for the Mother to attend upon her GP to seek a referral to a treating psychologist and thereafter attend upon the psychologist and follow all recommendations made to her.
d)An order was made (not by consent) restraining the Mother from consuming alcohol to excess (beyond the limit prescribed for driving a motor vehicle) in the presence of the Child or for 12 hours before and during any period whilst the Child was in her care; and
e)Orders were made (not by consent) that, within 24 hours of a request from the Applicant’s legal representative, and not more frequently than once per month, the Mother submit to a blood test for the screening for carbohydrate deficient transferrin, with the results to be available to the Applicant’s solicitor as soon as possible, and with any costs of that testing to be borne by the Applicant.
The matter was adjourned to 21 August 2019 at 2:00pm for interim hearing.
The parties and the Child attended for the parentage testing with DNA Solutions Pty Ltd and by the report dated 14 August 2019,[1] the Applicant was excluded from identification as the father of the Child.
[1] Affidavit of Ms Alto sworn or affirmed 16 October 2019, annexure [7].
On 4 September 2019, the Applicant filed an Amended Initiating Application in which he sought:
a)A declaration pursuant to section 69VA of the Family Law Act 1975 (Cth) (‘the Act’) that he was not the father of the Child;
b)A declaration pursuant to section 107 of the Assessment Act that he should not be assessed to pay child support in respect of the Child;
c)An order pursuant to section 143(1)(a) of the Assessment Act that the Mother repay to the Applicant the sum of $6,403.54 being monies paid by him to the Child Support Agency pursuant to an assessment under that Act that he pay child support to the Mother for the benefit of the Child; and
d)An order that the Mother pay his costs of the proceedings on an indemnity basis or, in the alternative, that the Mother pay his costs pursuant to rules 19.18(1)(a) and (b) of the Family Law Rules 2004 (Cth) on a party/party basis as assessed by a cost assessor of the Supreme Court of New South Wales in accordance with the Legal Profession Act 2004 (NSW), on the basis of the costs reasonably and actually incurred by the Applicant in the proceedings in accordance with the retainer agreement with his solicitor.
I note here that these proceedings are in the Federal Circuit Court of Australia, and rule 21.09(2) of the Federal Circuit Court Rules 2001 (Cth) (‘the FCC Rules’) provides that, subject to rules 21.02(2)(c) and 21.11(2)(a), chapter 19 of the Family Law Rules2004 (Cth) (‘the Family Law Rules’) does not apply to a family law or a child support proceeding in the Federal Circuit Court of Australia.[2]
[2] Federal Circuit Court Rules 2001 (Cth) r 21.09. See also Federal Circuit Court Rules 2001 (Cth) rr 21.02(2)(c), 21.11(2)(a).
Pursuant to rule 21.02(2)(c), in making an order for costs in any proceedings, the Federal Circuit Court of Australia may refer the costs for taxation under chapter 19 of the Family Law Rules.[3] Rule 21.11(2) provides that when taxing a statement of costs, the taxing officer must apply the scale of costs set out in schedule 3 to the Family Law Rule 2004 (Cth), the taxing officer being a reference to the registrar.[4]
[3] Federal Circuit Court Rules 2001 (Cth) r 21.02(2)(c).
[4] Federal Circuit Court Rules 2001 (Cth) r 21.11(2)(a).
When the matter came before Judge Altobelli on 16 September 2019, orders were made by consent which I summarise as follows:
(1)A declaration pursuant to section 69VA of the Act that the Applicant is not the father of the Child;
(2)A declaration under section 107 of the Assessment Act that the Applicant should not be assessed in respect of the costs of the Child because he is not a parent of the Child;
(3)Pursuant to section 19 of the Births, Deaths and Marriages Registration Act 1995 (NSW), that the Mother be permitted to apply to Births, Deaths and Marriages to amend the Child’s birth certificate to remove the description of the Applicant as the Child’s father “and the amendment of any other relevant information.”[5]
[5] Orders made by Judge Altobelli on 16 September 2019, [3].
The matter was also set down for a final hearing on 23 October 2019 at 10:00am in relation to the issues of the amount to be repaid by the Mother to the Applicant pursuant to section 143(1)(a) of the Child Support (Assessment) Act 1989 (Cth) and on the question of the parties’ competing Applications for costs.
On 16 October 2019, the Mother filed an Amended Response in which she sought an order on a final basis that, pursuant to section 143(1)(a) of the Assessment Act, she repay to the Applicant $4,705.40, less $197.00 payable by the Applicant to the Mother as costs paid by her for urinalysis test pursuant to the order made on 24 July 2019, being a repayment of the moneys paid by the Applicant for the Child pursuant to an administrative assessment issued by the Child Support Agency. The Mother also sought an order that the Applicant pay the Mother’s costs of the proceedings fixed in the sum of $3,645.14.
The matter came before me for hearing at Wollongong on 23 October 2019. The Applicant was represented by Ms Dart of Counsel and the Mother by Mr Cook of Counsel. The Applicant gave evidence-in-chief by way of affidavit and he was cross-examined. The Mother gave evidence-in-chief by way of affidavit and she was cross-examined.
Material relied upon
On hearing, the Applicant relied upon the following material:
(1)An Outline of Case document;
(2)An affidavit of the Applicant affirmed on 14 October 2019 and filed 15 October 2019;
(3)A Financial Statement of the Applicant affirmed 14 October 2019 and filed 15 October 2019; and
(4)An affidavit of attempted service sworn by Mr B, a process server, on 10 April 2019 and filed 15 April 2019.
In the course of cross-examination of the Applicant by Mr Cook, reference was also made to the Applicant’s affidavit affirmed 8 March 2019, and in particular paragraph 42 thereof.[6]
[6] See especially:
On the evening of 14 November 2018 I told Ms Alto our relationship was over. She would not allow me to kiss X Child goodnight and said words to the effect of “nope, she’s not yours I am going to keep her away from you”. Ms Alto left the house. Later that evening she sent me a text message about the fight and confirmed that she had threatened to keep X from me …
Affidavit of Mr Reagle affirmed 8 March 2020, [42].
On hearing, the Mother relied on the following material:
(1)An Outline of Case document filed 11 September 2019;
(2)An affidavit of the Mother affirmed 16 October 2019 and filed that day (‘the Mother’s October affidavit’); and
(3)A Notice of Risk filed 18 July 2019.
In the course of cross-examination of the Mother, reference was made to her affidavit sworn or affirmed 18 July 2019 (‘the Mother’s July affidavit’). In his submissions, the Mother’s Counsel also referred to her Financial Statement affirmed 16 October 2019.
Application for repayment of moneys paid for child support
At the outset of the hearing, the Court was informed that the parties were in agreement that an order should be made, pursuant to section 143(1)(a) of the Assessment Act, that the Mother repay to the Applicant moneys paid by him to the Child Support Agency (which were then paid out to the Mother with respect to the Child) pursuant to the administrative assessment issued by the Department of Human Services (Child Support), with such repayment to be made within 28 days. However, there was continuing dispute as to the precise sum to be repaid.
The parties were in agreement that the Applicant was out of pocket in relation to his payments to the Child Support Agency pursuant to the assessment in a sum of $4,705.40. The Applicant contended that that sum should be repaid to him, and the Mother contended that that sum less an amount of $197.00 (being $4,508.40) should be the amount to be repaid, the $197.00 being a refund by the Applicant to the Mother of the costs she paid for a carbohydrate deficient transferrin test pursuant to order 4 of the orders made on 24 July 2019.
The order made on 24 July 2019 for any costs associated with the Mother’s compliance with a request that she undergo a blood test for the screening of carbohydrate deficient transferrin was made at a time when the Applicant was pursuing his Application for parenting orders. It was made by the Court in consequence of assertions made by the Applicant that the Mother was an abuser of alcohol and that such presented a risk to the Child.
The Mother annexes to her affidavit of 16 October 2019 as ‘8’ a copy of the invoice dating 29 August 2019 from C Pathology for the CDT test in the amount of $197.00 and showing an amount due of $NIL, indicating that the amount had been paid by the Mother and bearing the words “this account is not claimable from Medicare”.[7]
[7] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [8].
I find that it is appropriate to deduct from the amount payable by the Mother to the Applicant under section 143 of the Assessment Act the sum of $197.00. The expenditure was incurred by the Mother in consequence of an allegation made against her in the parenting proceedings (when they subsisted) by the Applicant, and there is no evidence before the Court that the test indicated an excessive use of alcohol by the Mother (though I note that, in fairness, there is no evidence before the Court indicating to the contrary).
Accordingly, based on my finding in relation to the sum of $197.00, payable by the Applicant to the Mother pursuant to the order made 24 July 2019 and the consent agreement between the parties, notified to the Court at the hearing, I will make an order, pursuant to section 143 of the Assessment Act, that the Mother repay to the Applicant the sum of $4,508.40, being moneys paid by the Applicant to Child Support Agency, then paid out to the Mother, with respect to the Child, pursuant to an administrative assessment issued by the Department of Human Services (Child Support), such repayment to be made within 28 days.
That brings us to the main contested issue at the hearing, the question of costs.
Application for costs
The evidence
To enable the Court to give proper consideration to the matters referred to in section 117(2A) of the Act when considering if there are circumstances that justify the Court making an order as to costs, and so departing from the general rule in section 117(1) that each party to the proceedings under the Act bear his and her own costs,[8] it is necessary to traverse the relevant evidence in the matter.[9]
[8] “Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs”, Family Law Act 1975 (Cth) s 117(1).
[9] Family Law Act 1975 (Cth) s 117(1), (2A).
Much of the evidence in this matter was conflicting. According to the Applicant, the parties commenced the relationship in 2015.[10] They commenced living together in a de facto relationship in 2016, when the Mother moved into the Applicant’s parents’ home to live with him.[11]
[10] Affidavit of Mr Reagle affirmed 14 October 2019, [3].
[11] Affidavit of Mr Reagle affirmed 14 October 2019, [4].
The Mother says that the parties commenced their relationship in 2016 and started living together in 2018.[12] Both parties agreed that they separated on a final basis in January 2019.[13]
[12] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [3].
[13] Affidavit of Mr Reagle affirmed 14 October 2019, [34]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [3].
The Child was born in 2018. In cross-examination, the Mother conceded that her affidavit evidence that the parties began living together in 2018 was wrong,[14] and said that the parties began living together in 2017 at the Applicant’s parents’ home. The Mother agreed that the parties were living together when the Child was conceived.
[14] See especially Affidavit of Ms Alto sworn or affirmed 16 October 2019, [3].
According to the evidence of both parties, the Child was conceived by the Mother in 2017. The Applicant asserts that at that time the parties were “regularly engaging in sexual intercourse.”[15] However, the Mother gives evidence in paragraph 5 of both her affidavits of July and October that “during the relevant period of the Child’s conception, I did not have a sexual relationship with [the Applicant], as our relationship was very toxic following my sister’s death.”[16]
[15] Affidavit of Mr Reagle affirmed 14 October 2019, [8].
[16] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [5]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [5].
The Mother gives evidence in paragraph 6 of both affidavits that at the relevant time of conception, she was having a sexual relationship with another person, never named, for a period of about six weeks.[17] In paragraph 8 of both affidavits, the Mother deposes “I was not having a sexual relationship with [the Applicant] during the period that I understood the Child was conceived.”[18]
[17] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [6]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [6].
[18] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [8]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [8].
The meaning of this evidence is clear – in both of her affidavits, the Mother gives evidence that, at the relevant time of the Child’s conception, it was not possible for the Applicant to be the father, and that it was within her knowledge that the unnamed person with whom she was having a sexual relationship at the relevant time was the only viable candidate as the natural father of the Child.
In terms of the costs issue, it is not necessary to make a finding as to whether the Applicant or the Mother’s evidence is to be preferred in relation to the presence or absence of a sexual relationship between the parties at about the time of the Child’s conception. Paternity testing has ruled the Applicant out as the father, and he accepts that. It is the Mother’s evidence of what she asserts to be the facts at that time that will bear the greatest importance.
In cross-examination, the Mother was asked, “When you were pregnant, did you sit the Applicant down and tell him he was not the father?” to which the Mother responded “No.”
The Mother says that in 2018, when she was still in hospital following the Child’s birth, a conversation occurred involving a nurse, the Mother, the Applicant, and the Applicant’s Mother, the purport of which was that the Applicant was ruled out as the father of the Child on the basis of blood groups.[19] The Applicant on his part denies the conversation, in that he asserts that he has never known his blood type, that he has asked his Mother and she has indicated that she is not aware of his blood type (and I note no objection was taken to this evidence), and that the Mother could not possibly know what blood type the Applicant is.[20]
[19] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [9].
[20] Affidavit of Mr Reagle affirmed 14 October 2019, [91], [107].
The Mother asserts that when she told the Applicant “I’m pregnant” he replied with words to the effect of “Is it even mine, you can’t be pregnant.”[21] The Applicant asserts that at the time the Mother told him that she was pregnant, they were in a continuing sexual relationship, and he denies that at any time he said to her the words attributed to him, or any words or statements of a similar effect.[22]
[21] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [8]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [8].
[22] Affidavit of Mr Reagle affirmed 14 October 2019, [106].
In paragraph 109 of his affidavit, the Applicant denies that the Mother ever told him that he was not the Child’s father, and denies that the Mother at any time proposed a paternity test at any time prior to 2 June 2019.[23]
[23] Affidavit of Mr Reagle affirmed 14 October 2019, [109].
In 2018, either the Applicant alone or the parties together registered the Child’s birth and applied for a birth certificate. In registration of the Child’s birth, the Applicant was stated to be the Child’s father on her birth certificate. At no time prior to filing a Response in the proceedings on 18 July 2019 is there any evidence that the Mother sought to take any action to correct the detail on the Child’s birth certificate showing the Applicant as her father.
The Mother says that at the time the application for the birth certificate was made, she noted that the Child was registered with the surname Mr Reagle, the Applicant’s surname, and she said to the Applicant, “I don’t want the Child to have your surname, she’s my daughter, she should be Alto.”[24] The Mother does not give any evidence that she put any argument to the Applicant at that time or at any time thereafter that the Child should not bear the Applicant’s surname as she was not his daughter.
[24] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [10]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [10].
The Mother asserts that she made a request to the Applicant that he undertake a paternity test on several occasions prior to a text message that she sent to him on 2 June 2019 in the words “I would like to offer you a paternity test”[25] to which the Applicant responded “Okay, we can do that.”[26] This exchange occurred some three months after the proceedings were commenced by the Applicant, seeking orders that he spend time with the Child, and four months after the Mother had sought and obtained an assessment under the relevant legislation that the Applicant pay child support to the Mother for the benefit of the Child on the basis that he was the Child’s father.
[25] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(c)].
[26] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(c)].
The Mother asserts that in December 2018, she said to the Applicant, “We will do a paternity test because the Child is not your daughter” and asserts that the Applicant responded “How dare you say that?” and hung up the phone.[27] In cross-examination, the Applicant denied that this conversation ever occurred. Of note is that the Mother gives no evidence that at the time she asserts this conversation occurred, or at any time before or after until she swore her affidavit of 18 July 2019, that she explained to the Applicant the basis upon which she asserted that he was not the Child’s father.
[27] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(a)].
The Mother says that on 2 February 2019, in a telephone conversation, the Applicant said to her “I want to see the Child”[28] and she responded “You’re not the father and we should do a paternity test.”[29] She said that the Applicant became angry and said “No chance.”[30] In cross-examination, the Applicant denied that the conversation ever took place. Once again, if the conversation ever took place, there is no evidence that the Mother at any time gave the Applicant a basis upon which to form a belief or acceptance that he was not the father of the Child.
[28] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(b)].
[29] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(b)].
[30] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(b)].
In late June 2019, the Mother sent a text message to the Applicant with words to the effect of “I’m calling to ask for a paternity test for the Child’s health reasons.”[31] The Applicant did not respond himself, but on 21 June 2019, his solicitors sent an email to the solicitors who had indicated they were acting for the Mother, with the words “Our client now instructs that he does not consent to participate in such testing. Any testing should be by order of the Court and through a Court approved service provider.”[32]
[31] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(d)].
[32] Affidavit of Ms Alto sworn or affirmed 16 October 2019, annexure [2].
To this date, the Mother had still not sworn or affirmed her July affidavit which indicates in paragraphs 5, 6 and 8 the basis on which she asserted that the Applicant was not the Child’s father.[33]
[33] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [5], [6], [8].
On 4 July 2019, the Mother’s solicitors forwarded an email to the Applicant’s solicitors with a proposed minute of consent order for paternity testing orders. The Mother gives evidence in paragraph 12(e) of her October affidavit that the Applicant’s solicitors responded with words to the effect of “Ms Alto has provided no evidence as to why she says the paternity of the Child is in dispute.” I find that the statement attributed by the Mother to the Applicant’s solicitor is correct, though I note that the response from the Applicant’s solicitor is missing from the annexure.[34]
[34] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(e)], annexure [3].
The Mother says that on 12 July 2019, on her instructions, her solicitors again wrote to the solicitors for the Applicant, advising that an order would be sought for paternity testing, and inviting the Applicant to consent to the paternity testing order. The letter also said, “We advise that we will be filing our client’s documents next week.”[35] To that date, no evidence had been put forward, in text message, email, letter or affidavit to provide a basis upon which the Mother asserted that the Applicant was not the Child’s father.
[35] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [12(f)].
There is no evidence before the Court as to when the affidavit of the Mother sworn or affirmed 18 July 2019 was served on the solicitors for the Applicant, but certainly by the mention before the Court on 24 July 2019, the Applicant had that affidavit and had at last seen the basis upon which the Mother asserted he was not the father. The parties consented to an order for parentage testing.[36]
[36] Orders made by Judge Altobelli on 24 July 2019, document marked ‘A’ [1]-[5].
The Applicant is not to be blamed for not immediately accepting at face value the evidence given by the Mother in paragraphs 5, 6 and 8 of the Mother’s July affidavit, particularly in view of his evidence in his affidavit of 14 October 2019 that through the period that he understood to be the time of the Child’s conception, in 2017, he and the Mother “were regularly engaging in sexual intercourse”.[37] There is no conduct on the part of the Applicant to be criticised (in relation to the competing costs Applications) for pursuing the proceedings in relation to parenting orders for his time with the Child past 24 July 2019 and until the results of the paternity testing became known.
[37] Affidavit of Mr Reagle affirmed 14 October 2019, [8].
As outlined above, the paternity test results became known in August. As a result, when the matter came back before the Court on 16 September 2019, orders were made providing a declaration that the Applicant was not the Child’s father, that he was not liable to be assessed to pay child support for the Child, and enabling the Mother to have corrections made to the Child’s birth certificate.
By that time, as stated earlier, the Applicant had amended his Application to remove orders relating to parenting matters, and to seek reimbursement of the moneys he had paid under the child support assessment and costs on the indemnity basis.[38]
[38] Amended Initiating Application filed 4 September 2019.
Accordingly, the Mother was on notice from 4 September 2019, shortly after the parentage testing results became known, up to 16 September 2019, that the Applicant agreed to the declaration under section 69VA of the Act and to the declaration under section 107 of the Assessment Act, and was seeking reimbursement and costs. By her Amended Response filed the day the matter was back before the Court, the Mother indicated that she agreed to an order for reimbursement, though not as to the amount, and sought her own costs on a fixed sum basis.
The Mother deposes that on 28 January 2019, following the parties’ separation, the Applicant said to her in a telephone call “Go to Centrelink and lodge a single parent and [sic] get child support.”[39] She replied “Yes, I will do that”,[40] and in February 2019 the Mother made an application to the Department of Human Services (Child Support) for an assessment of child support to be payable by the Applicant to the Mother for the benefit of the Child on the basis, specifically put by the Mother in the application, that the Applicant was the Child’s father.[41]
[39] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [18].
[40] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [18].
[41] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [18].
The Applicant took this step despite her evidence (in both of her affidavits) that she was aware from the time she first became aware that she was pregnant with the Child that the Applicant was not the father.[42] She also took this step despite her evidence that there was a conversation occurring at the hospital on 9 February 2018, the result of which (according to her) was that on a blood group basis, the Applicant could not be the Child’s father.
[42] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [5], [6], [8]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [5], [6], [8].
If the Mother’s evidence is correct and the conversation took place between the parties on 28 January 2019, no blame in the costs issue can attach to the conduct of the Applicant – to the contrary, the parties had separated and, as far as he was concerned, the Mother was the Mother of his child, she was not in any employment and his words can best be interpreted as an expression of concern for the financial welfare of the Mother and the Child.
Once the results of the paternity test became known, the Mother lodged an ‘ending child support assessment’ form with the Child Support Agency and the assessment was terminated. Annexure ‘W’ to the Applicant’s affidavit of 14 October 2019 is a copy of a letter dated 3 September 2019 addressed to him from the Child Support Agency indicating that they “have accepted [the Mother’s] application to end your assessment for the child.”[43]
[43] Affidavit of Mr Reagle affirmed 14 October 2019, annexure [W].
The Mother gives evidence that by letters sent on her instructions on 1 October 2019, she offered to settle the matter by repaying the sum the Applicant was then claiming he had paid for child support ($6,403.54) and that each party pay their own costs of and associated with the proceedings.[44]
[44] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [24], annexure [12].
By a letter of 3 October 2019, the solicitors for the Applicant notified the solicitors for the Mother that the offer was “rejected”. I note that, in fact, the first part of the offer, that the Mother repay to the Applicant the sum of $6,403.54, was accepted, but on terms more favourable to the Mother than had been proposed by her, in that the Mother had proposed that the repayment be made within four weeks of the making of orders, whereas the Applicant proposed that the order for repayment be registered with the Child Support Agency “so that they may collect payment as if it was a child support liability, therefore avoiding the need for [the Mother] to make payment in a lump sum.”[45]
[45] Affidavit of Ms Alto sworn or affirmed 16 October 2019, annexure [14].
It was the Mother’s offer to settle in relation to the costs of the proceedings that was rejected, the Applicant counter proposing that the matter be settled on the basis that the Mother pay the Applicant’s costs in a sum of $25,000.00. The Applicant proposed a period of six months for payment of the costs. The offer was open from the date of the letter, through October 2019 until 5:00pm on 17 October 2019. The letter notified in its final paragraph “in the event Ms Alto does not accept this offer, our client will seek to rely on this correspondence as to the question of costs.”[46]
[46] Affidavit of Ms Alto sworn or affirmed 16 October 2019, annexure [14].
In her affidavit relied on by the Mother at trial, she gives evidence in relation to an assertion by her that she was the victim of family violence perpetrated by the Applicant.[47] She refers to a charge against the Applicant that was heard in the Local Court and dismissed and she purports, in paragraph 34, to give a basis upon which the Applicant “was found not guilty”.[48] I find that her purported evidence as to that basis has no weight whatsoever. I find that the evidence in relation to family violence will have no bearing on my consideration of the issue of costs.
[47] Affidavit of Ms Alto sworn or affirmed 16 October 2019, [27]-[34].
[48] See especially “On 2 July 2019 Mr Reagle was found not guilty because I remained living with Mr Reagle under one roof. …”, affidavit of Ms Alto sworn or affirmed 16 October 2019, [34].
In his affidavit, the Applicant gives evidence of the history of the attempts he made to arrange to spend time with the Child,[49] all unsuccessful,[50] and of his attempts to arrange personal service of his Initiating Application and supporting documents on the Mother.[51]
[49] Affidavit of Mr Reagle affirmed 14 October 2019, [55]-[65].
[50] Affidavit of Mr Reagle affirmed 14 October 2019, [55]-[65].
[51] Affidavit of Mr Reagle affirmed 14 October 2019, [75]-[86].
I find on the basis of all of the evidence of both the Applicant and the Mother, being their affidavit evidence considered at the hearing and the evidence of each given in cross-examination, that the Applicant held a genuine belief that he was the Child’s father up until the time that he received the results of the parentage testing.
I find on all of the evidence, as just described, that the Mother had a basis upon which to question the Applicant’s paternity of the Child from the time she found she was pregnant with the Child.
I find that the first occasion on which she revealed to the Applicant the proper basis upon which she had grounds to hold that belief was in her affidavit sworn or affirmed on 18 July 2019.
I find that belief was therefore revealed to the Applicant at some time between that 18 July 2019 and 24 July 2019, on the latter of which the Applicant consented to orders for parentage testing.
I find that the Mother was somewhat evasive in her responses in cross-examination. In that regard, I refer to the following exchange during the Mother’s cross-examination by Ms Dart of Counsel:
Dart: You applied for child support payable by the Applicant in February in 2019.
Respondent: Yes.
Dart: You told the Child Support Agency that the Applicant was the father of the child?
Respondent: They asked for a copy of her birth certificate and the details were on that certificate.
Dart: You were prepared to get child support from the Applicant?
Respondent: Until I could prove the Applicant was not the father.
Dart: You say you knew.
Respondent: Not until I went to a specialist for my daughter, a new specialist, in mid-January 2019.
I take it from this evidence that, despite her clear statements in multiple paragraphs both of her affidavits,[52] the Mother was asserting in cross-examination that she was unsure as to whether the Applicant was the father of the Child or not, until she consulted a new specialist for the Child in mid-January 2019. The Mother applied for an assessment that the Applicant pay child support as the father of the Child in February 2019.
[52] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [5], [6], [8]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [5], [6], [8].
Further in cross-examination, the Mother was asked by Ms Dart:
Dart: Until separation you let him believe he was the father of the Child?
Respondent: Yes.
Dart: You say that was your understanding until the specialist appointment?
Respondent: I couldn’t be certain until the DNA test that he was not the father.
Dart: You told the police the Applicant was the father of the Child.
Respondent: Yes.
Dart: You told the police you had a one year old daughter together?
Respondent: Yes.
Later in the cross-examination:
Dart: You agreed that you were living with the Applicant at the time of the Child’s conception.
Respondent: Yes.
Dart: You were having a sexual relationship with him.
Respondent: I’m not sure.
Dart: You say you conceived in 2017.
Respondent: Yes.
Dart: Do you say you were having a sexual relationship with the Applicant in 2017?
Respondent: I can’t be sure.
The Mother was then referred by Ms Dart to paragraph 5 of her October affidavit.[53] Her response was “the Child was premature.”
[53] See, especially “… During the relevant period of X’s conception, I did not have a sexual relationship with Mr Reagle, as our relationship was very toxic following my sister’s death.”, affidavit of Ms Alto sworn or affirmed 16 October 2019, [5].
Later in the cross-examination:
Dart: Prior to January 2019 did the Applicant’s parents spent time with the Child?
Respondent: Yes.
Dart: They thought she was their granddaughter.
Respondent: Yes.
In relation to her financial circumstances, the Mother gave some evidence-in-chief with Mr Cook that she was living in premises for which the rent was $535.00 a week of which she paid half, that she was not working, that she was last in employment in February 2019, that she did not own a car and that she was in receipt of a grant of Legal Aid for the proceedings.
Submissions were made by Ms Dart of Counsel on behalf of the Applicant. Amongst her submissions – which were most helpful and cogent – was that if the Applicant believed that he was not the Child’s father, or even if he had any reason to doubt his paternity of the Child, when he received the assessment letter from the Child Support Agency dated 26 February 2019,[54] he would have put paternity in question and sought DNA testing. He did not, and rather began paying the child support.
[54] Affidavit of Mr Reagle affirmed 14 October 2019, annexure [V].
Ms Dart pointed out in her submissions that the Mother acknowledged in cross-examination that in February 2019, she was aware that the Applicant’s Application before the Court sought mediation with a view to establishing a regime whereby he could spend time with the Child.
Ms Dart submitted that at that time,[55] a prudent person having either knowledge that the Applicant was not the Child’s father, or a basis to doubt that he was the father, would have immediately sought DNA parentage testing. I do not accept that this is necessarily so.
[55] February 2019.
The Mother acknowledged in cross-examination that she commenced instructing her solicitors in about April 2019. The Mother agreed that there was no request or proposal from her that parentage testing take place at any time during April or May 2019, and rather nothing until the letter of 4 July 2019.
Similarly, there was no correspondence through April, May, June, or July prior to the Mother’s affidavit of 18 July 2019 putting a basis upon which the Applicant’s parentage of the Child could be in doubt. Once the Applicant received the Mother’s July affidavit, he agreed to the DNA testing.
As submitted by Ms Dart, the Mother took it upon herself to wait from February to July to put into print the basis on which she asserted the Applicant was not the father. More particularly, the Mother waited from the time she became aware of the proceedings until her affidavit of 18 July 2019 to state that basis.
In submissions by Mr Cook on behalf of the Mother, he put that it was the conduct of the Applicant that led to the prolonging of the proceedings in his refusal to heed the assertions made to him, according to the Mother’s evidence (denied by the Applicant in cross-examination) that he was not the Child’s father, or that at least there was doubt as to her paternity.
I note however that the main thrust of Mr Cook’s submissions were in relation to the Mother’s state of financial impecuniosity and inability to meet a costs order of the amount sought by the Applicant, or at all, and the consequences on herself and the Child financially of any such order.
The law
Costs under the Family Law Act 1975 (Cth)
Costs in relation to matters under the Act are governed by section 117, which provides in subsection 117(1) that the normal position in relation to costs in family law matters is that “each party to proceedings under this Act shall bear his or her own costs.”[56]
[56] Family Law Act 1975 (Cth) s 117(1).
Subsection 117(2) provides for a departure from the usual rule in subsection 117 (1) as follows:
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.[57]
[57] Family Law Act 1975 (Cth) s 117(2).
Subsection 117 (2A) provides as follows:
(2A) 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 proceedings in the terms of any such offer; and
(g) such other matters as the court considers relevant.[58]
[58] Family Law Act 1975 (Cth) s 117(2A).
Pursuant to section 117(2), a finding by the Court of circumstances that justify the making of a costs order is the necessary preliminary to the making of an order, and beyond that there is no additional or special onus on an Applicant for a costs order.
If, having considered the matters referred to in subsection 117(2A) the Court is of the opinion that the circumstances justify a departure from the usual rule that each party bear his and her own costs then the Court must determine the quantum of the costs to be awarded.
In Penfold v Penfold,[59] the High Court discussed section 117 of the Act and said:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the 2 provisions which imposes any additional or special onus on an Applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgement under appeal that an order can only be made under s. 117 (2) in “a clear case”.[60]
[59] Penfold v Penfold (1980) 144 CLR 311.
[60] Penfold v Penfold (1980) 144 CLR 311, 315.
The Court’s discretion in relation to costs is broad and the considerations listed in subsection 117(2A) are not restrictive.[61] There is nothing to prevent any one factor in this subsection being the sole determinant for an order for costs.[62] It is a matter of the weight to be accorded to each factor by the Court, as no one factor listed in s 117(2A) prevails over another.[63]
[61] Penfold v Penfold (1980) 144 CLR 311.
[62] PBF & TRF & Anor [2005] FamCA 158, [41].
[63] Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157.
Costs are compensatory and not punitive, in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.[64]
[64] Latoudis v Casey (1990) 170 CLR 534.
The Full Court of the Family Court of Australia recently summarised the basic law on costs orders under the Act in Sfakianakis & Sfakianakis:[65]
[9] The ordinary position in proceedings under the Family Law Act 1975 (Cth) (the Act) is that each party is to bear his or her own costs (s 117(1)). Where the Court is of the opinion that circumstances justify it in doing so, the Court may make such order as to costs as it considers just (s 117(2)). Thus, an order may be made for the payment of costs on an indemnity basis, although such orders are exceptional (In the Marriage of L and C L Kohan (1992) 16 Fam LR 245 at 259; (1993) FLC 92-340 at 79,614; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCa 1178; D and D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64).
[10] It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs … as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
[11] Decisions as to the appropriate basis for any costs order are, of course, guided by principle. In applications under s 117 of the Act for costs of whatever kind, the Court must have regard to the considerations set out in s 117(2A). Paragraph (g) requires the Court to take into account any relevant matter.
[12] As the decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233–4; 118 ALR 248 at 256–7; 28 IPR 561 at 569–70 (‘Colgate-Palmolive’) and the extensive authorities referred to in it make clear, the categories for the making of special costs orders are not closed and may be made whenever the particular facts and circumstances warrant it. That position is reflected in s 117(2) of the Act.
[13] It is necessary to consider first whether there should be an order for costs before turning to whether the quantum of the costs should be left to the application of the scale contained within Sch 3 of the Rules or assessed or fixed on some other basis. …
[40] … the Court is not bound only to make an order on a party and party basis or on an indemnity basis. It may take an intermediate course if that is the order that is just in all of the circumstances. A special costs order may be assessed by reference to a particular period of time or set of events. Alternatively, the Court may fix a sum for costs that exceeds party and party costs but falls short of an indemnity.[66]
[65] Sfakianakis & Sfakianakis [2019] FamCAFC 54.
[66] Sfakianakis & Sfakianakis [2019] FamCAFC 54, [9]-[13], [40].
Offers of settlement are an important section 117(2A) consideration in determining the question of costs. Section 117(2A)(f) requires the Court to consider any offer in writing to settle the proceedings and the terms of any such offer.[67]
[67] Trevi & Trevi (No. 3) [2019] FamCAFC 58.
In Browne & Green,[68] the Full Court said:
We think that whilst s 117 (2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it proper consideration, is something to which very significant weight indeed normally to be given … [69]
[68] Browne & Green [2002] FamCA 791.
[69] Browne & Green [2002] FamCA 791, [57].
Rule 21.02 in part 21 – costs, division 21.2 – orders for costs, of the FCC Rules provides:
(1) An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2) In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceedings is concluded.[70]
[70] Federal Circuit Court Rules 2001 (Cth) r 21.02.
Rule 21.10 of the FCC Rules provides:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to;
(a) costs in accordance with Parts 1 and 2 of Schedule 1; and
(b) disbursements properly incurred.[71]
[71] Federal Circuit Court Rules 2001 (Cth) r 21.10.
I note here schedule 1 to which reference is made in rule 21.10(a) is schedule 1 of the FCC Rules.
Rule 21.11(2) provides that if costs in the court are taxed, the taxing officer[72] must apply the scale of costs set out in schedule 3 to the Family Law Rules for family law or child support proceedings,[73] and not schedule 1 of the FCC Rules to which reference is made in rule 21.10.
[72] “‘Taxing officer’ means a Registrar”, Federal Circuit Court Rules 2001 (Cth) r 21.11.
[73] Federal Circuit Court Rules 2001 (Cth) r 21.11(2)(a).
Schedule 1 of the FCC Rules is composed of ‘composite amounts’ for stages in the proceedings.[74] Schedule 3 in the Family Law Rules is composed of charges that can be made per item of work or per hour of work.[75]
[74] See, eg, “Initiating or opposing an application up to the completion of the first court date – Both: (a) $2,241; and (b) the daily hearing fee mentioned in item 13 that applies to the hearing”, Federal Circuit Court Rules 2001 (Cth) sch 1 item 1.
[75] See, eg, “Drafting a document (other than a letter) - $24.43 per 100 words”, Family Law Rules 2004 (Cth) sch 3 item 101.
It was established by the decision of Raphael FM (as His Honour then was) in Colan Products Pty Ltd & Luxon Pty Ltd[76] that, when applying the scale provided by the FCC Rules, Counsel’s fees are not claimable as a disbursement, and what is to be claimed is the advocacy loading on the daily hearing fee.[77] That is applicable in this matter, as what is sought by way of costs on behalf of the Applicant is the cost of attendance before the court by Counsel to conduct the final hearing.[78]
[76] Colan Products Pty Ltd v Luxon Pty Ltd (No 2) [2002] FMCA 90.
[77] Colan Products Pty Ltd v Luxon Pty Ltd (No 2) [2002] FMCA 90, [13].
[78] Colan Products Pty Ltd v Luxon Pty Ltd (No 2) [2002] FMCA 90.
Indemnity costs
In Colgate-Palmolive Company v Cussons Pty Limited,[79] Sheppard J provided some examples of circumstances that might warrant the exercise of discretion to award indemnity costs, and in In the Marriage of Munday & Bowman,[80] Holden CJ drew from his Honour’s decision with the following:
(a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397;
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra);
(c) Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)). 2015] FamCAFC 157 Reasons Page 7
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)).
(e) An imprudent refusal of an offer to compromise.[81]
[79] Colgate-Palmolive Company v Cussons Pty Limited (1993) 118 ALR 248.
[80] In the Marriage of Munday & Bowman (1997) 22 Fam LR 321.
[81] In the Marriage of Munday & Bowman (1997) 22 Fam LR 321.
In relation to indemnity costs, in Phillips & Hansford[82] the Full Court said:
[35] 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).
[36] 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).
[37] 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).[83]
[82] Phillips & Hansford [2020] FamCAFC 28.
[83] Phillips & Hansford [2020] FamCAFC 28, [35]-[37].
Specifically in relation to offers of settlement, in Trevi & Trevi,[84] the Full Court said at [15]:
… failure to accept an offer which in retrospect should have been accepted does not necessarily justify an order for costs on an indemnity basis.[85]
[84] Trevi & Trevi (No. 3) [2019] FamCAFC 58, [15].
[85] Trevi & Trevi (No. 3) [2019] FamCAFC 58, [15].
I refer here also to the learned judgment of the Full Court of the Family Court in the case of JEL & DDF.[86]
[86] JEL & DDF [2001] FamCA 907.
Consideration of section 117 of the Act
In proceedings under the Act, and pursuant to section 117 of the Act,[87] I must first consider if there are circumstances that justify the Court in making an order as to costs – that is, on the Applicant’s Application, should an order be made that the Mother pay his costs, and on the Mother’s Application, should an order be made that the Applicant pay her costs. In deciding whether an order for costs is justified in the circumstances, I must have regard to the considerations set out in section 117(2A).[88]
[87] Family Law Act 1975 (Cth) s 117.
[88] Family Law Act 1975 (Cth) s 117(2A).
If I find that there are circumstances justifying the making of a costs order, I must then go on to consider the nature of such a costs order – party/party costs, indemnity costs, ‘special costs order’ – and, depending on the nature of such costs order, the quantum of costs.
Financial circumstances of the parties
In considering the financial circumstances of each of the parties,[89] I am mindful of the decision of the High Court of Australia in Northern Territory & Sangare,[90] that impecuniosity is not a bar to the making of a costs order if there are other circumstances that justify such an order.[91] However, I am also mindful that whilst there is nothing to prevent any one of the considerations in section 117(2A) being the sole determinate of an order for costs,[92] no one of those considerations is superior to the others.[93]
[89] Family Law Act 1975 (Cth) s 117(2A)(a).
[90] Northern Territory & Sangare (2019) 265 CLR 164.
[91] See especially Northern Territory & Sangare (2019) 265 CLR 164, [26], [36].
[92] PBF & TRF & Anor [2005] FamCA 158.
[93] Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157.
Though the High Court pointed out in Northern Territory & Sangare that the status quo for an award of costs in Australian jurisdictions is that generally costs follow the cause,[94] that is not the rule in proceedings under the Act. The normal principle for costs in proceedings such as these is the general rule found in 117(1) of the Act, that each party should bear their own costs.[95]
[94] Northern Territory & Sangare (2019) 265 CLR 164, [20].
[95] See especially “… each party to proceedings under this Act shall bear his or her own costs.”, Family Law Act 1975 (Cth) s 117(1); see also Family Law Act 1975 (Cth) ss 45A(6), 70NFB(1), 117AA, 117AC.
The financial circumstances of the parties is a consideration and is not to be disregarded simply on the basis that any one or more of the other considerations may apply. Although impecuniosity is not a bar to the making of a costs order in the appropriate circumstances, the other considerations do not ‘overrule’ the consideration of the financial circumstances of the parties.
The Applicant’s financial circumstances are superior to those of the Mother. In his Financial Statement affirmed 14 October 2019, the Applicant states that he has salary from his employment as a professional with Employer D before deductions for tax of $2,134.00 per week. In addition, he receives $257.00 per week by way of rent, being a total weekly income of $2,391.00. This equates to a yearly income of just short of $125,000.00.
The Applicant deposes that his personal expenditure on a weekly basis, including an amount of $665.00 per week for non-fixed weekly expenditure, totals $2,020.00 per week. This gives him an excess of income over expenditure of $371.00.
The Applicant has capital assets in that he is the joint registered owner with one other of real property in which he states an equity of $38,000.00. He is the sole owner of two motor vehicles of an estimated value of $20,000.00. He has an interest under a trust with a value of $106,664.00. I do not take into account, in comparing the parties’ relative financial positions, any superannuation entitlements, as both parties are of an age where funds are not available to them (absent hardship reasons). The Applicant has a modest personal debt to family members in the sum of $28,700.00.
The Mother, in her financial statement affirmed 16 October 2019, indicates that she was, at the time of the hearing, not in employment and was in receipt of Centrelink payments to a total of $553.00 per week and no other income. She indicates her weekly expenses, including general living expenses, as $617.00 per week, being a deficit of expenses over income of $64.00 a week. The Mother has some modest savings of $1,370.00, no capital assets, and a consumer loan debt of $7,212.00.
The Mother was in receipt of a grant of Legal Aid to assist her with the cost of the proceedings.
The Mother was not cross-examined in relation to the contents of her Financial Statement. That is certainly no criticism of Counsel, as cross-examination proceeds on instructions. There may well have been no basis to cross-examine in relation to the evidence contained in the Financial Statement.
In submissions on behalf of the Mother, Mr Cook of Counsel referred to the evidence that the Mother is solely responsible for the care of the Child, who has health difficulties, and that, as a recipient of a grant of Legal Aid, she was under an obligation to make an Application for a costs order in respect of these proceedings.
Mr Cook pressed the point that, on the bases that the Mother was impecunious, living in rental accommodation shared with another, had no car, no capital assets, and only Centrelink income, she had no facility to pay an indemnity costs order in the amount sought by the Applicant. Mr Cook put arguments in submissions that, on consideration of the matters in section 117(2A) of the Act, no costs order should be made against her.
Grants of Legal Aid
As noted already in these Reasons, the Mother was in receipt of a grant of Legal Aid to assist her with the cost of the proceedings.[96] However, I do not have any evidence as to the terms of the grant of Legal Aid made to the Mother in relation to these proceedings.[97]
[96] Family Law Act 1975 (Cth) s 117(2A)(b).
[97] See especially Family Law Act 1975 (Cth) s 117(2A)(b).
Conduct of the parties to the proceedings in relation to the proceedings
Consideration of the conduct of the parties to the proceedings is, as section 117(2A)(c) says, conduct of the parties “in relation to the proceedings”.[98] The subsection goes on to give a non-exhaustive list of matters that can be included in consideration of the conduct of the parties.[99]
[98] Family Law Act 1975 (Cth) s 117(2A)(c).
[99] See especially “… 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”, Family Law Act 1975 (Cth) s 117(2A)(c).
The relevant conduct is conduct of the parties to the proceedings in relation to the proceedings, and not conduct of the parties, one to the other, which led up to the proceedings. In this matter, the consideration must concentrate on the conduct of the parties in relation to these Court proceedings and the Court must not be allowed to divert off into using the Court’s power in relation to costs as a means of punishing a party for out-of-Court conduct toward the other party. Costs are compensatory, not punitive.[100] It is no part of the Court’s function in deciding a costs issue to be influenced by arguments going to the moral conduct of either party, or any such matters irrelevant to the conduct of the parties to the proceedings in relation to the proceedings.
[100] Latoudis v Casey (1990) 170 CLR 534.
As I have found, the Applicant commenced these proceedings under his belief that he was the father of the Child. He pursued the proceedings under that belief until the results of the paternity test were revealed in mid-August 2019. When, for the first time, a basis upon which to doubt his paternity was presented in the evidence of the Mother in her affidavit of 18 July 2019, the Applicant acted appropriately and consented to the order for paternity testing made on 24 July 2019.
As soon as the results of the testing were known, the Applicant filed his Amended Initiating Application so as to redirect the matter to the relevant declarations and child support refund Application.
In relation to paternity, the Mother’s evidence was somewhat mixed in the proceedings, as I have outlined above. In both her affidavits, she is specific that the Applicant could not have been the father of the Child as they were not in a sexual relationship at the time she was conceived.[101] In her evidence, under cross-examination, she become ambivalent about that issue and gave evidence that she could not be sure until she consulted a specialist for the Child in mid-January 2019.
[101] Affidavit of Ms Alto sworn or affirmed 18 July 2019, [5], [6], [8]; affidavit of Ms Alto sworn or affirmed 16 October 2019, [5], [6], [8].
Even after that time, in February 2019, the Mother made her Application to the Child Support Agency for an assessment of child support payable by the Applicant to her for the Child, on the basis that the Applicant was the father of the Child. That action by the Mother necessitated the second part of these proceedings – the refund of child support issue – being the only issue other than costs that went to final hearing. I am mindful that consent to the refund was notified to the Court at the start of the final hearing, though not as to quantum.
The proceedings were commenced by the Applicant’s Initiating Application filed 18 March 2019. There was some difficulty in relation to service, but there is the evidence of the Mother that she consulted solicitors in relation to the proceedings in April 2019.
There was correspondence between the Mother’s solicitors and the Applicant’s solicitors in June 2019, but no documents were filed for the Mother until 18 July 2019, a few days before the second mention of the matter on 24 July 2019. That was the first time, as I have said repeatedly, that the Mother made known to the Applicant the basis of her assertion that there was doubt as to his paternity of the Child.
The result of the paternity testing was known in mid-August 2019, the Applicant’s Application for an order under section 143 of the Assessment Act was known to the Mother upon receipt of his Amended Initiating Application filed 4 September 2019.[102] In the consent orders made on 16 September 2019, there was no order made by consent providing for the refund sought by the Applicant. Rather, that matter was set down for the final hearing on 23 October 2019 being, together with the competing Applications for costs, the only outstanding issue.
[102] Child Support (Assessment) Act 1989 (Cth) s 143.
I find that there was conduct by the Mother that unnecessarily prolonged the proceedings and that unnecessarily led to the matter being listed for a final hearing, that final hearing taking place and involving cross-examination of the parties and verbal submissions.
Any failure to comply with previous orders of the Court
The proceedings were not necessitated by a failure of either party to the proceedings to comply with any previous order of the Court, there having been no previous orders of the Court.[103]
[103] Family Law Act 1975 (Cth) s 117(2A)(d).
Whether any party has been wholly successful or wholly unsuccessful
The Applicant did not achieve the orders he set out to achieve in his Initiating Application, that is, parenting orders going to parental responsibility and the time that he would spend with the Child. Based on the findings I have made as to the Applicant’s belief in relation to the Child’s paternity and the Mother’s knowledge in relation to the Child’s paternity, there can be no criticism of the Applicant in that regard, and it cannot be turned into a basis for finding that the Applicant was “wholly unsuccessful”[104] in relation to the proceedings as originally commenced.
[104] Family Law Act 1975 (Cth) s 117(2A)(e).
As soon as the results of the paternity test were known, the Applicant ceased his parenting orders Application and redirected the proceedings to the relevant declarations under section 69VA of the Act and section 107 of the Assessment Act.[105]
[105] Family Law Act 1975 (Cth) s 69VA; Child Support (Assessment) Act 1989 (Cth) s 107.
In reality, neither party was wholly successful nor wholly unsuccessful in relation to the parenting orders proceedings, as those proceedings fell away without contest once the result of the paternity testing was known.
In relation to the relevant declarations, they were virtually a matter of course once the parenting testing results were known, and were sought by the Applicant in his Amended Initiating Application filed 4 September 2019 and proposed by the Mother with the letter dated 4 September 2019 from her solicitors to the solicitors for the Applicant.
By the time the matter came to final hearing, the Mother had filed her Amended Response on 16 October 2019 in which she sought an order, under section 143 of the Assessment Act, for a repayment by her to the Applicant of $4,705.40 (less $197.00).
The Applicant, in his Amended Initiating Application, had sought a refund in the sum of $6,403.54, but prior to the final hearing he agreed that the proper sum for repayment of moneys paid by him to the Child Support Agency that he had not already recovered was $4,705.40. Accordingly, at final hearing, there was no issue that the amount repayable to the Applicant of the moneys he had paid to the Child Support Agency was $4,705.40.
The only issue in that regard was whether there should be a deduction of the $197.00 paid by the Mother for the costs of the CDT test, pursuant to orders made on 24 July 2019. I have indicated that I find that it is appropriate to deduct that sum, but once again I find that it cannot be said that either party was wholly unsuccessful in the proceedings that went to hearing on the issue of refund.
To give consideration to whether either party has been wholly unsuccessful in relation to the issue of the competing costs Applications would be a misapplication of section 117(2A)(e). Those considerations come before the decision as to whether it is appropriate in the circumstances to make a costs order. They are antecedent considerations to a circumstance of whether or not either party is wholly successful or wholly unsuccessful in relation to the cost issue.
Offers
Offers were made by each of the parties to settle the proceedings. They are detailed in the evidence of the Mother in her affidavit of 16 October 2019. Some of those offers led to the consent orders between the parties on 16 September 2019 and to the consent of the parties to an order being made under section 143 of the Assessment Act,[106] though not in relation to quantum of the refund.
[106] Child Support (Assessment) Act 1989 (Cth) s 143.
I find that the main such offer to concentrate on, under this consideration, is in the letter dated 1 October 2019 from the Mother’s solicitors to the Applicant’s solicitors. It encloses a draft Minute of Order that proposes an order be made under section 143 of the Assessment Act in the sum of $6,403.54, a sum in excess of that which I have indicated I will be ordering because both parties were under the misapprehension that it was the correct amount by which the Applicant was out of pocket in child support payments. The draft Minute of Order also included the proposal that each party pay their own costs of and associated with these proceedings.
It was in relation to this part of the offer (that each pay their own) that the Applicant’s rejection was directed. His solicitor’s letter of 3 October 2019 to the Mother’s solicitors make it very clear that the Applicant agreed to the refund order and, as I have stated, proposed a more generous method and timetable of repayment than that proposed by the Mother, but contained a counter offer that the Mother pay the Applicant’s costs of $25,000.00.
As noted by the Full Court of the Family Court of Australia in Trevi & Trevi,[107]it is consistent with longstanding authority that offers of settlement are an important section 117(2A) consideration in determining the question of costs. Offers of settlement should be considered seriously to ensure that the costs of litigation are avoided.
[107] Trevi & Trevi (No. 3) [2019] FamCAFC 58, [12].
In view of the ultimate result of the matter, in relation to all aspects of the proceedings pressed after the paternity results became known, it cannot be said to be unreasonable that the Applicant rejected an offer of settlement on the basis that each party pay his and her own costs.
Other relevant matters
Section 117(2A)(g) requires the Court to give consideration to such other matters as the Court considers relevant.[108] I find that there are no other matters that are relevant in relation to this costs issue.
[108] Family Law Act 1975 (Cth) s 117(2A)(g).
I find that there is a circumstance that justifies the making of a costs order against the Mother and in favour of the Applicant on the basis of the conduct of the Mother in relation to the proceedings.
Conclusion
The Mother’s conduct in failing to state a basis for her assertion that there was doubt as to the Applicant’s paternity of the Child until her affidavit of 18 July 2019 unnecessarily prolonged the proceedings, and was in the face of earlier requests on behalf of the Applicant for the Mother to state the basis upon which she made the assertion of doubt as to paternity.
I further find that the Mother’s conduct, in contesting the matter of an order under section 143 of the Assessment Act until at the earliest 1 October 2019 by correspondence sent that date
the day of final hearing on 23 October 2019, was, in view of the consent result on the first day of the hearing,was another unnecessary prolonging of the matter.I find that the financial circumstances of each of the parties is a consideration that does not outweigh my consideration that, based on the conduct of the Mother, it is appropriate to make a costs order in favour of the Applicant. The financial circumstances of the parties will, however, be a most relevant consideration in determining the nature of that costs order.
I have considered the whole of the evidence in this matter, in the light of the considerations set out in section 117(2A) of the Act and the authorities referred to above, and I find that this is not a case where the particular facts and circumstances warrant the making of an indemnity costs order.
However, I do consider that it is a case where it is appropriate to take an intermediate course and make a ‘special costs order’ by fixing a sum for costs that exceeds party/party costs, but falls short of indemnity costs.[109]
[109] Sfakianakis & Sfakianakis [2019] FamCAFC 54, [9], [10].
As at the date of swearing his affidavit of 14 October 2019, the Applicant deposes that he has spent $38,458.06 for legal fees in relation to the family law proceedings in this Court.[110] He gives evidence that he had an estimate from his solicitors that the legal costs for the final hearing, including Counsel’s fees, would be $7,350.00,[111] a total of $45,808.60. He gives evidence that he spent $13,325.40 in successfully defending the criminal proceedings against him in the Local Court in relation to a charge of assault.[112] Those costs in those proceedings have nothing to do with the costs issue before this Court.
[110] Affidavit of Mr Reagle affirmed 14 October 2019, [116].
[111] Affidavit of Mr Reagle affirmed 14 October 2019, [121].
[112] Affidavit of Mr Reagle affirmed 14 October 2019, [119].
In the final hearing, the Applicant sought an order that the Mother pay his costs in the sum of $45,808.06 by way of indemnity costs or, in the alternative, that the costs be assessed in accordance with the costs reasonably and actually incurred by him in proceedings in accordance with the retainer agreement with his solicitor, which one assumes is the same amount, but after assessment by a Supreme Court assessor in accordance with the method set out in the Legal Profession Act 2004 (NSW).
Taking into account my finding, that it is appropriate that a costs order be made against the Mother and in favour of the Applicant, and that such costs order should be for a fixed sum, I set the amount of costs to be paid by the Mother to the Applicant, pursuant to rule 21.02(2) of the FCC Rules,[113] at $15,000.00.
[113] Federal Circuit Court Rules 2001 (Cth) r 21.02(2).
In view of the financial circumstances of the Mother, I propose to make an order allowing her a period of 12 months to make that payment. Certainly, an order in terms as sought by the Applicant that such costs be paid within 30 days of order, or even within six months or nine months, would be a futile order given the state of the Mother’s financial circumstances on the evidence.
Accordingly I make the orders as stated at the beginning of these Reasons.
I certify that the preceding one hundred and fifty (150) paragraphs are a true copy of the reasons for judgment of Judge Morley
Associate:
Date: 1 May 2020
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