Sharma & Sharma (No 2) - [2007] FamCA 425

FAMILY COURT OF AUSTRALIA

SHARMA & SHARMA (NO. 2)

[2007] FamCA 425

FAMILY LAW – COSTS – Where father asserts mother knowingly made false allegations and statements – Whether s 117AB operative – Applying s 117AB to proceedings commenced before but finalised after section introduced does not offend presumption against retrospectivity - Whether pursuant to s 117AB father entitled to mandatory costs – Significance of reference to proceedings - Order made – Assessment of quantum

Family Law Act 1975 (as amended) s 70NFB(1), ss 117, (1), (2), ss 117AA, AB, AB(2), (2A), (2A)(c), s 118, s 4
Family Law Amendment (Shared Parental Responsibility) Act 2006 s 117AB,
Acts Interpretation Act 1901 s 3
Crimes Act 1914 (Cth) s 35
Evidence Act 1995 (Cth) s 140
Family Law Rules

Geraldton Building Co Ltd v May (1977) 136 CLR 379
Kohan & Kohan (1993) FLC 92-340
Colgate Palmolive Co & Anor v Coussins Pty Ltd (1993) 46 FCR 225

APPLICANT:

MR SHARMA

RESPONDENT:

MRS SHARMA

FILE NUMBER:

NCF

4470

1999

DATE DELIVERED:

2 March 2007

PLACE DELIVERED:

Newcastle

JUDGMENT OF:

The Hon. Justice Ryan

HEARING DATE:

26 February 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr S Austin

SOLICITOR FOR THE APPLICANT:

Baker Love Lawyers

COUNSEL FOR THE RESPONDENT:

Mr P Jurd

SOLICITOR FOR THE RESPONDENT:

James Papas Solicitors

Orders

That within nine months the wife pays the husband costs of his application filed 14 December 2004 which are fixed in the amount of $3,195.
Interest calculated in accordance with the Family Law Rules shall be payable by the wife on any balance outstanding from the day after which payment pursuant to order 1 is required.
Other than as is provided for in these orders, the Application in a Case filed by the husband on 20 December 2006 is dismissed.

FAMILY COURT OF AUSTRALIA AT
NEWCASTLE

FILE NUMBER: (P)NCF4460 of 1999

MR SHARMA

Applicant

And

MRS SHARMA

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application by the husband that his former wife pays his indemnity costs of and incidental to parenting proceedings he started on 15 December 2004. Simply put, the husband sought interim and final orders that the parties two daughters, C who is aged 11 years, and R who is aged 7 years, live with him. The wife opposed his application. The competing applications were heard on 25, 26, 27 and 28 September 2006 with judgment delivered on 4 December 2006. At the start of the hearing the husband presented an application expressed in the alternative, that is, if he failed to persuade the Court that the children live with him fulltime, the Court should make orders which result in the children dividing their time equally between their parents. The Court made equal time orders.

The applicable law

Costs are governed by s 117 of the Family Law Act 1975 (as amended). Section 117(1) provides that each party to proceedings shall pay his or her own costs. This is subject to ss (2,), s 70NFB(1), s 117AA, s 117AB and s 118. Sections 70NFB(1) and 117AA and 118 have no relevance to this case. By ss (2), if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, having regard to those matters set out in s 117(2A) make an order for costs.

Section 117AB is in the following terms:
(1) This section applies if:
(a)proceedings under this Act are brought before a Court; and
(b)the Court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.
(2)The Court must order that party to pay some or all of the costs of another party or other parties, to the proceedings.
Section 117AB forms part of a suite of amendments to the Family Law Act 1975 inserted by the Family Law Amendments (Shared Parental Responsibility) Act 2006. An issue arises concerning the operative date for s 117AB. That is, does it apply to all proceedings heard after the Family Law Amendments (Shared Parental Responsibility) Act 2006 commenced, or is it limited to proceedings filed after its commencement? Note 1 to the Family Law Amendments (Shared Parental Responsibility) Act 2006 says it received royal assent on 22 May 2006. Section 117AB is item 41 in Schedule 1 to the amending Act. The date of commencement for Schedules 1 and 2 is 1 July 2006. There are no saving or transitional provisions related to s 117AB. Thus, by s 3 of the Acts Interpretation Act 1901, s 117AB came into operation immediately on the expiration of 30 June 2006.
Does so interpreting the amending Act offend the well known rule that legislation is not retrospective? See Geraldton Building Co Ltd v May (1977) 136 CLR 379. The presumption against retrospectivity only arises where so to read the legislation would impinge on a person’s rights or duties. Parties to whom the provision applies were already under an obligation not to make false allegations or statements. Such conduct was actionable as perjury pursuant to s 35 Crimes Act 1914 (Cth). Conduct such as making false allegations could also have been dealt with under s 117(2). On this view, no duty has been affected as a result of the enactment of s 117AB and as such the presumption against retrospectivity does not apply.
Proceeding is defined in s 4 of the Family Law Act 1975 as meaning: “A proceeding in a court, whether between parties or not, and includes cross proceedings or an incidental proceeding in the course of or in connection with a proceeding”. This means s117AB does not apply to false allegations or statements made beyond the scope of the proceedings. By way of an example relevant to this case, a false allegation or statement made in a domestic violence complaint does not attract s 117AB unless the same allegations are repeated in the family law proceedings.
This new legislative provision amends the discretionary position that the Court otherwise has with respect to the issue of costs. See Penfold v Penfold (1981) 44 CLR 311 for the prior position. By s 117AB(2), where false allegations or statements are made, it is now mandatory that the Court order the offending party to pay some or all of the other party’s costs. For this purpose the Court is also able to make an order in favour of an Independent Children’s Lawyer. The only aspect of this issue which is discretionary is the quantum of costs payable by the offending party.

Do the wife’s allegations or statements attract s 117AB?

Whether a false statement is made “knowingly” is judged by reference to the civil standard of proof. Section 140 of the Evidence Act 1995 (Cth).
Commencing August 2004 the wife started keeping notes of remarks she says the children were making about their father. These are detailed in paragraphs 57 – 59 inclusive of her trial affidavit. She said further complaints arose from about early September to October 2004, the details of which are referred to in my judgment and summarised in an apprehended violence complaint and summons sworn by Constable D on 13 December 2004. Following service of the apprehended violence complaint and summons, on 14 December 2004 the husband commenced these proceedings. On 16 December 2004, the wife gave oral evidence before Justice Waddy. At paragraph 85 of my judgment I made findings that contrary to her evidence that:
“She had not made any complaint or report concerning the children or father …. She was an active reporter and complainant. The mother’s evidence shows that she is prepared to mislead this Court and suggests she knew the risks she ran if her involvement in these latter investigations was discovered.”
The effect of this is that I am satisfied that on 16 December 2004 and in the final hearing, the wife knowingly made a false statement. This is an important issue, indeed one of the central issues in the proceedings.
At paragraph 86 of my judgment I find:
“The mother explained she believes that each and every allegation she attributes to the children”.
After analysing the wife’s allegations, at paragraph 92 I made the following findings:
“The fact that when explicitly invited to discuss their father the children failed to make allegations of the type the mother makes, raises a number of possibilities. Firstly, the mother accurately records the children’s complaints, but the children have forgotten them. If the children had complained to the mother in the manner she alleges, I would have expected at least some of those concerns would have remained alive in the children’s memory. When [Dr Q] explicitly explored ‘bad things’ that may have happened with their father, this was a trigger for what may otherwise have been dormant memories. That the children, particularly [C] given her age, have no recall at all, makes this first scenario unlikely. Secondly, that the children made statements something like those alleged by the mother which she has misinterpreted and misreported. Given the mother’s note taking, this seems unlikely. The third scenario is that the mother has exaggerated relatively innocuous remarks made by the children and turned them into allegations which bear no relationship to the children’s reality. This is the most likely scenario. Finally, that the entire suite of allegations are fabrications. While this is possible, the father agrees he kisses the children. It may be this information provides a scaffolding of reality for one style of the mother’s complaints and the remainder falls across scenario three and four spectrum”.
My finding that some of the wife’s allegations are fabrications introduces the mental element which turns a wrong statement into a deliberate falsehood. This means I am satisfied she knowingly made a false allegation or statement. Again this was a central issue. So that there can be no doubt that the wife adopted her complaints and allegations made to police in these proceedings, at paragraph 112 I find:
“At the close of her case, the mother maintained the veracity of each and every allegation made against the father post 30 April 2004. That is, not only that she has accurately reported the children’s complaints but that the father behaved in the manner described”.
Section 1117AB thus applies and the Court must make a costs order in the wife’s favour.

Determination of quantum

There is no statutory guideline concerning the manner in which the Court determines the quantum of costs payable pursuant to s 117AB. The factors which ordinarily influence the Courts discretion about whether an order will be made at all (s 117(2A) purport to relate only to the exercise of that discretion and not to the separate issue of the quantum of a costs order which s 117AB mandates. Nonetheless s 117(2A) contains a useful structure of relevant considerations when determining the quantum of an s 117AB order.
Both parties completed financial statements. The wife’s financial circumstances are as set out in her financial statement filed 14 February 2007. She has a total average weekly income of $455.15, comprising parenting payment, child support and family tax benefits. She has assets to the total value of $270,549, the most significant of which is her home at BB worth $265,000. In liquid assets, the wife has $49 savings. Her liabilities total $81,247.54, of which $78,747.54 is outstanding on a mortgage. The wife spends all of her income in meeting her and the children’s necessary expenses. She has no money remaining and no capacity to meet higher mortgage costs or additional loan repayments. The effect of this finding is that anything other than a modest costs order against the wife is likely to require the sale of the home in which she and for half of the time, the children live. Such an outcome is almost certain to cause the children great distress.
The husband filed his financial statement on 20 December 2006. As cross-examination quickly revealed, his financial statement is quite misleading. For example, the husband says he earns $1,200 per week when he actually earns $1,346 per week. As the husband saw his accountant so as to complete his taxation return only seven days earlier, it is unlikely the figure contained in his financial statement was inserted in error. The husband said he does not have a bank account. In cross-examination he conceded he has a bank account with a Building Society into which his wages are paid. He failed to disclose advancing $40,000 to his brother A so that A could acquire property in which the husband will live for years to come. He has 907 IAG shares worth approximately $4,500 which he failed to disclose. The effect of these findings is that the husband has approximately $30 a week over and above his and the children’s necessary expenses. He has assets of at least $48,000, the most significant of which is the advance to A. The husband’s liabilities total $56,666, the most significant of which is $37,675 he owes another brother, H. This relates to advances H made so that the husband could meet legal expenses incurred in these proceedings. The husband has superannuation worth $59,410.
Comparatively, the husband has considerably greater income than the wife. The wife’s assets exceed the husband’s. However, the husband has arranged his financial affairs in a fashion which gives him an equitable interest in property and enables him to have secure accommodation at least until R reaches her majority. I was not impressed by the manner with which the husband answered questions from Mr Jurd concerning his finances and was left with a distinct sense of unease that the husband conceded only those matters which he apprehended Mr Jurd was able to prove. The parties’ comparative financial circumstances weigh in favour of the wife’s position.
The wife received a grant of legal aid from 18 August 2005 for which she was required to make a financial contribution of $75. This does not influence the outcome of the application.
Section 117AB considerations overlap with s 117(2)(A)(c) conduct considerations. Other than the matters already referred to there are no additional conduct issues which require consideration. Conduct issues significantly favour the husband.
Non-compliance issues do not arise.
In his application for interim orders, the husband was wholly unsuccessful. He failed in his substantive application, which was his only application on foot until 25 September 2006. Throughout the final hearing and in closing addresses, the husband strongly pressed his application that the children live with him. He also sought a period of months during which the children and the wife did not spend time together or communicate with each other. The wife was completely successful in arguing against these positions. The vast majority of the hearing and closing argument was addressed to the husband’s primary application. Although he succeeded in his alternate application, it was far from the focus of these proceedings. The comparative success of each of the parties’ positions slightly favours the husband.
Neither party made offers to settle.
The wife emphasises that the husband initiated these proceedings. She says the proceedings were unnecessary and the issues which concerned the husband were capable of exploration and resolution more cheaply in the domestic violence proceedings. This submission side steps that the apprehended violence proceedings sought, at order 13, to prohibit contact between the husband and the children. I accept the husband’s submission that in order to preserve his relationship with the children, he required this Court’s intervention and consideration in a wider sense, of the impact upon him and the children of the wife’s actions. Mr Jurd pointed out that following upon completion of the 2004 parenting proceedings, it is apparent the husband kept a detailed diary concerning matters involving the wife and his contact with the children. To a considerable degree, this demonstrates the husband prepared for another round of litigation. I accept he did. It seems likely however, that he prepared to defend further allegations from the wife rather than initiate proceedings against her. The wife forced his hand when she took her complaints and allegations to police and others. This finding weighs in favour of the husband’s costs application.
The next issue requiring consideration is whether the husband’s costs ought to be ordered on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340 the Full Court held that an indemnity costs orders is a very great departure from the normal standard. Their Honours cited with approval Sheppard J in Colgate Palmolive Co & Anor v Coussins Pty Ltd (1993) 46 FCR 225. Sheppard J lists examples of circumstances which have resulted in indemnity cost awards. Relevantly, these include: “Making of allegations of fraud knowing them to be false” and “the making of allegations which ought never to have been made”. Concerning indemnity costs, His Honour held:
“The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis”.
In the family law context, however, as the Full Court said in Kohan:
“Even in cases where there has been dishonest concealment of assets or income …. No more than party and party costs have been awarded”.
Arguing against indemnity costs, Mr Jurd highlighted that the commencement of the Family Law Amendment (Shared Parental Responsibility) Act 2006 changed the applicable law and that it was reasonable, having regard to Dr Q’s report, for the wife to resist the husband’s primary and alternate applications. Particularly when one considers the children’s desire to continue living with their mother and that she has been their primary carer all their lives. I do not accept Mr Austin’s submission that at least from release of Dr Q’s report the wife’s position was untenable. Although Dr Q’s report and evidence seriously damaged the wife’s allegations, neither party, nor their legal advisers, could have confidently predicted the outcome of these proceedings.
Thus, notwithstanding that other courts have determined that “the making of allegations which ought never have been made” warrant an indemnity costs order, having regard to the totality of circumstances in this case, I am not persuaded an indemnity costs order is appropriate.
Calculated in accordance with the Family Law Rules, since 14 December 2004 the husband incurred costs in the vicinity of $43,000. Concerning the hearing, other than 25 September 2006, counsel appeared uninstructed. The trial costs are $12,780. Concerning affidavit preparation, I have no difficulty accepting Mr Jurd’s analysis concerning the prolix and to a considerable extent, irrelevant nature of evidence included in the husband’s affidavit. A considerable portion of his affidavit appeared to be nothing more than the husband’s computerised diary presented in affidavit structure. Taking this, the husband’s failure before Justice Waddy and the other findings I have made into account, I am satisfied that the proper and just costs order is that the wife pay 25 per centum of the husband’s final hearing costs. This means she must pay him $3,195.
Having regard to the wife’s financial circumstances, she will have a longer than usual period within which to pay the husband. A period of nine months strikes an appropriate balance between the husband receiving his payment and the wife having a proper period within which to save the amount due. If payment is not made at nine months, interest calculated in accordance with the Family Law Rules will accrue.
For these reasons I make the orders identified at the beginning of this judgment.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan

Associate:

Date: 2 March 2007.

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as SHARMA & SHARMA