Robbins and Rosemount (No. 2)
[2008] FamCA 494
•1 July 2008
FAMILY COURT OF AUSTRALIA
| ROBBINS & ROSEMOUNT (NO. 2) | [2008] FamCA 494 |
| FAMILY LAW – COSTS – of wife and Independent Children’s Lawyer |
| Family Law Act 1975 (Cth) |
| APPLICANT: | MS ROBBINS |
| RESPONDENT: | MR ROSEMOUNT |
| FILE NUMBER: | MLF | 3211 | of | 2004 |
| DATE DELIVERED: | 1 July 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Carter J |
| HEARING DATE: | 25 June 2008 |
Representation
| COUNSEL FOR THE APPLICANT: | Mr G Dickson |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| SOLICITOR FOR THE RESPONDENT: | Mr Apelbaum |
| SOLICITOR’S FIRM FOR THE RESPONDENT: | Hale & Smith |
| COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: | Ms Buchanan |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER : | Septimus Jones & Lee |
Orders
That on or before 31 August 2008 the husband pay to the wife’s solicitors the sum of $40,000 by way of contribution towards the wife’s costs incurred in these proceedings.
That on or before 31 October 2008 the husband pay to the Independent Children’s Lawyer’s solicitors the sum of $8,000 by way of contribution towards the Independent Children’s Lawyer’s costs incurred in these proceedings in so far as they relate to children’s issues.
IT IS NOTED that publication of this judgment under the pseudonym Robbins and Rosemount is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 3211 OF 2004
| MS ROBBINS |
Applicant
and
| MR ROSEMOUNT |
Respondent
and
| INDEPENDENT CHILDREN’S LAWYER |
REASONS FOR JUDGMENT
[Reserved - Costs]
D
elivered in Chambers
On 25 June 2008 I delivered a reserved judgment following contested proceedings relating to parenting and financial issues. That judgment should be read in connection with these Reasons.
The proceedings were heard over a period of four days in August 2007 with a further two days of hearing in October 2007. In addition, written submissions were filed in support of the respective applications.
At the time I delivered judgment I advised that any applications for costs could be made orally and stood the matter over until 2:15pm to enable consideration to be given to the Reasons and the possibility of seeking, or opposing, an order for costs.
Ms Robbins (for convenience referred to as “the wife”) and the Independent Children’s Lawyer (“I C L”) both seek an order for costs against Mr Rosemount (for convenience referred to as “the husband”).
The I C L seeks an order to the effect that the husband should bear the entirety of her costs which were estimated at $16,539. Advice was subsequently received that this figure was incorrect and should be reduced by $467. I will round down the figure to $16,000.
The wife seeks that the husband should pay her costs of and incidental to the proceedings for alteration of interests in property incurred after 7 April 2004. Additionally the wife seeks that the husband should pay the costs of a hearing in the Defaulters List on 23 January 2007; the costs of a second Family Report; and make a further contribution of $10,000 towards the wife’s costs in relation to the parenting proceedings.
The husband resists both applications.
Initially the husband had sought an adjournment but in the event did not proceed with that application because further legal costs were likely to be incurred.
Oral submissions were made and I reserved my decision, advising that it would be delivered in Chambers.
Relevant Legal Principles
The power to award costs is largely to be found in ss 117(1), (2) and (2A) of the Family Law Act 1975 (“the Act”). However there are a number of other provisions in the Act and the Family Law Rules 2004 (“the Rules”) which relate to costs. I will refer to those where relevant.
It is the general rule under s 117(1) that each party shall bear his or her own costs. However, pursuant to sub-s (2) the Court may make such orders as to costs as it considers just, if it is of the opinion that there are circumstances to justify doing so. In considering what order (if any) should be made the Court is required (inter alia) to have regard to the matters referred to in s 117(2A). They are:
“117(2A) [Matters relevant to costs order]
In considering what order (if any) should be made under sub-section (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 the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.”
The Act also makes provision for payment of the costs of an I C L and the relevant statutory provision is as follows:
“117(3) [Court may order payment of independent children's lawyer's costs]
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, 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.
117(4) [When court must not order payment of independent children's lawyer's costs]
However, in proceedings in which an independent children’s lawyer for a child 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.
117(5) [Funding of independent children's lawyer must be disregarded]
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.”
Sub-sections (3), (4) and (5) to s 117 were introduced by the Family Law Amendment Act 2003 and they apply to “proceedings instituted in the Court” after the commencement date of the Family Law Amendment Act. That was 14 January 2004. These sections are applicable to the present case, given that the proceedings commenced in November 2004.
In Penfold (1980) FLC ¶ 90-800 the Full Court of the High Court of Australia held that the general rule expressed by s 117(1) must yield to s 117(2) 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. Apart from that however, there is nothing in the subject matter or in the inter-relationship of the provisions which imposes any additional or special onus on the Applicant for an order for costs. The members of the High Court did not agree with the suggestion made by the Full Court of this Court in the judgment under appeal that an order could only be made under s 117(2) in “a clear case”.
The Full Court of this Court made it clear in I & I (No. 2) (1995) FLC ¶ 92-625 that the approach that should be taken by the Court was the same in all cases, including cases involving children.
In Fitzgerald (as Child Representative for A, (Legal Aid Commission of Tasmania)) v Fish (2005) 33 FamLR 123 the Full Court wrote in par 41 that there was no prescription in s 117(2A) or elsewhere in s 117 that more than one factor must be present before an order for costs is made, nor any suggestion as to the comparative weight of the factors themselves. As a consequence their Honours held that there was nothing to prevent any factor being the sole foundation for an order for costs.
In CDJ v VAJ (No. 2) (1998-1999) 24 FamLR 1 Kirby J made observations to the effect that generally one would expect that parents should be equally responsible for costs incurred by a child representative. However, I am nonetheless still required to take into account the relevant statutory matters set out in the Act.
Background
In my earlier Judgment I set out an extensive chronology commencing at par 44. I detailed events relating to children’s issues, as well as financial issues, some of which were determined in the process of their being recorded. In some instances, further consideration was thereafter given.
For present purposes I need not detail all of what was said there, although aspects of it will be touched upon later in these Reasons.
For present purposes the following matters will suffice.
The husband was born in May 1960 in the former USSR. He is self-employed through a company, L Pty Ltd. He is an engineer and has tertiary qualifications. The husband is the sole director of L Pty Ltd and this company is, and was, the husband’s alter ego.
The wife was born in July 1971 in the former USSR. She is employed in the information technology field. She also has tertiary qualifications.
Cohabitation commenced on 24 June 2001. The husband and the wife were married in November 2001 and physical separation took place on 5 July 2003. They had separated under the one roof in about April 2003.
There is one child of the marriage, a son, who was born in March 2002 (“the child”). Following separation, the child was in the primary care of the wife and spent time with the husband which varied over the years. When the trial commenced, and in broad terms, the time the child spent with his father was from 6:00pm Thursday until 4:00pm Saturday in each alternate week, together with a further period from 7:45am on Tuesday until 6:00pm on Wednesday in the other week. The child also spent time with his father on certain specified Jewish holidays, Father’s Day, and during school holiday periods.
The husband and the wife have not repartnered and no suggestion was made that they were otherwise than in good health.
The wife continued in full-time employment following separation. The husband’s level of work varied and he ceased work completely at the end of 2006.
The I C L was appointed on 11 April 2007 and participated in the proceedings thereafter.
The wife’s final position, as far as parenting orders were concerned, was:
·The husband and the wife should have shared parental responsibility for the child.
·The husband should spend time with the child from after school on Friday until 5:00pm on Sunday on each alternate week and from after school on Thursday to the commencement of school on Friday in the other week. (Proposals were also put forward in respect of special days, school holidays, and certain Jewish Religious Holy Days.)
The husband’s final position was:
·The husband and the wife should have shared parental responsibility for the child.
·The child should live with his parents on an alternate week and week about basis during school holidays, with changeover to take place after school, and at that school, each Friday. (The husband also provided detailed proposals in respect of special days, school holidays and Jewish Religious Holy Days.)
The final position of the I C L was:
·The husband and the wife should have shared parental responsibility for the child.
·The child should live primarily with the wife.
·The child should spend time with the husband on each alternate week from after school on Friday until Sunday at 5:00pm and from after school on Thursday until 6:30pm on the Friday in the other week.
The orders which I made in respect of the child in broad terms, were as follows:
·That the husband and the wife have equal shared parental responsibility for him.
·That the child live with the wife.
·That the child spend time with the husband during school term in the first week of a fortnightly cycle from the conclusion of school on Friday until 5:00pm on Sunday; in the second week of the fortnightly cycle, from the conclusion of school on Monday until 6:30pm as well as from after school on Thursday until the commencement of school on Friday.
·That the child spend time with his father for one-half of all school term holiday periods and for one-half of the long school term holiday period.
Additionally, orders were made, mostly by consent, relating to “special days” and some other matters.
By way of alteration of interests in property, and again in broad terms, the wife sought:
·To retain her equity in two items of real estate owned by her before cohabitation and her interests in superannuation.
·That the husband retain his equity in two items of real estate owned by him prior to cohabitation; his superannuation; and his interests in L Pty Ltd.
·That the husband pay to the wife the sum of $251,802.
In broad terms, the husband’s proposal was:
·That each party should retain the assets and liabilities in existence as at the date of hearing.
·That he should pay the wife not more than $50,000, which was to be paid by way of a superannuation split.
The orders which I made, in broad terms, were:
·That the husband pay to the wife the sum of $245,843.
·Subject to that payment, the husband was to retain his equity in the two items of real estate owned by him prior to separation; his personal property; his superannuation entitlements; and his interests in L Pty Ltd.
·That the wife receive the payment previously mentioned.
·That the wife retain her equity in the two items of real estate owned by her prior to separation; all personal property; and her superannuation entitlements.
The basis of the orders was that the husband would receive 48 per cent of the nett asset pool as I had determined it. That asset pool is set out at p 115 of my earlier Judgment. The total pool was $1,050,283. The pool, as I determined it, included a notional asset in the husband’s hands of $62,780 and I disallowed a draw down of a mortgage of $41,579.
The effect of the orders was considered and set out commencing at par 866 of the earlier Judgment. The assets to be retained by the husband included superannuation of $165,601. In considering the factors in s 75(2) of the Act, I took into account the fact that the husband’s superannuation represented about 30 per cent of the assets which the husband was to retain. I noted that it presumably would not vest for some years to come and found that this matter favoured the husband (see par 853).
I also determined that the husband had an earning capacity which he had not been exercising. There was particular reference to this commencing at par 825 of the earlier Judgment and at par 849 I determined that the husband had a continuing financial capacity to generate gross fees through L Pty Ltd of no less than was generated in the 2007 financial year, that is to say, $99,624. At par 850 I also found that the husband was entitled to receive rental from his mother of $110 per week and that it was quite clear that no rental payments were received in the 2006 financial year.
At par 851 I observed that the fact that the husband chose not to work from the end of 2006 had a flow-on effect in that he had drawn on his own savings and those of L Pty Ltd. I had earlier recorded the total reduction in both savings accounts in the five-month period between May and October 2007 alone, which was approximately $69,000.
In my earlier Judgment I found the wife’s salary was about $77,000 per annum including superannuation.
The wife had also sought a departure from the Child Support Assessment for the child. She had sought periodic child support in the sum of $250 per week, to be adjusted annually, in accordance with the Child Support inflation factor and additionally, payment of one-half of the child’s childcare, kindergarten, or school fees and levies.
The wife’s Child Support Application was contained in par 14 of her Second Amended Application filed 9 March 2007. The husband opposed that application. Additionally, in his Further Amended Response to the wife’s Application for Final Orders, the husband had sought a departure order himself (see par 27). That Cross Application was effectively not pursued and in any event, appeared to be based on an equal sharing of time. There were no submissions made in support of it.
I considered the child support matters commencing at par 877 of my earlier Judgment. I noted that the approach to the wife’s application had been limited to periodic child support and I dealt with that aspect only. The child support assessment which was the subject of the departure application was that issued as a result of the decision of a Senior Case Officer on 21 February 2007. There were two periods included in that assessment, however, the wife’s case appeared to have been conducted on the basis of the only relevant period was from 10 January 2007 until 29 February 2008.
In the event, I determined that there should be no departure from the determination and assessment made for that period.
The Wife’s Application
Statutory Considerations
In support of her application for costs in relation to the property proceedings, the wife relies on s 117(2A)(c) and (f). In support of her application as to costs relating to parenting orders the wife relies on s 117(2A)(c) and (e).
The husband puts particular reliance on s 117(2A)(a). There were other submissions which will be considered later.
I now turn to look at the matters set out in s 117(2A).
(a) Financial Circumstances
In Browne v Greene (2002) FLC ¶ 93-115 the Full Court drew attention to the difference in the wording of this subparagraph from, for example, s 75(2), where the requirement is to take into account the income, property and financial resources of each of the parties. In the context of an application for costs this subparagraph requires an overview of the parties’ financial circumstances, sufficient to enable a broad comparison to be made.
I have earlier set out the effect of the orders I made in determining the parties’ respective applications for alterations of interests in property and need not repeat that here. It is sufficient to observe that the outcome significantly favoured the wife. I have also noted the parties’ respective salary and earning capacity (so far as is possible).
I should also record that both parties had incurred significant legal costs and discussion about this is set out commencing at par 719 of my earlier Judgment.
Mr Apelbaum told me that the husband’s financial circumstances were “not great”. He had “a few thousand dollars” in the bank and had no funds overseas. L Pty Ltd had modest savings as I understand it which were earmarked for payment of tax. It was his strong submission that the husband would incur undue financial hardship if an order for costs were made against him because of these circumstances. He raised a suggestion of payment of these costs by way of “superannuation”. I believe he was making reference to a superannuation splitting order. I considered the husband’s submission that any property order made in the wife’s favour should be made by way of a superannuation splitting order and rejected that proposal. Amongst other things, I noted, and it is still my view, that the wife’s situation in respect of her needs for herself and for the child were to maximise the property reasonably available to her at this stage of her life, rather than by the benefits of a superannuation splitting order which would not be available for many years to come.
The husband’s current financial situation is of his own making. It was his decision to cease work. It was clear on the evidence that the husband had been capable of maintaining on-going work and income. Significant reductions in the husband’s savings and those of L Pty Ltd resulted from this decision.
The husband had entered into an arrangement with Mr Z, the essence of which was that L Pty Ltd, the husband’s company, paid DS Company, Mr Z’s company, allegedly as a subcontractor and, allegedly for work carried out. Shortly after payment, however, a large proportion of the money was returned in cash by DS Company to L Pty Ltd. L Pty Ltd entered the payments to DS Company in its financial reports as an expense, however, the money which was refunded was not accounted for by the husband or L Pty Ltd. The husband kept that money in cash. I treated this as a premature distribution of assets to the husband.
In a similar manner I determined to reduce the mortgage liabilities claimed by the husband by the amount he had drawn down and paid to his cousin. Both of those matters had financial consequences for the husband. However, as I said in my earlier Judgment, the husband had the sole benefit of the moneys obtained as a result of the arrangement with Mr Z and he also had the sole benefit of whatever moneys his cousin had advanced.
The disparity between the parties’ respective current financial situations must be looked at in this light.
(b) Legal Aid
Neither the husband nor the wife was in receipt of assistance by way of Legal Aid.
(c) Conduct
This subsection relates to conduct of the parties in relation to the proceedings. The matters which are normally relevant under this subparagraph include the parties’ conduct in relation to pleadings, particulars, discovery, inspection of documents and the like. If the proceedings have been unduly prolonged or made unduly expensive, or if a party has failed to make proper disclosure, the Court would normally regard such matters as conduct within this subparagraph. The wife relies on this subsection in support of her application for costs in relation to both the property proceedings and the proceedings for parenting orders.
I will deal firstly with this factor in connection with the property proceedings.
The principal matter relied upon was the husband’s lack of disclosure. I set out the legal principles relating to full and frank disclosure commencing at par 575 of my earlier Judgment. I found that the husband did not comply with his obligation to make full and frank disclosure before the trial, and indeed even after he signed his Undertaking as to Disclosure, which was only provided following a direction I made on the morning of the second day of the trial.
There are references to this in a number of places in my earlier Judgment and particular reference can be found commencing at par 583 where I dealt with the transactions with the husband’s cousin and later commencing at par 601 when I dealt with the arrangement with Mr Z.
In her trial affidavit the wife had deposed that the husband had asserted after separation that credits which had been paid towards the mortgage which encumbered the husband’s property were loans made to him by overseas relatives. She annexed two documents which the husband had produced and which he said substantiated the loans. Those documents were headed “Promissory Notes”. The husband had responded to this in his trial affidavit (par 30). Amongst other things, he said that all of the money which had been provided by his cousin to him was lent on the security of Promissory Notes which he signed, adding that all of these had been provided to the solicitor for the wife. That was simply not true. Two Notes had been provided but another two were not provided until after the trial commenced, and indeed subsequently to the husband’s Undertaking as to Disclosure being provided.
The husband relied on what was described as a “Repayment Note” to support his assertion that his cousin had been repaid in full. That document was not provided until the week before the trial commenced and no explanation was given as to why it had not been provided at an earlier date.
The transactions with the husband’s cousin were relevant and indeed significant to these proceedings.
The husband told counsel for the wife that his understanding of the Undertaking as to Disclosure which he had signed meant that he had to disclose information to the best of his knowledge and agreed that he understood he also had to provide all relevant documents. It was also pointed out to him that in the document itself he undertook that he had made such disclosures. This clearly was not the case.
I noted in my earlier Judgment some of the explanations which the husband gave in connection with the lack of provision of relevant documents to these transactions, as well as some of the inconsistencies in his evidence about those transactions. It is sufficient to note here that I did not accept the husband’s account.
The arrangement with Mr Z provided an even starker example of the husband’s failure to make disclosure.
The wife had drawn attention in her trial affidavit to substantial claims which had been made and the usage of subcontractors by L Pty Ltd following separation. Mr Z had been subpoenaed to produce documents prior to the hearing and some of those documents had the figures relating to repayments to L Pty Ltd “blanked out”. In his evidence-in-chief Mr Z agreed that he had telephoned the husband when he had received the subpoena.
The husband agreed with counsel for the wife that is was only when he knew that Mr Z had finally been required to produce “the real documents” without them being “blanked out” in part, and that he was subpoenaed to give evidence, that the husband in part “confessed”. That “confession” was the explanation given by the husband in par 35 of his trial affidavit. No reference to it was made in his Financial Statement filed in late 2004 and it was not until the husband affirmed his Financial Statement on 10 August 2007 that there was any acknowledgement of the transactions with Mr Z.
The husband told counsel for the wife that he had intended never to tell the wife about the part of the transaction whereby cash moneys were repaid to him.
I found that the husband’s evidence in relation to the arrangement with Mr Z and his company was both inconsistent and misleading.
During the course of the proceedings various documents were produced at different times relating to this transaction which had never been disclosed. Details are set out in my earlier Judgment.
The husband confirmed during cross-examination that there had been correspondence between the solicitors about the subcontracting fees and that the wife’s solicitor had asked to be informed what, if anything, was the arrangement between L Pty Ltd and Mr Z’s company. The husband confirmed that he was aware of this and that on his instructions his solicitor had responded saying that there was no relationship other than as a client/contractor. That was dishonest.
I found that had the material subpoenaed from Mr Z not come into the wife’s hands, the husband would have succeeded in his admitted intention not to tell the wife about the arrangement between himself and Mr Z to refund the moneys to him shortly after each of the four different transactions had taken place.
My conclusions as to disclosure were set out in par 631 of my earlier Judgment. I wrote:
“631.Far from complying with his obligations to disclose and indeed his Undertaking as to Disclosure, the husband has been obfuscatory in his approach to financial matters generally and in particular in respect of the transactions with [his cousin] and the arrangement with Mr [Z]. Additionally, there were far too many occasions when he gave evidence under cross-examination which differed markedly from that contained in his trial affidavit. He had confirmed the accuracy of that affidavit to his own counsel as well as counsel for the wife prior to giving oral evidence …”
Reliance was also placed on this subsection in connection with other matters. I was reminded of how the husband behaved during cross-examination when a series of questions were needed to be put before the husband responded to what was more often than not a very simple question. I would add to that there were a number of occasions when the husband also paused for comparatively significant periods of time before giving any answer. Those matters were referred to at times as and when they occurred during the hearing. Such matters as well as the husband’s (at times) inconsistent evidence all added to the time which this trial occupied.
This subsection was also relied upon to support the wife’s application for some costs in relation to the parenting matters. In particular, the wife sought that the husband pay the costs of the Defaulters List hearing and the costs of preparation of the second Family Report.
I dealt with the Defaulters List hearing commencing at par 232 of the earlier Judgment. The background was that neither party had complied with orders made at a Trial Notice hearing and accordingly the case was placed in the Defaulters List. A hearing was conducted before Mushin J on 23 January 2007. By that stage the wife had filed her trial affidavit and Financial Statement but had not served them on the husband. At that stage, the husband’s position (amongst other things) was that the child should live with each of his parents on a week and week-about basis during school term.
A transcript of the proceedings before Mushin J was annexed to the wife’s second affidavit filed in the principal proceedings. The husband’s then solicitor, Ms Snyder, appeared on his behalf and Ms Nichols, a solicitor, appeared on behalf of the wife. The husband and the wife both attended at the Defaulters List hearing.
Ms Snyder dealt with some preliminary matters and then went on to say:
“… As far as the Trial Notice list is concerned we seek an extension of time to provide an amended Response because I have now instructions to amend my Response to seek residence of the child and that creates an entirely different picture than what had previously been the position. …” (Emphasis added.)
Ms Snyder, upon enquiry from Mushin J, said that a report had been prepared in 2006 and his Honour then asked whether Ms Y had considered the matter in terms of residence or only in terms of contact. The following exchange then took place:
“(Ms Snyder) My client’s application has always been for shared residence on an equal basis, so whilst she didn’t consider his application for sole residence because that wasn’t then before her, she certainly considered the question of shared residence because that was very much an issue and is in issue.
(His Honour) That constitutes a really significant change from shared to sole residence …”
(Emphasis added.)
Mushin J made various orders, including an order that the husband was to file and serve any Amended Application by way of a Form 1A Response within seven days. The parties were also ordered to obtain an updated report from Ms Y.
The husband filed his further Amended Response by way of a Form 1A on 29 January 2007. He did not seek sole residence. He continued to seek an order that the child live with each of his parents on an alternate week and week-about basis during school term, but as an alternative he proposed that the child should live with the mother during three consecutive weeks of the four-week cycle, from Thursday to Monday (four nights), and during the fourth week of the four-week cycle, from Wednesday to Thursday (one night). The overall effect of this would have been that in any 28-day period the child would have 13 nights with his mother and 15 nights with his father, rather than spending equal time with each of his parents.
On 6 February 2007 the wife’s solicitors wrote to the husband’s solicitors, given that the husband had not sought an order for sole residence of the child as had been put by the husband’s solicitor to Mushin J. It was the wife’s position, as reflected in her affidavit and in the letter her solicitors sent on her behalf, that the Court had been misled by the proposal advanced on behalf of the husband at the Defaulters List hearing which would put the wife to further and unnecessary legal expense. It was sought that the husband agree to approach the Court to have the matter relisted at the earliest possible opportunity with the aim being for the matter to continue to be allocated a place in the forthcoming “Blitz” and without any further report.
The husband was cross-examined and his evidence was to the effect that he had never instructed Ms Snyder to inform the Court that he was seeking sole residence and that he instructed her on more than one occasion that he wanted the matter to be relisted as soon as possible. He agreed that he knew that the wife’s solicitor had written to the Listings Officer asking for the matter to be relisted and that he also knew that Ms Snyder had opposed this. According to the husband this was in a letter which his solicitor had sent without his instructions.
The husband was taken to a letter dated 12 February 2007 from his solicitor to the wife’s solicitor. The husband agreed that the effect of par 2 of that letter was that the husband had given his solicitors instructions to amend his application following the lengthy period of time that he spent with the child over the holidays and his assessment as to how the child adapted to spending that time with him. The letter also went on to say, effectively, that the further report would be insisted upon. The husband could not recall whether he ever received a copy of that letter.
The husband did recall however that he received a copy of the earlier letter, which he repeated had been sent without his instructions. He said that his solicitor had explained how it was that she had not misled the Court and he believed her. That explanation was that because he was now seeking to have more time with the child than the wife would have, the matter needed to proceed in the sense of there being another report. In other words, his solicitor had explained to him this was because one of his alternatives was that the child should spend 15 nights out of the 28-day cycle with him rather than the 14 days envisaged in an equal shared care arrangement.
In my earlier Judgment I noted that I found it difficult to accept that a solicitor of Ms Snyder’s experience would have viewed the proposal as so significant as to warrant a further report. I also pointed out that Ms Snyder continued to act for the husband. She prepared his trial affidavit and Financial Statement, which were both dated 3 May 2007. She appeared on his behalf at the Pre-Trial Conference on 8 June 2007. She filed a Notice that she had ceased to act for the husband on 28 June 2007, that Notice being dated 21 June 2007. New solicitors filed a Notice of Address for Service on 22 June 2007.
I concluded in my earlier Judgment that I could not take the matter any further as at that time. I referred to what the wife had set out in her second affidavit filed in connection with the substantive proceedings, which foreshadowed an application for costs.
Mr Apelbaum pointed out that the Defaulters List hearing was convened because neither the husband nor the wife had complied with the Trial Notice orders. I give that submission weight. He added that his instructions were that there was conflict between the husband and his former solicitor, given that she had been acting without instruction and ultimately he “sacked” her and went to other solicitors.
The allegation that Ms Snyder acted without the husband’s instructions was consistent with the husband’s evidence. However, it seems to be somewhat inconsistent with the husband’s evidence that Ms Snyder was able to explain to his satisfaction why a further report was needed. Given that the change in the husband’s alternative proposal was so minor I have difficulty in understanding not only why Ms Snyder thought it necessary to have to proceed to obtain a further report, but I also have difficulty in understanding why the husband accepted this.
In all those circumstances, I would not be disposed to make an order for the costs of the attendance at the Defaulters List hearing. I place particular reliance in this regard on the fact that neither party had complied with the Trial Notice orders, even though the wife’s documents had been prepared. They should have been served and they were not. However, in my view, the costs of obtaining a second report was an unwarranted expense. Subject to other statutory considerations being satisfied, I would be disposed to make an order that the husband be responsible for the costs of the second report. If indeed Ms Snyder was acting without his instructions at any time but in particular when she insisted that this report needed to be obtained, that is a matter which the husband could take up with Ms Snyder.
I have considered the other matters raised on behalf of the wife under this subparagraph, but to my mind, the matters which I have set out are the most significant. Those matters favour the wife.
(d) Failure to Comply with Previous Orders of the Court
This is not a relevant matter in the circumstances of this case.
(e) Whether a Party has been Wholly Unsuccessful
The wife relied on this subparagraph in connection with her claim for a contribution towards her costs in connection with the application for parenting orders.
As was pointed out the orders which were ultimately made were very close to the orders sought by the wife.
By contrast, the husband was totally unsuccessful in so far as his application sought a shared care regime for the child.
It is not correct to say that either party was “wholly unsuccessful in the proceedings”, given that neither parent succeeded in his or her application in the sense that the orders I made reflected the orders which had been sought. However, the outcome was infinitely closer to the position adopted by the wife than it was to the position adopted by the husband. This factor favours the wife.
(f) Offers in Writing to Settle the Proceedings
This is the ground upon which the wife places most emphasis in connection with her application for an order for costs in relation to the property proceedings. Two documents were relied upon.
The first document (Exhibit “C1”) is a letter dated 31 March 2004 from the wife’s solicitors to the husband’s previous solicitor. At p 2 the following proposal in relation to property settlement and child support issues was made:
“Our client has therefore instructed us that provided that the offer contained herein is accepted within seven days, that she will resolve this matter as follows:
1. She will accept a cash payment of $90,000;
2.She will require a child support regime to be entered into by your client based on a child support income of $100,000.”
The Offer was said to be open for a period of seven days. It should be noted that this offer was made some eight months before proceedings were commenced in this Court.
The second offer was said to be constituted by Terms of Settlement which the husband and the wife entered into on 13 August 2007 (Exhibit “C2”). Some background is necessary to understand the factual context.
This case had been in the Reserve List and was transferred to me on 13 August 2007. I was informed that the husband and the wife had settled property and child support issues and I was given a Minute of Proposed Consent Orders which had been signed by both the husband and the wife. If those orders had been made they would have finalised property, spousal maintenance and child support issues. Issues in relation to the child had not been the subject of any agreement and it was suggested that the I C L and/or her counsel would have further discussions with the husband and the wife.
Subsequently, I was informed that the husband had withdrawn his consent to the Terms of Settlement. I informed all present in Court that I had read the Minutes of Proposed Orders and enquired whether it was appropriate for me still to continue to hear the case. All counsel submitted that it was appropriate for me to do so.
Relevantly, the proposed orders provided:
“1.The husband pay to the wife the sum of $100,500 (“the payment”) on or before 13 October 2007 (“the date”).
2.Contemporaneously with the payment …
(b) the costs order of 28 April 2005 be discharged;
….
4.There be a departure from the Administrative Assessment of Child Support such that for the period 13 August 2007 to 13 August 2009 the husband pay for [the child] born […] March 2002:
“(a) [U School] fees for the 2007 year;
(b) the sum of $844 per calendar month;
(c)commencing 2008 one-half of all school fees and levies, and all extracurricular expenses, sporting costs, uniform, books, and excursions at such school as [the child] may attend from time to time.
…”
The reference in par (2)(b) to a costs order is a reference to costs which were ordered to be paid by the husband’s mother which were then and indeed now outstanding.
So far as child support matters are concerned it should be noted that the then current child support assessment required the husband to pay $844.58 per month. There was no provision for what I will call educational expenses.
Mr Dickson, on behalf of the wife, has very properly conceded that the orders I made did not reflect the outcome proposed in either offer in so far as child support was concerned. He emphasised the difference between the proposals in both offers in respect of a property settlement and that which was ultimately awarded. I repeat that the husband was ordered to pay the wife the sum of $245,843.
The Full Court has emphasised the importance of offers. In Browne v Green the Full Court said:
“[57]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 a proper consideration, is something to which very significant weight indeed ought normally be given. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.”
In Robinson and Higginbotham (1991) FLC ¶ 92-209 at 78,417 Nygh J (with whom Simpson and Smithers JJ agreed) accepted the submission that:
“… [par] (f) does not have any particular priority, but its importance must surely be weighed in the light of all the circumstances of the case … when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened …”
It is also useful to look at what is now r 10.06 which deals with compulsory offers to settle. That rule applies to property cases and I refer to it only in the sense that it provides the policy background. The Explanatory Statement says in conjunction with this rule:
“Parties must be encouraged to make offers ‘with teeth’. It is an important way of promoting settlement if a party can see that there are adverse financial consequences for them if they unreasonably refuse to settle. The Court will use its power in relation to costs to discourage unreasonable behaviour.”
Given that the wife did not achieve what she had sought to achieve in respect of child support matters, it is also useful to consider the Full Court’s decision in Pennisi (1997) FLC ¶ 92-774, namely:
“The plain words of the paragraph do not limit a Court’s attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded or how much that is the case … We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs …”
It was not suggested on behalf of the husband that the seven-day period of time for acceptance of the offer as set out in the letter dated 31 March 2004 was not sufficient for him to give it proper consideration. It was also not suggested that, for example, he did not have sufficient knowledge at the time of the financial circumstances of the parties in order to give proper consideration to the offer. (See Pennisi (supra); Browne v Green (supra).)
Mr Apelbaum did not submit that the Minutes of Proposed Orders did not constitute an offer in writing to settle the proceedings within the meaning of this subparagraph and the decision of the Full Court in Harris (1991) FLC ¶ 92-254 would appear to preclude any such suggestion in any event. If I am incorrect in this conclusion, and notwithstanding the lack of submissions put on behalf of the husband regarding this matter, it would be an appropriate matter to be taken into account in my view, under s 117(2A)(g).
In my view, the offers contained in Exhibit “C1” and “C2” were abundantly reasonable and both exceeded the amount ultimately awarded to the husband by way of property settlement. This factor weighs very heavily in the wife’s favour.
(g) Other Relevant Matters
It is convenient to deal with two other matters raised on behalf of the husband in the context of this subparagraph. The first matter which was strongly pressed upon me was that the husband’s application for the child to spend more time with him was bona fide and that he genuinely believed that this would be in the child’s best interests. It was on this basis that he disagreed with the recommendations contained in the second Family Report.
There has been no suggestion that the husband’s application for the child to spend equal time with both his parents was anything other than genuine. I do take into account, however, that the husband maintained his position as to a shared-care regime against professional opinion. He was, of course, entitled to do so. The Court is not bound by any recommendation by a Family Reporter or the I C L. But it is fair to say that in maintaining his position against the recommendations of the Family Reporter the husband did put himself at the risk of costs given that it led to the prolongation of the proceedings. It is a matter for which I ascribe very limited weight, nonetheless.
The other matter raised by Mr Apelbaum was, I believe, linked to that earlier submission that the husband’s actions were bona fide. The submission was that as a matter of policy, the Court should not make orders for costs which might discourage parents from bringing applications to the Court. No authority was cited for this. The authorities make it clear that an order for costs is compensatory and not made for the purpose of punishment. (See, for example, Cassidy v Murray (1995) FLC ¶ 92-633; Lataudis v Casey (1990) 170 CLR 534.) It is compensatory in the sense that it is awarded to indemnify the successful party against expense to which he or she has been put by reason of the legal proceedings. That is the approach I have taken in this case, subject of course, to the statutory considerations. Otherwise, in my view, this submission is answered by the terms of s 117 itself. A “general rule” is expressed in s 117(1) but the legislature has seen fit to make that subject to s 117(2). There is no element of deterrence in any of this.
Conclusion
The wife is in a better financial situation than the husband as a result of the orders I made as to the distribution of their property. She is entitled to receive a substantial sum of money and in order to make this payment the husband may not be able to retain both items of real estate which he owns. While that factor favours the husband, it must be looked at in light of the matters I have discussed earlier and the circumstances which lead to the current disparity in their financial circumstances. In any event, there are other factors which favour the wife, namely, those referred to in s 117(2A)(c), (e) and (f).
Having identified the relevant matters set out in s 117(2A) my obligation is to balance them so as to determine whether or not to make orders for costs. As is made clear in Penfold, the Court does not have to be satisfied that there is a “clear case” or an “exceptional case”. The requirement is that there are matters in the combination of s 117(2) and (2A) which “justify” the conclusion that costs should be ordered. Section 117(1), s 117(2) and s 117(2A) are interrelated and the overall structure of these subsections is to provide the Court a broad discretion, the exercise of which starts with the general rule in s 117(1).
In my view, and notwithstanding the submissions to the contrary, there are justifying circumstances for costs orders as between the husband and the wife and in favour of the wife. Those circumstances are apparent from the earlier discussion. The matter which has weighed most heavily with me is the husband’s conduct and the offers to settle. I give less, but still significant degree of weight to subpar (e).
While I am satisfied that there are circumstances therefore which justify an order for costs in the wife’s favour I am not satisfied that they warrant an order for the totality of the costs sought on her behalf.
It will be recalled that the wife sought an order for costs incurred in respect to the property proceedings after 7 April 2004; a contribution of $10,000 towards her costs relating to the parenting proceedings; the costs of the Defaulters List hearing; and the costs of the second Family Report.
As earlier recorded I will not make an order in respect of the costs of the Defaulters List hearing. Having considered the totality of the relevant statutory matters I conclude that it would be proper for the husband to pay the costs of the second Family Report and an order to that effect will be made.
The wife’s costs have not been quantified, however, I can obtain some guidance to them from a Schedule prepared by her solicitor which was given to me during the earlier proceedings and which is retained on the Court file. That Schedule showed that the wife had incurred total billed and unbilled costs of $133,852.19 of which the wife had paid $97,944.59. Those costs did not include the costs of the trial, preparation and the like. Otherwise, the wife owed her solicitor almost $36,000.
I take into account that those costs would have been calculated on a solicitor/client basis.
The ordinary rule is that a costs order is for payment calculated on a party/party basis which usually produces a lesser amount. Whilst I cannot be sure, experience in other cases tells me that the likely costs of the trial, including preparation and the written submissions would be well in excess of $20,000.
In my view this is an appropriate case for costs to be fixed. I have considered the possibility of making an order that the quantum for costs be fixed by agreement, however I have little doubt that the husband and the wife would be unable to agree as to a figure. There is much to be said for avoiding an assessment of costs. The costs of preparing a Bill of Costs, for example, would in the circumstances of this case be very substantial indeed, and the assessment of costs in itself is time consuming and expensive. There is, of course, also always the possibility of a later review.
I am permitted by the Rules to fix costs and in my view, this is an appropriate case to do so. I will order in due course that the husband contribute the sum of $40,000 towards the wife’s overall costs. I would apportion those costs as to $35,000 for the property proceedings and $5,000 for the child’s proceedings. This is in addition to the costs of the second Family Report.
I acknowledge that payment of this sum will have a significant impact upon the husband’s financial resources. Nonetheless, in my view, the orders I propose to make provide a fair outcome to both the husband and the wife and are a proper exercise of my discretion.
The orders will provide for payment on or before 31 August 2008, this being the date when the husband is required to make the payment pursuant to the property proceedings.
The Application by the I C L
Statutory Considerations
Section 117(4)
In certain instances the Court must not order payment of the costs of an I C L. Those circumstances are:
“(a)(Where) a party to the proceedings has received legal aid in respect of the proceedings;
(b)(Where) 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 …”
In the present proceedings subpar (a) is not relevant.
“Hardship” is not defined in the Act. It would generally mean financial deprivation or privation.
When any order is made as to costs a party’s financial situation must diminish. It is relevant to take into consideration that the husband will be required to contribute a substantial sum to the wife’s costs. Otherwise, his financial situation has been sufficiently considered earlier in these Reasons.
It must also be noted however, that the husband is certainly not without the means to improve his financial situation. I found that he had a significant capacity to earn income. Provided that he were given a lengthy period to make any payment for costs, I am satisfied that he would not suffer financial hardship.
I have taken into account the strong submissions to the contrary made by Mr Apelbaum.
Section 117(5)
The Court is required to disregard the fact that an I C L is funded under a Legal Aid scheme when it comes to consider what order (if any) should be made under s 117(2A). I take note of the requirement of this section.
Section 117(2A)
(a) Financial Circumstances
I have already set out the husband’s financial circumstances and have noted that he will be required to contribute a substantial amount towards the wife’s costs.
(b) Legal Aid
This is not relevant.
(c) Conduct
I have already considered this matter in connection with the wife’s application for costs. It is also relevant to the claim by the I C L. I would add to that discussion that there is an impact on the claim made by the I C L because the proceedings relating to the child as well as the property proceedings were heard concurrently. They could not be dealt with in isolation and accordingly, the I C L was required to be present for the totality of the proceedings. The husband’s conduct, and in particular, where it resulted in a prolongation of the proceedings, is a relevant factor to take into account in favour of the I C L pursuant to this subparagraph.
(d) Failure to Comply with previous Orders of the Court
This is not relevant.
(e) Whether a Party has been Wholly Unsuccessful
I have already considered this subparagraph in as much as it concerns the husband and the wife. It is also relevant to the claim by the I C L. As earlier recorded the I C L’s final position was very similar to that of the wife. The difference was in relation to the time the child should spend with his father on the “other week”. For present purposes it is sufficient to record again that the husband was totally unsuccessful in so far as his application sought a shared-care regime for the child, and again the orders which I ultimately made were very close to the orders proposed by the I C L. This factor favours the I C L.
(f) Offers in Writing to Settle the Proceedings
This is not relevant.
(g) Other Relevant Matters
It is convenient to consider the only substantive submission made on behalf of the I C L at this stage. This was to the effect that the I C L had a “special position” not being a party in the normal sense used in litigation. She reminded me that the Family Reporter had recommended the appointment of an I C L “in an attempt to assist the parties and manage and progress the matter”. This followed an order which had been made by Mushin J at the Defaulters List hearing that, at the adjourned hearing, consideration should be given for such an appointment.
An I C L was indeed appointed and the reason given related to an apparently intractable conflict as between the parents.
As I understand Ms Buchanan’s submissions, the I C L’s role was to attempt to “settle” the matter, however, she was unable to assist the parents. She told me that the I C L had not at any stage been supportive of the husband’s application but did support the position taken by the wife as well the Family Reporter’s recommendations. The wife had accepted the recommendations of the Family Reporter but the husband did not and this, in turn, led to the application being directed to the husband alone and not to both parents.
Mr Apelbaum told me that the I C L did not do much to help “settle the case”. No particulars of this were given and I should make it clear that no criticism was directed towards Ms Buchanan.
After the Family Law Amendment (Shared Parental Responsibility) Act 2006 came into effect on 1 July 2006 the role of the I C L was defined in s 68LA of the Act. There are specific duties imposed upon an I C L and they are set out in s 68LA(5).
The relevant part of the Explanatory Memorandum (“EM”) relating to the Shared Parental Responsibility Act states:
“The amendments aim to strengthen the role of the child representative by providing further guidance to lawyers acting in the role. Along with the Guidelines for child representatives: Practice directions and guidelines (“the Guidelines”), released by the Family Court of Australia, the amendments also aim to provide clarity and understanding to those parties participating in proceedings where a child representative is involved …
In accordance with the recommendations of the (Family Law) Council, the intention of such a provision is to clarify that the independent children’s lawyer should act as an independent advocate for the best interests of the child, rather than act on the instructions of the child. The Government considers that this is appropriate, given the legislative requirement for a court to make a decision in the best interests of the child …
The Council considered the basic elements of the role of the child representative as set down by the Full Court of the Family Court in the case of P and P (1995) FLC ¶ 92-615 should be incorporated into the Act. This provision acknowledges that an important part of the role of the independent children’s lawyer is the function played outside of the courtroom. The independent children’s lawyer may be working with all the parties to the proceedings to find creative solutions to the issues in dispute.
It is appropriate that the independent children’s lawyer has flexibility to sensitively manage the views of children and presentation of evidence. In the circumstances of a particular case, it may be most appropriate for the independent children’s lawyers to work with court mediators and experts to get evidence about the best arrangements for the child before the court, rather than inform the court directly of the views of a child. … ”
The circumstances of the present case were such as to make it completely appropriate for the appointment of an I C L, both to protect the child’s interests and also to assist the Court. The role of an I C L is not limited to attempts to “settle” a case, although as the E M explains the I C L may be working outside the Courtroom with the parents in attempting to find creative solutions to the issues in dispute.
There is no evidence as to how the I C L approached this matter outside the Court. I have a vague and unsubstantiated allegation that she did not do much to “settle the case”.
What I do know is that the I C L put evidence before the Court from Dr P as well as the Family Reporter. That evidence was of assistance to the Court and it was necessary for the purposes of determination of the child’s welfare. It was also appropriate in my view for counsel to be briefed to appear on behalf of the I C L.
I earlier referred to CDJ v VAJ (No. 2). Kirby J noted that a children’s representative had a duty to “act in an independent and unfettered way in the best interests of the child”. (Bennett (1991) FLC ¶ 92-191.) He went on to observe that the interests of children and their welfare is a matter of public concern and those interests extended beyond, and are separate from, the interests of the parents. As his Honour pointed out, the children are the children of both parties. It was his Honour’s view that both parents should share equally the costs of their children being separately represented. That, however, was not the approach taken by the I C L in the present case.
Conclusion
In my view there are justifying circumstances for a costs order to be made in favour of the I C L. Those circumstances are apparent from the earlier discussion, both here and in connection with the wife’s application for costs. The matters which have weighed most heavily with me are the husband’s conduct and the fact that he was wholly unsuccessful in the orders that he sought that the child should spend time on a week and week-about basis with his parents. This was a proper case for the appointment of an I C L and no one has submitted to the contrary.
However, I am not persuaded that the husband should pay the totality of the costs sought by the I C L. It is appropriate for him to pay one-half of those costs in my view, and in the exercise of my discretion. His current financial situation will be recognised in the substantial period of time I will permit him before payment is due. Payment will not be required until October 31, 2008.
For all those reasons, orders are made in the terms set out at the commencement of these Reasons.
I certify that the preceding one hundred and fifty-six (156) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.
Associate:
Date: 1 July 2008
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