Sweet & Sweet (No 2)
[2022] FedCFamC2F 1078
Federal Circuit and Family Court of Australia
(DIVISION 2)
Sweet & Sweet (No 2) [2022] FedCFamC2F 1078
File number(s): MLC 4622 of 2021 Judgment of: DEPUTY CHIEF JUDGE MCCLELLAND Date of judgment: 16 August 2022 Catchwords: FAMILY LAW – COSTS – Where the mother seeks an order for costs on an indemnity basis following the conclusion of the final parenting and property proceedings – Where the parties came to an agreement in September 2021 for the property proceedings to be resolved – Where the father withdrew his consent to resolve the property proceedings – Where the father was wholly unsuccessful in the final parenting and property proceedings – Where the father’s conduct does not justify an order for indemnity costs – Party/party costs ordered in a lump sum from date of September 2021 agreement Legislation: Family Law Act 1975 (Cth) ss 102NA, 117
Family Law Rules 2004 (Cth) r 19.18
Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) r 12.17
Cases cited: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Legal Aid ACT & Westwell (2021) 62 Fam LR 546; [2021] FamCAFC 50
Moy & Pao [2022] FedCFamC1A 17
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Prantage v Prantage (Costs) [2014] FamCA 850
Rimac and Rimac (No 2) [2022] FedCFamC1F 159
Robinson & Higginbotham (1991) FLC 92-209; [1991] FamCA 5
Somers & Ettridge [2020] FamCAFC 37
Stasiuk & Guild [2021] FamCAFC 62
Stoian v Fiening (Costs) [2014] FamCA 944
Sweet & Sweet [2022] FedCFamC2F 676
Division: Division 2 Family Law Number of paragraphs: 40 Date of last submission/s: 24 June 2022 Date of hearing: On the papers Place: Sydney The Applicant: Litigant in person (did not participate) Counsel for the Respondent: Ms Damon Solicitor for the Respondent: Cahill & Rowe Family Law ORDERS
MLC 4622 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR SWEET
Applicant
AND: MS SWEET
Respondent
order made by:
DEPUTY CHIEF JUDGE MCCLELLAND
DATE OF ORDER:
16 August 2022
THE COURT ORDERS THAT:
1.Pursuant to r 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), within 28 days of the date of these orders, the applicant father is to pay the costs incurred by the respondent mother, in the period subsequent to 17 September 2021, in the fixed sum of $40,100.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sweet & Sweet has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
DEPUTY CHIEF JUDGE MCCLELLAND:
INTRODUCTION
Ms Sweet (“the mother”) was the respondent in property and parenting proceedings commenced by Mr Sweet (“the father”). Following the delivery of a final judgment, Sweet & Sweet [2022] FedCFamC2F 676 (“the final judgment”), the mother seeks an order for costs in respect to those proceedings, including on an indemnity basis in respect to costs incurred after the father withdrew from an agreement regarding the property aspect of the parties’ dispute.
I have determined that, up until the time that the father rejected a reasonable offer of settlement made by the mother, the provisions of s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) should apply such that it is to be presumed that each party should be responsible for their own legal fees. I have further determined, however, that the father should pay fixed costs as assessed on a party/party basis in respect to the period consequent to his imprudent rejection of a reasonable offer of settlement that was made by the mother.
Background
In 2021, the father commenced proceedings in the Federal Circuit Court of Australia (as it was then known) seeking parenting orders in respect to the parties’ three children.
On 4 June 2021, the mother filed an Amended Response to an Initiating Application in which she proposed that interim orders be made for the children to spend supervised time with the father, subject to the father undergoing appropriate drug screening.
On 15 July 2021, the father filed an Amended Application for Final Orders seeking property orders in addition to the parenting orders.
On 10 August 2021, the mother filed her Amended Response in relation to the property orders sought by the father.
On 17 September 2021, the parties attended private mediation in respect to the property aspect of their dispute and reached agreement, which was recorded in final heads of agreement that was signed by both parties on the day. That agreement provided for the former matrimonial home to be transferred to the mother and for the mother to make a financial adjustment to the father in the sum of $110,000. That payment was in addition to the mother transferring a substantial portion of her superannuation to the father.
On 6 October 2021, the father withdrew his consent to the heads of agreement by way of correspondence.
On 11 October 2021, the mother’s solicitors wrote to the father confirming that the mother remained willing to resolve the property aspect of the parties’ proceedings in accordance with the heads of agreement. That offer was repeated on 17 February 2022. The mother maintained that position up to and including the trial of these proceedings, which commenced for three days on 5 April 2022.
On 18 March 2022, the mother filed a Further Amended Response to an Initiating Application in which she proposed final parenting orders that provided for the father to spend supervised time with the children initially, with a program in place for that time to increase subject to the father attending for drug testing and engaging in psychological therapy.
On 27 May 2022, I delivered a final judgment which, most relevantly, provided for each party to retain their superannuation and for the former matrimonial home to be transferred to the mother, subject to the mother making a cash adjustment to the father in the sum of $33,271. I also made an order permitting the mother to apply for an order for costs by providing written submissions within 14 days of the date of the orders. Further, the father was entitled to file a response through written submissions within 14 days of the mother’s submissions.
On 10 June 2022, the mother provided her written submissions in relation to costs. The mother’s proposed order sought that “within 45 days, the Applicant father pay the Respondent mother’s costs fixed in the sum of $71,549.”
The father did not file any response to the mother’s submissions. Judgment was reserved on 24 June 2022, being the end date of the time allowed for the father to file his respective written submissions.
Relevant legal principles
The general rule, as set out in s 117(1) of the Act, is that each party to the proceedings shall bear his or her own costs. This is, however, subject to s 117(2) of the Act which provides that if the Court is satisfied that there are circumstances justifying it, the Court may make an order as to costs as it considers just. Beyond the “essential preliminary” consideration of those matters set out in s 117(2A) of the Act, there is no “additional or special onus” on the applicant for the Court to make an order for costs: Penfold v Penfold (1980) 144 CLR 311 at [13].
In considering whether it is appropriate and just to make an order for costs in favour of a party, it is unnecessary for the Court to be satisfied in respect to each and every factor set out in s 117(2A) of the Act: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at [41], nor does any factor set out in s 117(2A) of the Act have priority over another: Prantage v Prantage (Costs) [2014] FamCA 850 at [12].
consideration
It is convenient to address the relevant factors set out in s 117(2A).
Section 117(2A)(a) - The financial circumstances of the parties
I have taken into consideration and set out in the final judgment the fact that the father has had a lengthy period of unemployment. His income was initially supported by way of a disability entitlement associated with an injury to his right hand and, more recently, has been benefited by weekly social security payments. On the other hand, it is relevant that, pursuant to the orders made on 27 May 2022, the father will receive a lump sum payment of $33,271.
Section 117(2A)(b) - Whether a party is in receipt of legal aid
As a result of the mother’s allegations of the father perpetrating acts of family violence against her, orders were made pursuant to s 102NA of the Act that prevented the parties from cross-examining each other. In those circumstances, the father was provided with legal representation for the hearing of this matter by the Victorian Legal Aid Commission.
In Legal Aid ACT & Westwell (2021) 62 Fam LR 546, after conducting a textual analysis of s 117, the Full Court held at [40] that the reference to “legal aid” within s 117 “does not include a reference to the provision of funding of a lawyer under s 102NA.”
Accordingly, the fact that the father was represented by lawyers funded by the Victorian Legal Aid Commission is not a relevant consideration in this matter.
Section 117(2A)(c) - Conduct of the proceedings
In the final judgment published on 27 May 2022, I expressed concern in respect to the manner in which the father presented during the course of the proceedings. The father’s presentation, including derogatory comments he made in respect to the mother, was a matter that I took into consideration in the orders that I made. It could not be said, however, that the manner in which the litigation was conducted by the legal representatives of the father was anything other than entirely proper and appropriate. Accordingly, I have not had regard to the manner in which the father presented during the course of the proceedings in considering the mother’s application for costs.
Section 117(2A)(d) - Failure to comply with orders
A significant issue in the primary proceedings was the fact that the father had failed to present for drug screening in accordance with interim orders made by the Court. Had he done so, the outcome of the parenting aspect of the proceedings may well have been different. The fact that the father failed to comply with those orders was ultimately to his prejudice, however, it is not a relevant consideration in the decision I have made to award costs against him.
Section 117(2A)(e) - The father was wholly unsuccessful in the proceedings
In Robinson & Higginbotham (1991) FLC 92-209 at 78,417, Nygh J stated that the concept of being wholly unsuccessful is “a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed.”
It is highly relevant to my decision to award costs in favour of the mother that the father was wholly unsuccessful in obtaining the orders he sought in respect of both the parenting and property aspects of his application.
Section 117(2A)(f) - The father’s withdrawal from previous agreement in respect to the property aspect of the proceedings
It is highly relevant to my decision to award costs in favour of the mother that, as previously noted, on 17 September 2021 the parties reached agreement in respect to resolving the property aspect of the dispute. That agreement was reduced to writing and falls within the contemplation of s 117(2A)(f) of the Act. The father’s rejection of the mother’s offer of settlement was imprudent. Pursuant to the terms of the agreement, the father would have obtained a substantial portion of the mother’s superannuation and, in addition, would have received a lump sum cash adjustment in the sum of $100,000. The outcome of the proceedings, however, is that the mother will retain superannuation that is currently in her name and she will be required to make a cash adjustment to the father of $33,271.
Costs order to be made in favour of the mother
For these reasons, I am satisfied that it is in the interests of justice for an order for costs to be made in favour of the mother as and from 17 September 2021.
What should be the quantum of costs?
The mother relied upon the authorities referred to in Rimac and Rimac (No 2) [2022] FedCFamC1F 159 (“Rimac”) when justifying an order for costs against the father on an indemnity basis. This is in circumstances where she contends that the father has imprudently rejected a reasonable offer of settlement.
In Somers & Ettridge [2020] FamCAFC 37, Strickland J confirmed at [18] that “an imprudent refusal of an offer of compromise” might, in an appropriate case, warrant the exercise of discretion to award indemnity costs.
For reasons which I have set out, it was unquestionably imprudent for the father to have rejected the mother’s offer of settlement that led to the parties signing agreed terms on 17 September 2021. However, that agreement related only to the property proceedings and not to the parenting proceedings.
I have also considered that the mother had acted entirely reasonably in respect to both the interim and final parenting orders that she sought which, by way of summary, provided for the children to spend time with the father, initially on a supervised basis, with that time increasing on a graduated basis subject to the father undertaking drug screening and taking steps to address his mental health challenges.
I have also taken into consideration that the mother was effectively forced to litigate this matter, in circumstances where it was the position of the father that orders should not be made for the children to spend time with him unless those orders provided for that time to be unsupervised.
The mother has persuasively argued similarities between the facts of this case and the matter of Rimac to which I have earlier referred. However, there is a significant point of distinction. The offer of settlement that I found the father in Rimac to have imprudently rejected would have resolved the entirety of the proceedings. That was not the situation in this case. The resolution of the property aspect of the proceedings would nonetheless have left the parenting aspect of the parties’ dispute on foot. This is in circumstances where the hearing was substantially occupied by matters relating to the parenting aspect of the dispute.
Accordingly, while I have had regard to the father’s imprudent rejection of the mother’s offer of settlement on 17 September 2021 and the proceedings following as justifying an order for costs in favour of the mother, the father’s conduct in that respect is not such that it justifies an order for indemnity costs in favour of the mother. In that respect, I note that the Full Court has repeatedly stated that indemnity costs in family law proceedings should only be ordered in “exceptional circumstances”: Moy & Pao [2022] FedCFamC1A 17 at [29] citing Stasiuk & Guild [2021] FamCAFC 62 at [4] and Kohan and Kohan (1993) FLC 92-340.
Should costs be ordered in a fixed sum?
It is to be noted that I propose to order that the father pay the mother’s costs in respect to the period subsequent to 17 September 2021.
Rule 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) set outs the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
In this matter, the mother has suffered a significant financial and emotional burden as result of this litigation which, for reasons I set out in my primary decision, she was effectively compelled to conduct. It would be unfortunate in those circumstances if the mother was forced to incur further expenses and delay associated with arranging for her lawyers to prepare an assessed and taxed bill of costs. I am therefore satisfied that it is appropriate to make an order for the father to pay the costs of the mother in a fixed sum.
The difficulty I have is that the costs assessed by the mother’s lawyers in respect to the period subsequent to 17 September 2021 have been assessed on an indemnity basis. I am nonetheless satisfied that a fixed sum that is logical, fair and reasonable in respect to the mother’s costs during that relevant period, as assessed on a party/party basis, would be the equivalent of two thirds of the amount that has been assessed on an indemnity basis.
For those reasons, the order I make is for the father to pay the costs incurred by the mother in the fixed sum of $40,100 being approximately two thirds of the costs sought on an indemnity basis. Those costs are to be paid within 28 days of the date of these orders.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Deputy Chief Judge McClelland. Associate:
Dated: 16 August 2022
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