Turner & Alexander (No 2)

[2014] FamCA 334

FAMILY COURT OF AUSTRALIA

TURNER & ALEXANDER (NO. 2) [2014] FamCA 334

FAMILY LAW – COSTS – Where the father seeks fixed costs of and incidental to the trial or in the alternative as assessed – where the father does not seek the entirety of his costs – consideration of the factors in s 117(2A) – consideration of costs in parenting matters – where the mother was wholly unsuccessful – the mother’s conduct of the proceedings considered – consideration of the quantum of costs – costs order made for sum less than that sought by the father.

Family Law Act 1975 (Cth) s 117

Green & Knowles (No. 2) [2009] FamCA 541
I and I (No 2) (1995) FLC 92-625

APPLICANT: Mr Turner

RESPONDENT: Ms Alexander

FILE NUMBER: MLC 7872 of 2007

DATE DELIVERED: 22 May 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATES: By way of written submissions

SUBMISSIONS RECEIVED FROM

COUNSEL FOR THE APPLICANT: Mr Werner

SOLICITOR FOR THE APPLICANT: Hutchinson Legal

COUNSEL FOR THE RESPONDENT: In person

SOLICITOR FOR THE RESPONDENT: N/A

IT IS NOTED that publication of this judgment by this Court under the pseudonym Turner & Alexander(No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7872 of 2007

Mr Turner

Applicant

AND

Ms Alexander

Respondent

REASONS FOR JUDGMENT  

1. On 8 January 2014 I delivered reasons for judgment and made final parenting orders, including orders that the father have sole parental responsibility for the children of the marriage R and S, that the children live with the father, and that as from 14 March 2014 the children spend time and communicate with the mother on the second and fourth weekend of each month from 6 pm on Friday until 6 pm on Sunday. All extant applications were otherwise dismissed save and except for any application for costs.

2. On 24 January 2014 I made orders in Chambers that on or before 4 pm on 7 February 2014 the parties file and serve upon the other parties any applications for costs and written submissions in support of such applications and that the parties file and serve any responses to any submissions filed in support of any application for costs by 4 pm on 21 February 2014.

3. On 28 January 2014 I made further orders in Chambers at the mother’s request extending the time for her to file and serve any response to any submissions filed by the father in support of his application for costs to 4.00 pm on 14 March 2014 on the basis that she would be overseas between 2 February 2014 and 28 February 2014.  

4. On 10 February 2014 the Court received a letter from the Independent Children’s Lawyer advising that he would not be making any application for costs and, accordingly, the Independent Children’s Lawyer has not filed any written submissions or any submissions in reply.

5. The father seeks an order that the mother pay his costs of and incidental to the trial of the proceeding fixed in the sum of $44,587.35 or, in the alternative, as assessed by a Registrar of this Court in default of agreement. The father’s application for costs is opposed by the mother and she has filed lengthy written submissions in reply.

Legal Principles

1. The general rule in proceedings in this Court, subject to the provisions of s 117(2) of the Family Law Act 1975 (Cth) (‘the Act’), is that parties to those proceedings shall each bear their own costs of those proceedings.

2. Section 117(2) of the Act provides as follows:

   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 to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

3. Section 117(2A) of the Act provides that in considering what, if any, order should be made for the payment of costs the Court shall have regard to the following matters:

   (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.

4. As the Full Court said in I and I (No 2) (1995) FLC 92-625 the relevant matters in s 117(2A) ‘must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.’

5. Whilst the father’s submissions address the relevant matters in s 117(2A), the mother’s submissions while purporting to respond do not necessarily do so and are, to a large extent, a restatement of the mother’s case and set out her complaints about the decision and the reasons for that decision. Doing the best I can on the basis of the parties’ submissions and notwithstanding those limitations I propose to address the matters in s 117(2A).

Section 117(2A)(a) The financial circumstances of each of the parties

1. As submitted by counsel for the father the evidence before me with respect to the parties’ respective financial circumstances was limited. It was for that reason that on 31 March 2014 I made orders in Chambers that the father and the mother file and serve a financial statement in accordance with Chapter 13 of the Family Law Rules 2004 (Cth) (‘the Rules’). Whilst I have had regard to the parties’ respective financial statements I am mindful of the fact that they have not had the opportunity to challenge the evidence contained in those financial statements. 

2. The father is self-employed in the financial industry and the mother is self-employed in a healthcare role. The father’s wife, Ms T, assists the father with his business. Mr J, the mother’s husband, is employed as a salesman. The father’s evidence is that he earns $1,154 per week from his business and Ms T earns $741 per week, and although the source of her income is not disclosed based upon the evidence she gave at trial I am satisfied that this is income paid to her by the father’s business.  The father attributes a value of $65,000 to his business.

3. The mother’s evidence is that she earns $230 per week from her business and the business pays motor vehicle expenses of $150 per week and superannuation of $45 per week on her behalf, a total package of $425 per week. The mother receives board of $200 per week from the two adult children of the marriage who live with her. Notwithstanding that the mother says she earns only $230 per week from her business, she values the business at $75,000. The mother estimates Mr J’s income at $1,400 per week.

4. Both the father and the mother and their respective new partners own or are in the process of purchasing the homes in which they each live. The father attributes a value of $495,000 to the home in which he lives whereas the mother estimates the value of her home to be $600,000. The father and Ms T have a mortgage of $410,000 and a personal loan of $100,000 and credit card liabilities of approximately $73,000. The mother and Mr J have two mortgages which total $500,000 and credit card debt of $10,000. Whereas the father has superannuation entitlements of $203,000 and the mother’s superannuation entitlements are only $30,000, the father is only 47 years of age and those superannuation entitlements are not likely to be readily accessible.

5. The mother in the course of her evidence made reference to having travelled overseas and to proposed overseas travel in the first half of 2014.  Whilst I do not recall any evidence in relation to the father and/or his family travelling overseas, that was not a matter of particular relevance to the case I was required to determine and I therefore do not rule out the possibility that he and his family may also have travelled overseas.

6. Finally, I have also had regard to the fact that the father now has the primary financial responsibility for both R and S.

7. The father’s expenses as set out in his financial statement are significantly greater than the mother’s expenses however that may be explained by the fact that he has the care of R and S and the fact that he has not apportioned his household expenditure as the mother appears to have done in her financial statement.   

8. The mother submitted that the fact that the father would have already paid his legal costs means he would therefore not be disadvantaged if an order for costs were not made in his favour. There is however nothing unusual about a party seeking an order for costs notwithstanding that those costs have already been paid and the fact that those costs have been paid would not preclude an order being made reimbursing that party for the costs that have been paid. This also disregards the fact that the father’s liabilities and in particular his credit card debts are significantly more than the mother’s.

9. It was the mother’s case that she does not have the capacity to satisfy any order for costs that the Court might make and her financial circumstances are “dire”. The father submitted that the parties are neither affluent nor impecunious and I am satisfied that this is the case.  In my view, the parties’ respective financial positions are neither the basis for an order being made in the father’s favour nor are they a reason why the mother should not be required to pay the father’s costs of the hearing, although their respective financial circumstances are relevant for the purposes of determining the quantum of any order for costs.  

Section 117(2A)(b) Whether either party is in receipt of legal aid

1. These proceedings have had a long history however there was no evidence before me that either of the parties had either sought or been in receipt of legal aid in the earlier stages of the proceedings and neither party was in receipt of legal aid for the purposes of the hearing before me.

Section 117(2A)(c) The conduct of the parties to the proceedings in relation to the proceedings

1. It was submitted by the father that there were strong adverse findings as to the credit of both the mother and her new husband, Mr J. That is clearly the case. At paragraph 21 of my reasons I found that ‘there were a number of aspects of the mother’s evidence which suggested that she was deliberately not telling the truth’ and I then referred to a number of examples. At paragraph 26 I found that Mr J’s evidence ‘was at best misleading and more likely to be, as was submitted by Mr Werner, “deliberately untruthful”.’

2. It was further submitted on behalf of the father that four of the 10 days of hearing were taken up by cross-examination in relation to what he said were statements of historical fact made by the mother and Mr J, contained in their affidavits, made to the Department of Human Services and to the family consultant during the interviews for the preparation of a family report. As submitted on behalf of the father there were many examples of the mother and Mr J’s various versions of events which they either acknowledged were not accurate or were not accepted by the Court. This includes my finding that when proceedings were commenced the mother knew that the affidavit filed by Mr J, and upon which she relied at the commencement of the proceedings in the Federal Magistrates Court, as it then was, and at the trial, contained false evidence.

3. The mother by way of reply submitted that she and her witnesses were not untruthful and that the adverse findings as to credit were an unfair assessment attributable to the fact that she had represented herself and ‘the perception created from errors and omissions not deliberately done to deceive’.

4. Although I am and was during the hearing conscious of the fact that the mother was representing herself, that does not explain my reservations in relation to her evidence and does not accord with my findings. Nor in all of the circumstances of this case does the fact that the mother represented herself preclude an order for costs being made against her.  

5. The mother in her written submissions submitted that the proceedings were protracted not only because she represented herself and did not have assistance regarding the processes and procedures of a trial but also because of the conduct of the applicant’s counsel and allowances made by the Court for the way in which he conducted the proceedings. The mother referred to both s 97(3) and s 101(2) of the Act in support of her submission. Her primary submission with respect to these issues was focused mainly upon what she submitted was the repetitive and irrelevant cross-examination of herself and her witnesses and in particular Mr J. Although I do agree that the cross-examination was lengthy I do not agree that it was, as submitted by the mother, ‘repetitive at best and designed to humiliate at its worst’. The issues in the case were complex, the history was lengthy, and the relevance of that cross-examination and the manner in which counsel for the father conducted his case is supported by my findings.

6. The mother also referred to the fact that the matter had to be stood down to allow the Court to deal with other matters as a reason for the protracted nature of the proceedings. The mother did not specify how much time she said was spent on other matters. It is not uncommon for the Court to have to deal with urgent matters or, in circumstances where a trial has taken longer than anticipated as in this case, to have to deal with matters that have previously been listed before it.

7. These considerations however do not explain the length of the trial in this case. The length of the trial in this case is attributable to many factors, including the lengthy history of the matter, the seriousness and complexity of the issues involved, and the fact that there were different versions of many events and aspects of the case, not only between the father and the mother, but different versions of the evidence of the witnesses, in particular, in relation to the sexual offences committed by Mr J.  

Section 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders

1. These proceedings were not necessitated by the mother’s failure to comply with previous orders.

Section 117(2A)(e) Whether a party to the proceedings has been wholly unsuccessful

1. In my reasons I identified three issues that I was required to determine. They were as follows:

   ·whether [R] should live with the father or continue to live with the maternal grandmother;

   ·what time the children should spend with each of their parents and together; and

   ·what, if any, time the children should spend with Mr [J].

2. Both the father and the mother commenced their cases on the basis that R and S should spend time with each other and the other parent in accordance with their wishes. During the course of the hearing both the father and the mother changed their positions and made detailed and specific proposals for R and S to spend time together and with the other parent, which was supported by the Independent Children’s Lawyer.

3. The two central issues for determination, as submitted by counsel for the father, were the living arrangements made for R and what, if any, contact both R and S should have with Mr J. It is the case that in relation to those two issues that the mother was wholly unsuccessful. The arrangements for the children to spend time with each other and the other parent, subject to my determination as to where R should live, was ultimately not the subject of significant dispute.

Section 117(2A)(f) Whether either party made an offer in writing to the other party to settle the proceedings and the terms of any such offer

1. The father relies upon his written offer of settlement made to the mother’s then solicitors on 1 March 2013, which was as follows:

   After consideration of the Family Report and the best interests of the children we have been instructed that our client will settle this matter under the following terms:

   1.[S] and [R] live primarily with our client;

   2.For a period of eight weeks, [S] and [R’s] time with your client be reserved;

   3.Following the above eight week period, [S] and [R] spend time with your client each alternate weekend from Friday until Sunday;

   4.Mr [J] has no contact with the children;

   5.All parties attend Family therapeutic counselling.

2. It was submitted on behalf of the father, and in my view correctly, that although the father’s proposal in his closing submissions was more elaborate than his earlier offer, that elaboration ‘related to the mechanics of his proposal, to accommodate matters which only became apparent or significant as the evidence unfolded, rather than the substance of the living arrangements and protective measures he was proposing.’

3. The mother submitted by way of reply that she was effectively representing herself by the time the father made his offer and she had represented herself thereafter. It is her case that the father’s proposal was not supported by the Independent Children’s Lawyer and that on that basis she decided not to accept it.

4. There is no evidence before me as to whether the Independent Children’s Lawyer did or did not support the father’s proposal at the time it was made in March 2013. At the commencement of the trial, however, the Independent Children’s Lawyer in his summary of argument filed 11 October 2013 submitted, whilst acknowledging that S wished to live with the father and R wished to live with the mother albeit she was living with the maternal grandmother, that ‘[t]he viability of these wishes in the context of this matter, is arguable, as is the viability of making [o]rders directly against those wishes”, and perhaps not surprisingly the Independent Children’s Lawyer reserved his position until the conclusion of the evidence.

5. Even if the Independent Children’s Lawyer had not supported the father’s proposal it is in my view significant that the father’s proposal was based upon the recommendations of the family consultant in her report dated 15 February 2013. These recommendations were known to the mother at the time the offer was made and were recommendations which I ultimately accepted following trial.

Section 117(2A)(g) Any other matters the court considers relevant

1. It was submitted on behalf of the father that I should also have regard to the fact that the proceedings were necessitated by the mother’s failure to disclose both Mr J’s criminal record and the fact that he was a registered sex offender to the father and, ultimately, the court in December 2008 when the parties entered into final parenting orders by consent. Once the father became aware of the fact that Mr J was a registered sex offender he immediately commenced the proceedings to which the application for costs relates. At paragraph 165 of my reasons I found that the mother’s failure to disclose to the father that Mr J was a registered sex offender and that his offences involved a teenage girl ‘was a complete abrogation of the mother’s responsibility as a parent.’

2. During the trial, and notwithstanding the observations of the family consultant, the mother remained critical of the father for what she considered was his overreaction to the information he received from the Department of Human Services in relation to Mr J’s offences, and I found that she had minimised the significance of Mr J’s offences.

1. I accept that these are matters which I may and should consider in this case. I also consider that the mother’s reliance and emphasis upon R’s wishes in support of her case that R should live with the maternal grandmother instead of the father, when it was clear from the evidence that R’s preferred option was to live with the mother, is also a significant and relevant matter.

Conclusion

1. As observed by Mushin J in Green & Knowles (No. 2) [2009] FamCA 541 at paragraph 44, although ‘an order for costs in a parenting case is unusual, that does not mean that such an order cannot and should not be made in the appropriate matter.’

2. Having considered and weighed up all of the matters in s 117(2)(A) of the Act, I am satisfied that there are grounds in this case to depart from the general rule that each party should bear their own costs.

3. My reasons for doing so include, in particular, the manner in which the mother conducted these proceedings in the face of an offer to settle the matter along the lines of the recommendations of the family consultant made many months prior to the final hearing and the fact that the mother was wholly unsuccessful in relation to the primary issues that I was required to determine.

4. As I found in my reasons, the mother essentially disregarded R’s wish to live with her in order to live with and marry Mr J.  The mother’s prioritising of her relationship with Mr J, a registered sex offender, over her relationship with R also weighs heavily in favour of the father’s application for costs.  It is this attitude and the way in which the mother has conducted these proceedings, which necessitated the father being put to the significant expense of the hearing before me, which lead me to conclude that an order for costs is justified in this case. 

Quantum

1. Although the Act sets out the matters to consider when determining whether the circumstances of a case justify an order for costs, the Act does not provide any statutory guidelines for the determination of the quantum of any order for costs. However, the circumstances which lead the Court to conclude that an order for costs is justified may also be relevant for the purposes of determining the quantum of those costs.

2. Rule 19.18 of the Rules provides that the Court may make an order for 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.

3. The father’s application is that I should make an order for costs in his favour fixed in the sum of $45,587.35 or, alternatively, in default of agreement, as assessed. The father’s application for costs is confined to the costs of the trial, notwithstanding that these proceedings have been on foot since early 2012 and notwithstanding the offer he made to settle the matter in March 2013. The amount sought by the father is made up of counsel’s fees in the sum of $28,000, the solicitor’s attendance for the purposes of instructing counsel during the trial in the amount of $12,639.35, photocopying costs of $300 (which included multiple copies of subpoenaed documents relied upon in cross-examination), and Court fees of $3,648. Both counsel’s fees and those of his instructing solicitor have been calculated in accordance with or are within the range provided for in the itemised scale of costs in Schedule 3 of the Rules.

4. Counsel’s fees include one day for the preparation of the outline of case in anticipation of the trial, two days’ preparation prior to the commencement of the hearing, and a further half a day of preparation during the case. It was submitted on behalf of the father that having regard to the length of the trial and complexity of the issues, made more complex in part because of the need to accommodate the mother’s requirements as a litigant in person, that the preparation time claimed by counsel was both necessary and reasonable. 

5. However counsel for the father, notwithstanding his submission as to the reasonableness of his claim for preparation, nonetheless reduced his fees by some $4,600, effectively reducing his claim for preparation by almost two days based upon his daily fee of $2,500, thereby reducing his claim for preparation overall from $8,800 to $4,200. This equates to less than two days preparation for a 10 day trial including for which counsel prepared both a case outline and final written submissions. I am satisfied that counsel’s fees in the sum of $28,000 are in all of the circumstances more than reasonable. I am also satisfied that  not only was this a matter in which it was appropriate for counsel to have the assistance of an instructing solicitor but that the fees charged by the instructing solicitor are reasonable.

6. However, although I am satisfied that the circumstances of this case justify the Court departing from the general rule that each party bear their own costs and that the quantum of the father’s claim is reasonable, I am not persuaded that I should make an order that the mother pay all of the amount sought by the father.

7. Having found that the father and mother are neither affluent nor impecunious, I have nonetheless had regard to the significant disparity between the income of the father and that of the mother.  Although an order for costs in the sum of $45,587.35 or for that matter a lesser sum would place a significant financial burden upon the mother, I am however also mindful of the fact that the father has been put to significant expense in order to do what he considered was necessary to protect and advance the welfare of R and S, a course which the outcome of the case supports. This leads me to conclude that the father should be compensated for at least some of the costs he has incurred in doing so.

8. Having weighed up the competing considerations in this case, and having regard to the financial circumstances of both the father and the mother, I propose to make an order that the mother pay half of the father’s costs fixed in the sum of $22,793. I also propose, subject to any further submissions the parties may make with respect to the date of payment of those costs, to allow the mother 90 days in which to make the payment. Whilst this amount will not meet all of the costs the father has incurred, leaving him to bear a significant proportion of those costs, it is in all of the circumstances of this case an appropriate contribution by the mother to those costs that he has incurred.

9. Accordingly, the orders I propose to make are as follows:

   1)     By 4.00 pm on 15 August 2014 the mother pay the father’s costs fixed in the sum of $22,793.

   2)     The father’s costs application be otherwise dismissed and the matter be removed from the list of cases awaiting hearing.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 22 May 2014.

Associate: 

Date: 14 May 2014