Wyard & Wyard (No 2)
[2022] FedCFamC2F 1417
Federal Circuit and Family Court of Australia
(DIVISION 2)
Wyard & Wyard (No 2) [2022] FedCFamC2F 1417
File number(s): DUC 409 of 2021 Judgment of: JUDGE OBRADOVIC Date of judgment: 21 October 2022 Catchwords: FAMILY LAW – Practice and Procedure – Costs – Application for costs on an indemnity basis – Applicant wholly unsuccessful – Whether circumstances justifying a costs order – Costs in accordance with scale. Legislation: Family Law Act 1975 (Cth) s.117
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 sch1
Cases cited: Cochrane & Cochrane [2012] FMCAfam 984
Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801
Collins & Collins [1985] FamCA 15
Fitzgerald v Fish and Anor [2005] FamCA 158
Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364
Greedy & Greedy [1982] FamCA 4
I & I(No.2) [1995] FamCA 80
Jensen &Jensen [1982] FamCA 57
Kohan & Kohan [1992] FamCA 116
Latoudis v Casey [1990] HCA 59
Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157
Munday v Bowman (1997) FLC 92-784 at 84,660
Penfold & Penfold [1980] HCA 4
Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)
Renald & Renald (Costs) [2018] FamCAFC 4
Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd [1991] FCA 225
Division: Division 2 Family Law Number of paragraphs: 45 Date of last submission/s: 30 September 2022 Date of hearing: On the papers Place: Parramatta Appearing for the Applicant: Mr Hill Solicitors for the Applicant: Longman Hill Solicitors Counsel for the Respondent: Ms Bridger Solicitors for the Respondent: Arden Law ORDERS
DUC 409 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WYARD
Applicant
AND: MR WYARD
First Respondent
MS B WYARD
Second Respondent
order made by:
JUDGE OBRADOVIC
DATE OF ORDER:
21 October 2022
THE COURT ORDERS THAT:
1.The Respondents are granted leave to rely on their Affidavit and Written Submissions filed on 5 September 2022.
2.Within 28 days the Applicant, Ms Wyard, is to pay the Respondents’ costs in the amount of $15,215.
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 a pseudonym Wyard & Wyard has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE OBRADOVIC:
On 16 August 2022, the Court delivered its reasons for judgment[1] in respect of the applicant’s interim application to spend unsupervised time with the respondents’ two children. The applicant is the children's paternal grandmother and the parents are the respondents.
[1] Wyard & Wyard [2022] FedCFamC2F 1157
The Court dismissed the paternal grandmother’s application for interim parenting orders and discharged previous orders made by consent that provided for the paternal grandmother to spend supervised time with the children.
These reasons for judgment relate to the respondent parents’ oral application for indemnity costs reserved on the last occasion to be dealt with on the papers.
The paternal grandmother relies on her affidavit and written submissions filed on 30 September 2022 and the parents rely on their joint affidavit and written submissions filed on 5 September 2022 (noting that the affidavit was affirmed on 1 September 2022 and that the written submissions are dated 30 August 2022). No issue has been raised in respect of the non-compliance with the orders for filing made on 16 August 2022, and the Court grants leave to the respondents to rely on their material filed less than 1 business day later than permitted by those orders.
The application for costs
The parents’ evidence is that they have incurred $37,787.79 in legal costs (including disbursements).
The parents say that they have a joint annual income of about $90,376. The father earns an annual salary of $75,088 and the mother an annual salary of $15,288. The parents say that they have assets with an estimated gross value of $358,379 and liabilities in the amount of $362,608.[2]
[2] Assets include property purchased for $290,000 in January 2021 and 2 motor vehicles. Liabilities include 2 home loans in the amount of $296,651, personal loan from Commonwealth Bank of Australia in the amount of $34,513, motor vehicle loan and credit card debts. Respondent’s written submissions at [6] and Parents affidavit filed 5 September 2022 at [8] and [9].
It is submitted on behalf of the parents that during the course of these proceedings the parents have made a number of attempts to bring finality to these proceedings, and to reduce the financial and emotional burden it was having on them. This was not done because the parents viewed the paternal grandmother’s application as one with merit.
The parents in the affidavit filed 5 September 2022 annex a number of letters of offers exchanged between the parties respective solicitors. The parents submit that the communications between the lawyers demonstrates that the paternal grandmother was obdurately resistant to engaging in dispute resolution and demonstrates an abject failure by her to put forward a proposal which was realistic and sensible having regard to the evidence before the Court or that could ever possibly be before the Court.
It is further submitted by the parents that the paternal grandmother has showed “little to no respect or regard” for the parents in their role in determining what was in their children’s best interest or, at the very least, as to the financial distress these proceedings was causing them. It is argued that the paternal grandmother’s rejection of both offers was unreasonable as she ought to have known that any judicial assessment of her application would have involved a consideration of whether the children had a meaning relationship with her. The parents say that the paternal grandmother did not have relationship with the children, let alone a meaningful one.
The paternal grandmother submits to the Court that there is “no factor of combination of factors” that would support the Court to deviate from the general rule that each party pay their own costs.
The paternal grandmother is in receipt of Centrelink benefits in the amount of $700.50 per fortnight, which she says is expended on household expenses, electricity costs, rates, vehicle registration, fodder and veterinary costs.
The paternal grandmother is the registered owner of a property situate at H Street, Town F, where she breeds animals. She says that the farm has not generated any profits for years and that she is in the process of winding it down.
The paternal grandmother says the property is approximately valued at $550,000. The property is unencumbered, however the paternal grandmother says that it is subject to a loan agreement between her recently deceased mother and herself. She asserts that the loan is repayable to her late mother’s estate.
The paternal grandmother further says that she has an outstanding credit card debt in the amount of $14,460.97, unpaid legal fees in the amount of $3,300 and just over $1,000 held in bank accounts.
The paternal grandmother was in receipt of a legal aid grant which was terminated on 12 July 2022. The paternal grandmother says that her grant was terminated because she did not provide a valuation of her property within the time requested.
The paternal grandmother says that her conduct during the parties’ negotiations were genuine and reasonable. She says that she had the benefit of orders which provided for supervised time with the children and as such did not see the parents’ offer for themselves to supervise time or at a particular location to be reasonable.
It was submitted on behalf of the paternal grandmother that she is in a poor financial position, when compared against her borrowings and her credit card liabilities. It is further submitted that the Court ought to consider the fact that the paternal grandmother was legally aided for the majority of these proceedings and that she may well have her grant of aid reinstated in the future. This would therefore go against the long standing principle that the Court not make a costs order against a legally aided party or at the very least that she be protected from costs incurred when she was in receipt of a grant of legal aid.
The paternal grandmother submits to the Court that neither party has behaved in a manner that has prolonged these proceedings or failed to comply with directions, discovery or other similar matters.
Lastly, the paternal grandmother argues that the general principle regarding costs be upheld as the quantum of the costs order would severely impact her and that this Court should remain a forum where parties may approach the Court for resolution of their disputes without undue fear of adverse costs order when a decision goes against them.
Relevant Legal Principles Relating to Costs in Family Law Proceedings
The principles in respect of costs orders in family law proceedings are well known. The starting position with respect to costs, as set out in s.117 of the Family Law Act 1975 (Cth) (“the Act”) is that, subject to sub-section 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[3] No one factor under s.117(2A) prevails over any other factor. It is a matter of weight that is accorded to each of the relevant factors in the trial judge’s discretion.[4]
[3] see for example Collins & Collins [1985] FamCA 15
[4] Medlon & Medlon(No. 6) (Indemnity Costs) [2015] FamCAFC 157 at [24]
The High Court held in that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order. [5]
[5] Penfold & Penfold [1980] HCA 4
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a “clear case”.[6]
[6] Penfold & Penfold [1980] HCA 4; Jensen &Jensen [1982] FamCA 57
Any one of the factors in s.117(2A) may be the sole foundation for an order for costs.[7] Nevertheless, 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”.[8]
[7] Fitzgerald v Fish and Anor [2005] FamCA 158 at [41]; Renald & Renald (Costs) [2018] FamCAFC 4 at [11]
[8] I & I (No.2) [1995] FamCA 80; Renald at [11]
In Latoudis v Casey[9] the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.[10]
[9] Latoudis v Casey [1990] HCA 59
[10] Referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane [2012] FMCAfam 984 at [17]
In determining what order, if any, should be made under s.117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
The Court has the power to order costs on an indemnity basis.[11] An order for indemnity costs in proceedings to which s.117 applies is exceptional.[12]
[11] Kohan & Kohan [1992] FamCA 116; Latoudis v Casey [1990] HCA 59
[12] Kohan & Kohan [1992] FamCA 116; Stasiuk & Guild [2021] FamCAFC 62
The principles in respect of indemnity costs orders are also well known[13], relevantly:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;[14]
(a)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud;[15]
(b)Evidence of particular misconduct causing loss of time to the court and to other parties;[16]
(c)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;[17]and
(d)An imprudent refusal of an offer to compromise.[18]
[13] see generally Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801
[14] see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364
[15] Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364
[16] see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd [1991] FCA 225
[17] see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)
[18] Medlon at [28] referring to Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660
It is unnecessary to spell out detailed reasons for decisions in costs matters.[19]
[19] Greedy & Greedy [1982] FamCA 41; Renald & Renald (Costs) [2018] FamCAFC 4 at [12]
Courts Determination
While costs orders in parenting proceedings are rare, and indemnity costs orders even rarer, in appropriate cases such orders may be made. For reasons which are explained below, it is appropriate that a costs order be made in the circumstances of this case, but in accordance with Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 including in respect of the costs application, rather than on an indemnity basis.
Proceedings were commenced by the paternal grandmother in circumstances where the respondent parents had been making attempts to settle the dispute. According to the mother, the paternal grandmother commenced proceedings because she was not happy with the offers which had been made by the parents for her to spend time with the children.
On the first return date, orders were made by consent, largely in accordance with the written offer made by the parents[20]. Notwithstanding an order for the children to spend time with the paternal grandmother, the paternal grandmother continued with her application for significant and substantial time with the children. This application was made in circumstances where the children, as noted in the interim judgment, appeared never to have spent time with their grandmother without either one or both of their parents (or a supervisor), and where there was no evidence of any meaningful relationship between the paternal grandmother and the children.
[20] Except to the extent of any applicable time period
Between the time of the consent orders on 21 February 2022 and the interim hearing on 16 August 2022, there were a number of offers made by the parents. These offers were reasonable and indeed, had the paternal grandmother accepted them she would have been better off than what she was as a result of the orders which were ultimately made at the interim hearing, dismissing her application for time and dismissing the orders for supervised time. Instead, the paternal grandmother took an unreasonable stance in respect of reaching a resolution with the parents, including saying to the parents:
Hi [Ms B Wyard],
If you are willing to let the children visit me one day week I will be happy to talk to you with mediation if this isn’t suitable to you, it would be a waste of time and your money.
[Ms Wyard]
…
I have put a proposal forward if you are not willing to accept that. I’m not going to waste money on mediation I’ll put my money into going to court.
The paternal grandmother says that she does not have the financial means to pay any costs order. The Court notes that she has property which is worth approximately $550,000 and which is unencumbered. While the paternal grandmother says that she owes a debt to the Estate of Ms J the Court notes from the loan agreement and the Will annexed to the paternal grandmother’s affidavit that:
(a)At the time the loan agreement was entered into on 18 September 2014 the paternal grandmother was intending to subdivide the property in order to sell part of the property and repay the loan to her mother. The loan agreement further provided that if the debt is not repaid at the time of the passing of the paternal grandmother’s mother, then any outstanding amount would form part of the paternal grandmother’s share of her inheritance from her mother’s estate.
(b)The paternal grandmother is an executor and trustee of the Estate of Ms J;
(c)The respondent father is a beneficiary being a grandchild of the deceased;
(d)The paternal grandmother is a beneficiary of 1/5 of the residual estate; and
(e)The Will provides for the loan to be “notionally” repaid by the paternal grandmother.
Notwithstanding that the paternal grandmother is an executor, trustee and beneficiary of the estate of her late mother, the paternal grandmother does not put before the Court any evidence of the value of the estate or of her likely benefit. She does not explain whether she ever took steps to subdivide the property as was envisaged at the time of the loan agreement and if not, why not. The Court notes that the loan to the paternal grandmother’s mother was to be repaid at the time of the sale of a subdivided part of the paternal grandmother’s property.
The Court notes that the applicant is in receipt of Centrelink benefits but that her bank balances are not negligible. She is not impecunious. The paternal grandmother has sufficient equity in the assets she owns to be able to meet any costs order. Furthermore, she is a beneficiary of her mother’s estate in an unknown amount. While the paternal grandmother had been in receipt of a legal aid grant at a particular time, she was a private paying client at the time she pressed her interim application. The grant of legal aid included a grant for a mediation, something which the applicant never took up. Instead of mediating, as invited by the parents, she took the path of litigation.
The Act has a strong emphasis on dispute resolution and the Court’s practice is to encourage parties to settle their disputes. This is not only because of the high costs of litigation, but more so because of the nature of the disputes that come before the Court, particularly in parenting applications. The human aspect of the litigation lends itself strongly to dispute resolution. While costs in proceedings brought under the Act are usually borne by the parties, the Act does permit for costs orders to be made where circumstances justifying a costs order exist. Litigation cannot be pursued with impunity, even in what is usually a no costs jurisdiction.
The parents have been significantly burdened by the litigation. Not only has there been a significant financial burden on them, but there has been a significant emotional toll. This has caused conflict between the parents, which has no doubt had an impact on the children.
The respondents are the parents of young children. They both work hard and provide for their children. They have average incomes. They live in a modest house which is heavily mortgaged. They have other debts. They have had to further borrow to be able to fund these proceedings.
The evidence is crystal clear that the parents have made many attempts at resolving the dispute without the need for litigation and costly Court proceedings. The paternal grandmother’s attitude has essentially been “it’s my way or the highway”. The offers made by the parties show that the paternal grandmother was not willing to compromise her position.
The paternal grandmother was entirely unsuccessful in her application for time with the children.
As such, there are circumstances justifying a costs order. However, noting the authorities, the Court does not find on balance that the paternal grandmother’s conduct warrants an order for indemnity costs to be made against her.
Taking into consideration the relevant factors pursuant to s.117 as noted above, it is appropriate that a costs order be made against the paternal grandmother in the scale amount[21].
[21] Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021
As such, the paternal grandmother is to pay the parents’ costs as follows:
Item 2 Opposing an application that includes interim orders up to the completion of the first court date (mention only) Both:
(a) $2,947 and
(b) $321Item 13 Daily Hearing Fee (solicitor) - Interim Hearing $2,357 Item 14 Daily Hearing Fee with Advocacy Loading (counsel) – Interim Hearing $3,536 Item 3 Initiating an application for interlocutory orders (including an interim hearing) – in respect of the costs application Both:
(a) $1,964; and
(b) no hearing feeItem 16 Disbursements – as sought $4,090 TOTAL: $15,215
The total costs of $15,215 are to be paid within 28 days.
46 I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic.
Associate:
Dated: 21 October 2022
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