Suen & Kaw
[2021] FamCA 509
•20 July 2021
FAMILY COURT OF AUSTRALIA
Suen & Kaw [2021] FamCA 509
File number(s): SYC 1880 of 2019 Judgment of: ALTOBELLI J Date of judgment: 20 July 2021 Catchwords: FAMILY LAW – COSTS – Father seeks indemnity costs of a review application filed and discontinued by the maternal grandparents – Consideration of s 117(2A) factors – Where Court views that costs order would detrimentally affect relationship between the parties and consequently the child’s wellbeing – Application for costs dismissed. Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.18
Cases cited: Bhatt & Acharya (Costs) [2017] FamCAFC 71
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; [1993] FCA 536
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Hillier & Olly [2017] FamCA 2
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
Lenova & Lenova (Costs) [2011] FamCAFC 141
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Phillips & Hansford [2020] FamCAFC 28
Ventura & Ventura [2020] FamCA 1127
Number of paragraphs: 40 Date of last submission/s: 31 May 2021 Date of hearing: 31 May 2021 Place: Sydney Counsel for the Applicant: Ms Stenmark SC Solicitor for the Applicant: AHL Legal Counsel for the Respondents: Ms Beck Solicitor for the Respondents: Lin Tang & Co Counsel for the Independent Children's Lawyer: Mr Fermanis Solicitor for the Independent Children's Lawyer: Claremont Legal ORDERS
SYC 1880 of 2019 BETWEEN: MR KAW
Applicant
AND: MR SUEN AND MS CHUNG
Respondents
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
20 JULY 2021
THE COURT ORDERS THAT:
1.The father’s application that the maternal grandparents pay his costs of and incidental to the Application in a Case filed by the maternal grandparents on 22 February 2021 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Suen & Kaw has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
These reasons for judgment explain the orders that the Court has made dismissing the application for costs made by the father.
BACKGROUND
This is a tragic case. At the centre of the conflict is a seven year old boy, X. In 2018 X and his parents were involved in a motor vehicle accident. At the time, the vehicle was being driven by the father. Three days later X’s mother died as a result of the injuries she suffered in this accident. The father was charged in relation to the motor vehicle accident, pleaded guilty, and then sentenced to 200 hours of community service which he has now completed.
On 30 May 2019, his Honour Judge Monahan made orders by consent that X would live with his father and spend time with the maternal grandparents. Those orders were varied on 15 October 2019 for X to spend more time with the maternal grandparents. The grandparents made a further attempt to increase their time with X before Senior Registrar Campbell as he then was on 2 February 2021, but that application was dismissed.
By way of an Application in a Case dated 22 February 2021, the grandparents asked the Court to review the orders made by Senior Registrar Campbell and to make further and specific orders in relation to school holiday time. In the father’s Response to that Application in a Case, he proposes that the application be dismissed and that the grandparents pay his costs on an indemnity basis, or alternatively on a party-party basis. On 21 May 2021, the grandparents filed a Notice of Discontinuance of their application for review. Thus, when the matter came before the Court on 31 May 2021, the sole issue was costs. On this basis, the Independent Children’s Lawyer was excused. For the purposes of this judgment, the father will be referred to as the Applicant and the grandparents will be referred to as the Respondents.
By way of further background there are separate proceedings currently underway between the parties in the Probate List of the Supreme Court of New South Wales Equity Division arising out of the estate of X’s late mother.
THE MATERIAL BEFORE THE COURT
There is some expert evidence relied upon by the parties that is relevant background to the costs application. First, there is the single joint expert report dated 12 March 2020 prepared by Ms B, a forensic and clinical psychologist, marked by the Court as exhibit A4. Next, there is a report from Mr C dated 25 January 2021, marked by the Court as exhibit R19. He is the treating psychologist for the maternal grandparents. Finally there is the report of Ms D dated 10 May 2021, annexed to her Affidavit filed on the same date and marked by the Court as exhibit A5. Ms D is a registered psychologist who has been providing treatment to X, his father and maternal grandparents.
In support of his case, the Applicant relied on the following documents:
(a)His Response to an Application in a Case filed 9 November 2020;
(b)His Affidavit filed 9 November 2020;
(c)His Affidavit filed 2 February 2021;
(d)His Affidavit filed 7 May 2021;
(e)His Case Outline document filed 7 May 2021;
(f)His Response to an Application in a Case filed 10 May 2021;
(g)His Affidavit filed 31 May 2021; and
(h)Various pieces of correspondence tendered as exhibits A1 to A3.
In support of their case, the Respondents relied on the following documents:
(a)Their Initiating Application filed 26 March 2019;
(b)Their Notice of Risk filed 26 March 2019;
(c)Their Reply filed 27 May 2019;
(d)Their Application in a Case filed 29 September 2020;
(e)Their Case Outline document filed 3 May 2021;
(f)Affidavit of the maternal grandfather filed 30 May 2021; and
(g)Various pieces of correspondence tendered as exhibits R1 to R18.
THE APPLICABLE LAW
The law relating to costs in family law proceedings is well settled and is set out in detail in the Full Court decision of Parke & The Estate of the Late A Parke (2016) FLC 93-748.
An application for costs is governed by s 117 of the Family Law Act 1975 (Cth) (‘the Act’). Section 117(1) of the Act sets out the general presumption that each party to the proceedings shall bear their own costs. This is subject to s 117(2), which provides that:
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) and (5) and the applicable Rules of Court, make such order as the court may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) sets out the matters that the Court is to have regard to:
(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 the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
Although the Court is required to consider each of the abovementioned factors, it is plain that their relevance to a particular matter will depend upon the circumstances of that case and they should be considered in that light. That is, no one factor prevails over another and it is a question of the weight that is to be afforded to each of the relevant factors depending on the circumstances of the matter: Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]. There is also “nothing to prevent any factor being the sole foundation for an order for costs”: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at [41].
Whilst the applicant in a costs application must establish the circumstances justifying the making of a costs order, the Court is not limited to making such an order only in what has been described as a "clear case": Penfold v Penfold (1980) 144 CLR 311.
THE COMPETING CONTENTIONS SUMMARISED
The father appeared with senior counsel. After some clarification, it became apparent that notwithstanding the terms of the orders sought in the father’s Response to an Application in a Case filed 10 May 2021, he only sought an order for costs against the grandparents, preferably on an indemnity basis, but alternatively on a party-party basis. In substance, the father’s case for costs contended that not only was the application for review of the Senior Registrar’s decision an abuse of process and doomed to fail, but so too was the substantive application before the learned Senior Registrar. Senior counsel accepted that the issue of any costs arising out of the application before the Senior Registrar that resulted in his orders made 2 February 2021 was not a matter before the Court. Nonetheless, senior counsel argued that the application for review was baseless and plainly unreasonable, and the filing of the Notice of Discontinuance reflected this. The best evidence in support of this was the expert evidence, and particularly the report of Ms D.
The maternal grandparents were represented by counsel. Whilst it was conceded that they had filed a Notice of Discontinuance, it was submitted that the expert evidence was not nearly as clear as the father contended. Their request for school holiday time was supported by the single expert and, initially, the Independent Children’s Lawyer. It was only when the report of Ms D became available, and the Independent Children’s Lawyer withdrew her support for their application, that the grandparents accepted the need to discontinue the proceedings. Counsel accepted that their client’s application was wholly unsuccessful but submitted, in effect, that in the overall context of this case the general rule, of each party paying their own costs, should be followed.
The Independent Children’s Lawyer did not seek costs from either party. No submissions were therefore made on behalf of the Independent Children’s Lawyer but the Court very much appreciates the analysis of the expert evidence contained in the Independent Children’s Lawyer’s Case Outline document filed 11 May 2021. Based on the Court’s own reading of the reports in question, the Case Outline is an accurate summary.
It is clear from the single joint expert report of Ms B that the grandparents were having difficulty prioritising X’s needs in the face of their own overwhelming experience of grief. The expert was concerned about X’s disclosures that his grandparents had spoken with him about his mother’s death, and attributing fault to his father. Her own impression was that the grandparents had a strong negative view of the father. This placed X in an untenable position. Whilst it was important for X to spend time with his grandparents, the grandparents needed to demonstrate capacity to manage their emotions and prioritise his emotional wellbeing. They would need assistance with a qualified psychologist, and if they were able to enhance their capacity in this regard, then X would be able to spend more time with them. However, Ms B made it very clear in her report that if the grandparents could not demonstrate clinically meaningful improvements in their capacity to manage their emotions and encourage X’s relationship with his father, their time with X should remain as is, with changeover occurring at school. Ms B expressly noted that this may require the suspension of time during school holidays.
The grandparents consulted Mr C, a psychologist, and clearly in response to the concerns raised in the report of Ms B. He produced a report which, at its highest, suggested that the maternal grandparents had begun to learn not to show hatred for X’s father “though still need to work on this”. It is important to give credit to the maternal grandparents because their engagement with their psychologist was quite extensive between 23 September 2020 and 19 January 2021. Notwithstanding this, the Independent Children’s Lawyer was particularly concerned about the father’s evidence that on 28 December 2020 he had a conversation with X who told him that his grandparents had called his father an idiot and a brute who was responsible for causing his mother’s death. If this is correct, it would suggest that notwithstanding the maternal grandparents’ extensive involvement with their psychologist, they were still struggling to cope with their grief and persisted in expressing a strong negative view about their father.
Ms D had the benefit of meeting with X, his father, and his grandparents. She described X as experiencing grief at the loss of his mother, expressing confusion about the current arrangements of him spending time with the grandparents, of demonstrating a good knowledge of the conflict between the grandparents and the father, and of being severely distressed by these conflicts because unpleasant comments were often made in front of him. She urged the grandparents to continue their engagement with a psychologist to address their own grief and to increase their readiness to resolve the grievance with the father. She urged them to understand the impact of this on X, and to prioritise his emotional wellbeing. She recommended completion of parenting programs but, unless they could demonstrate improvement in setting boundaries with X, she could not recommend any changes to the current arrangements.
Thus, the Court observes, the expert evidence did not support the maternal grandparents’ application to spend more time with X. Indeed, even their own treating psychologist’s report was largely unhelpful.
THE SECTION 117(2A) CONSIDERATIONS
None of the parties in this case are in a strong financial position. The litigation about the estate of the late mother will do very little to improve the situation. The evidence suggests that the maternal grandparents are almost impecunious, and rely on others for assistance, particularly in relation to legal costs. Mere impecuniosity is not a reason in itself for declining to make a costs order: see, eg, Lenova & Lenova (Costs) [2011] FamCAFC 141; Bhatt & Acharya (Costs) [2017] FamCAFC 71. The financial circumstances of each party is a matter that the Court takes into account.
None of the parties in this case are in receipt of assistance by way of legal aid.
In relation to the conduct of the parties to the proceedings, there was a delay between the maternal grandparents becoming aware of the contents of Ms D’s report and the filing of the Notice of Discontinuance. In some respects, this was probably not productive of expense to the father because he had already filed his material, but that probably masks the reality that further costs were incurred in preparation for the interim hearing. The Court was not able to ascertain why there was a delay. It would have been far better if the grandparents filed the Notice of Discontinuance earlier than they did. This is a matter that the Court takes into account.
Further in relation to the conduct of the grandparents, the father submits that they were pursuing an application that lacked merit, particularly having regard to the available expert evidence, even that of the grandparents’ own psychologist. If one puts aside the reality of the grief that the grandparents must be experiencing, it is hard to understand why they persisted in their quest for more time. The Court suspects that their grief impaired their ability to consider this matter clearly and objectively. By the time that Ms D’s report had been made available to the grandparents on or about 10 May 2021, it should have been clear to them that their application was highly problematic. This is a matter that the Court takes into account.
The proceedings were not necessitated by the failure of any one to comply with orders of this Court.
Even counsel for the maternal grandparents conceded that they had been wholly unsuccessful in their application to review the decision of the learned Senior Registrar. This must follow as a result of the filing of the Notice of Discontinuance. This is a matter that the Court takes into account.
The correspondence between the lawyers for the parties pertaining to the application for review was in evidence. In an email dated 12 May 2021, the Independent Children’s Lawyer asked whether the maternal grandparents were pressing their application for review. In an email of the same date, the solicitor for the maternal grandparents confirmed that he would seek instructions. About a week later, on 20 May 2021, the solicitor for the maternal grandparents sought the consent of the parties to withdraw the review application. The solicitor for the father replied on the same day indicating there was no consent to the withdrawal with no order as to costs, and requested consent orders to provide for the maternal grandparents to pay the father’s costs on an indemnity basis. Beyond this, it is not evident to the Court that any other offers of settlement were made. This is a matter that the Court takes into account.
The Court is entitled to take into account such other matters as it considers relevant. The Court takes into account the following matters.
The grief experienced by all of the parties, but especially the maternal grandparents in this case, is palpable. All of the expert reports refer to the same. The Court accepts that, as a general proposition, grief distorts one’s ability to see and think clearly.
The maternal grandfather is clearly in very poor health. He is being treated for stage III cancer. He has had surgery relating to this. He is currently undertaking his third cycle of chemotherapy. His treating doctor describes his prognosis as unknown. He was too ill to attend the hearing of the costs application.
Despite the conflict between the important adults in X’s life, his relationship with his grandparents is clearly important. Yet, they lack insight about his needs and cannot contain their own intensely negative feelings about his father. Ms B specifically identified that their actions were not due to malicious intent, but was a product of their own grief. It is possible, therefore, that their grief will abate over time.
Despite the current dysfunctional relationship between X’s father and grandparents, they will need to continue to have some form of future relationship.
The making of a costs order against the maternal grandparents is unlikely to assist with the grief that they, or the father, is experiencing. It is unlikely to ameliorate the maternal grandfather’s health. It is hardly likely to improve the relationships between the most important adults in X’s life. In short, it is hard to understand how it could be in X’s best interests to make the costs order sought by his father. Conversely, to make the costs order might only aggravate the litigation between the father and the grandparents, both in this Court and in the Supreme Court.
INDEMNITY COSTS
The father sought that the maternal grandparents pay costs on an indemnity basis.
It is well settled that when costs are ordered by this Court, such costs are payable on a party-party basis. It has been held that the Court should not lightly depart from the ordinary rule: Kohan & Kohan (1993) FLC 92-340.
The provision relating to the calculation of costs is governed by r 19.18(1) of the Family Law Rules 2004 (Cth) (‘the Rules’) which is as follows:
19.18 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
The rule further provides that:
(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d) whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre‑action procedures; and
(f) expenses properly paid or payable.
In relation to an award of indemnity costs, the Full Court decision of Phillips & Hansford [2020] FamCAFC 28, helpfully summarises the position as follows:
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).
While the maternal grandparents were wholly unsuccessful in their application, the Court’s impression is that their application was not a hopeless one, at least before the release of Ms D’s report. As in the case of party-party costs, the decision to award indemnity costs is a discretionary one: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225. The Court is not satisfied that the conduct of the maternal grandparents, and their delay in filing the Notice of Discontinuance, was so exceptional as to warrant the making of an indemnity costs order.
CONCLUSION ABOUT COSTS
This is a case where there the child is not only coming to terms with the loss of his mother, but also faced with the distressing reality of ongoing conflict between his father and his maternal grandparents. As discussed above, the Court has wide discretion in determining whether or not to make a costs order. There have been cases where the Court has declined to make costs orders in circumstances where making of such order would further jeopardise a relationship against a child’s best interests: see, eg, Hillier & Olly [2017] FamCA 2; Ventura & Ventura [2020] FamCA 1127. This is such a case. This Court is concerned that any costs order would only exacerbate the conflict between the father and the maternal grandparents, to X’s detriment. Having considered the factors in s 117(2A) in their totality, my view is that s 117(1) applies and each party is to bear their own costs.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 20 July 2021
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