Adami and Adami (No 2)

[2020] FamCA 837

FAMILY COURT OF AUSTRALIA

ADAMI & ADAMI (NO. 2) [2020] FamCA 837

FAMILY LAW – COSTS – Where final orders have been made - Where the wife seeks costs in relation to two interim applications – Where the husband claims the wife’s application is out of time – Where the wife contends the question of costs were reserved in relation to the interim applications and are therefore still live – Where the Court finds the husband was not wholly unsuccessful.

FAMILY LAW – COSTS – Circumstances justifying order – Where the wife seeks indemnity costs in relation to the husband’s non-disclosure of a Deed of Release in relation to a liability – Where the husband claims the wife’s application is out of time – Where the wife asserts the husband’s conduct was so egregious time should run from the date disclosure was made as opposed to when the final orders were made – Where hardship would be caused to the wife if time was not extended – Orders.

FAMILY LAW – ORDERS – Discharge – Where final property orders included a payment to the wife for arrears of spousal maintenance – Where the husband seeks that the order be discharged and that he be reimbursed for payments – Where the Court is not in a position to reopen the proceedings.

FAMILY LAW – ORDERS – Variation – Where final orders required the husband to transfer his right, title or interest in property to the wife with the wife to cause the mortgage to be discharged, refinanced or varied – Where the orders provided a default provision that the property be sold – Where the husband considers the wife has defaulted and seeks that the property be sold – Where the wife seeks a variation to the order extending the time for it to be complied with – Whether the order is substantive or machinery – Where there is no prejudice to the husband - Orders.

Family Law Act 1975 (Cth) s 117(2A)
Family Law Rules 2004 (Cth) rr 19.08(1), 19.08(3), 19.18, 19.18(3)

Beckham & Quarrington (2019) FLC 93-913
Holland & Holland (1982) FLC 91-243

APPLICANT: Ms Adami

RESPONDENT: Mr Adami

FILE NUMBER: DNC 521 of 2017

DATE DELIVERED: 30 September 2020

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 24 August 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Farmer

SOLICITOR FOR THE APPLICANT: Withnalls Lawyers

COUNSEL FOR THE RESPONDENT: Mr Barry

SOLICITOR FOR THE RESPONDENT: Darwin Family Law

Orders

1. That in addition to the payment to the wife of the amounts as provided for in order 1(d) of orders made 14 May 2020, the wife is to receive the further sum of SEVEN THOUSAND NINE HUNDRED AND EIGHTY FIVE DOLLARS ($7,985).

2. That order 1(a) of orders made 14 May 2020 be varied such that the time for the wife to cause the discharge, refinance or variation of the loan to the Commonwealth Bank of Australia be varied by the deletion of the words “sixty (60) days” and be replaced by the words “sixty (60) days from 2 November 2020”.

3. That the interim proceedings be otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Adami & Adami has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: DNC 521 of 2017

Ms Adami

Applicant

And

Mr Adami

Respondent

REASONS FOR JUDGMENT

INTRODUCTION 

1. Following a hearing on 21 to 23 August 2019, 20 September 2019 and 20 to 21 January 2020 judgment was delivered on 14 May 2020 and orders were made for settlement of property which resolved all outstanding matters.

2. By Application in a Case filed 10 July 2020 Ms Adami (“the wife”) seeks that Mr Adami (“the husband”) pay her costs in the following terms:-

   1.That pursuant to Section 117(2A) of the Family Law Act 1975 (Cth) and Rule 19.18(1)(a) of the [Family Law Rules 2014], the Husband pay the Wife the following sums for the following Court events:-

   a)The sum of $15,000 for the Wife’s Application in a Case filed 15 August 2018;

   b)The sum of $26,000 for the Husband’s Application in a Case filed 27 February 2019;

   c)The sum of $7,985 for costs incurred by the Wife from 26 March 2020 arising from the Husband’s non-disclosure as to the Deed of Release dated 26 March 2020 as to the resolution of the P Bank liability to P Bank Limited; and

   d)The sum of $5,000 for this Application in a Case.

   2.A declaration that the amount payable from the joint funds held in Darwin Family Law’s Trust Account to the Husband in accordance with 1(d) of the Orders 14 May 2020 is nil.

3. Order 1(d) of orders made 14 May 2020 provides:

   (d)That the net proceeds of sale of the property situate at R Street, S Town, New South Wales (“the S Town property”) be disbursed as follows:-

   (i)Payment of TWELVE THOUSAND NINE HUNDRED AND EIGHTY DOLLARS ($12,980) to Withnalls Lawyers Trust Account for and on behalf of the wife;

   The balance of the net proceeds to be placed into an interest bearing account in the joint names of the parties and/or their separate legal representatives pending the agreement of the parties as to the payment of any money owing to the P Bank pursuant to personal guarantees given by the husband in respect of loans made available to E Pty Ltd (ACN …) and D Pty Ltd (ACN …) or as may be ordered by the Court upon further application PROVIDED that if the parties agree upon the amount to be paid to P Bank the sum agreed shall be met by the wife as to 62.5 percent but in any event not exceeding ONE HUNDRED AND SEVENTY THOUSAND THREE HUNDRED AND SIXTEEN DOLLARS ($170,316) whichever is the lesser sum PROVIDED that the balance (if any) remaining of the net proceeds be distributed to the parties as to 62.5 percent together with the further sum of EIGHT THOUSAND ONE HUNDRED AND TWELVE DOLLARS ($8,112) to the wife and the balance to the husband.

4. The effect of the judgment delivered on 14 May 2020 was to apportion the property of the parties and to adjust their separate superannuation entitlements as to 62.5 percent to the wife and the balance to the husband.

5. The wife’s solicitors foreshadowed that there would be an application seeking costs.  The husband’s solicitors considered that any application for costs was required to be filed within 28 days from the date of judgment and the orders being made namely, before 22 June 2020.

6. The wife contends that in respect of the Applications in a Case filed 15 August 2018 and 27 February 2019 the question of costs were reserved and accordingly those applications are still live.

7. In respect of the application for costs arising from the husband’s non-disclosure of a Deed of Release dated 26 March 2020 with the P Bank, the wife contends that the husband’s conduct was so egregious that time should commence to run from the date of full disclosure by the husband  of the Deed of Release.

8. If time has expired then the wife seeks an extension of time.

P Bank debt

1. Throughout the trial the husband asserted that the P Bank debt was $404,000.  The husband’s evidence was that he was in active negotiation with P Bank to try and negotiate a reduction in the outstanding liability.  As at the conclusion of the trial, the husband was purportedly still in active discussions with P Bank.

2. The wife’s position at trial was that the Court should ignore the P Bank debt in circumstances where it was alleged that there had been non-disclosure of relevant documents by the husband with the result that the wife and the Court could not gain a proper consideration of the extent to which the debt would continue to be levied against the husband by P Bank and not against other co-guarantors.

3. The Court considered that there was sufficient evidence to find that there may well be an amount that the husband will have to pay to P Bank but that it could not be quantified.

4. The net pool was determined to have a value of $931,443 (which did not include any residual liability for the P Bank debt).

5. At 62.5 percent, the wife was to retain superannuation and property to a total value of $582,152.  The wife held net assets and superannuation of $411,836 leaving an amount to be received by her of $170,316 with the settlement sum to be paid from the proceeds of the sale of the S Town property.

6. The following paragraphs from the judgment are relevant:-

   331.The remaining consideration is the manner in which any liability to the P Bank should be dealt with as between the parties.  It is in the interests of the husband and the wife to do all things necessary as may be required to bring about a resolution of the amount outstanding to the P Bank, if any.

   332.The net asset pool (including superannuation and legal fees added back) is less than $1 million.  The potential liability to the P Bank represents about 40 percent of the net pool.  It is an overwhelming consideration and not one that can be ignored.

   333.I do not propose to make final orders, but rather to put in place orders by way of partial settlement of property which will have the effect of resolving some of the substantive issues between the parties.

7. The resultant uncertainty as to the status of the P Bank debt was the basis for the construct of order 1(d) of the judgment namely, that if the parties were not able to agree upon the amount to be paid to P Bank then the matter was to be finally resolved by the Court upon further application.

Applications for costs

1. Pursuant to sub-r 19.08(1) of the Family Law Rules 2004 (Cth) (“the Rules”), the wife has applied for an order that the husband pay her costs. The application is made by Application in a Case. The wife also seek an order for costs payable by the husband on an indemnity basis. Sub-rule 19.08(3) of the rules provides:-

   A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

2. The method of calculation of costs is referred to in r 19.18 of the Rules:-

   (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.

3. Sub-rule 19.18(3) of the rules provides that the Court may consider:

   (a)the importance, complexity or difficulty of the issue;

   (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.

4. In considering what order should be made, if any, in respect of the applicant’s costs, section 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) requires the Court to have regard to the following:-

   (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 matter as the court considers relevant.

5. I have a wide discretion in respect of matters relating to a potential costs order.

Application in a case filed 15 august 2018

1. The Application in a Case filed 15 August 2018 sought a raft of orders dealing with the following matters:-

   1.That the proceedings be transferred to the Family Court of Australia.

   2.Disclosure.

   3.The proceeds of sale of a motor vehicle 6.

   4.The proceeds of sale of N Street, Q Town.

   5.Ongoing management of the property at R Street, S Town (the S Town property).

   6.Ongoing management together with the sale of the property at O Street, U Town (the O Street property).

   7.Ongoing management including the sale of the property situate at B Street (the B Street property).

   8.Adami Business Trust.

   9.D Pty Ltd and E Pty Ltd.

   10.Legal fees.

2. The husband filed a Reply on 22 October 2018 which resolved by consent a number of the issues raised by the wife in her application.

3. On 24 October 2018 orders were made that listed the Application in a Case for hearing on 9 November 2018 with the matters to be argued limited to [14(c)], [19(c)], [20], [21] and [22] to [27] inclusive of the wife’s application and [2] and [3] of the husband’s Reply.

4. Orders were also made providing for the net proceeds of the sale of the O Street and B Street properties to be the subject of an injunction.

5. In addition, orders were made by consent in terms of concession in the respondent’s Reply.

6. On 9 November 2018 judgment was reserved in respect of the balance of the remaining issues for argument in the Application in a Case filed 15 August 2018 and the Reply filed 22 October 2018.

7. Judgment was delivered on 16 November 2018.

8. On 20 November 2018 orders were made that the wife’s costs of and associated with the hearing on 9 November 2018 be reserved.

9. The wife argues that the reservation of costs allows the wife’s cost application to be determined even though judgment was delivered on 14 May 2020.

10. The wife argues that she was successful in obtaining the orders sought in her Application in a Case save as to [21] seeking that any net proceeds of sale payable to F Pty Ltd as trustee for the Adami Business Trust arising from the sale of LL Business at Suburb J or LL Business at Suburb K be held in the wife’s solicitors’ trust account.

11. The wife was also unsuccessful in obtaining an order that the husband pay a lump sum of $41,824 to the wife’s lawyers towards her costs but the Court did make a dollar for dollar order as sought in the alternative.

12. It cannot be said that the husband was wholly unsuccessful in respect of the Application in a Case.

13. I am not able to ascertain the wife’s motivation for bringing the application at the time that she did, however, the Reply of the husband agrees a number of orders sought by the wife which enabled the Court to focus on the outstanding issues.

14. The fact of consent does not necessarily mean that the husband was wholly unsuccessful.

15. That is not to suggest that the wife did not obtain the majority of the orders that she sought but rather to highlight that much of what was sought was uncontentious.

16. Moreover, the husband was successful in seeking an order that the wife disclose all documents detailing the job applications made by her in 2018.

17. The status of the wife’s employment became a relevant issue at the final hearing in that the wife’s employment was such that late in the proceedings she discontinued her application for spousal maintenance.

18. The primary consideration is that each party should bear their own costs. It is only if the Court considers that an order for costs should be made that the Court needs to have regard to s 117(2A) of the Act.

19. In the circumstances of this application, I do not consider that the husband has been wholly unsuccessful, nor do I find that the matters generally in s 117(2A) have a relevant application.

20. I decline to make the costs order that the applicant seeks.

Application in a case filed 27 february 2019

1. The husband filed an Application in a Case on 27 February 2019 seeking orders summarised as follows:-

   1.That the net proceeds from the sale of the B Street property be applied to pay down debt of A Pty Ltd.

   2.That the S Town property be listed for sale and that any net proceeds be applied to pay down the debt of A Pty Ltd.

   3.That all previous maintenance orders be discharged and there be no requirement for the husband to pay any spousal maintenance arrears.

   4.That the wife return to the husband the motor vehicle 1 conditional upon the husband providing the wife with a “new 4 cylinder 2 wheel drive vehicle such as a Toyota Corolla or similar”.[1]

   5.That by way of spousal maintenance the husband pay the following:-

   a)All costs associated with the provision of the 4 cylinder motor vehicle including insurance but not fuel or maintenance;

   b)Payment of insurance on the M Town property as and when these payments fall due.

   [1] Application in a Case filed 27 February 2019 at [6].

2. The wife filed a Response to an Application in a Case on 7 March 2019 seeking that [3] to [7] of the husband’s application be dismissed and in addition orders summarised as follows:-

   1.That the applicant have sole and exclusive use of the motor vehicle 1.

   2.That should the applicant default in the payment of spousal maintenance to the wife in the sum of $500 per week in compliance with order 1(c) of orders made 12 February 2018 then monies held following the sale of the B Street property be paid to the wife in the sum of $1,000 with such sum to be categorised as a partial property settlement as to the sum of $500.

   3.That the net proceeds of sale of the B Street property be disbursed as follows:-

   a)$54,930.79 to the wife on account of legal fees;

   b)$14,000 to the wife on account of the husband’s expenditure of the motor vehicle 6; and

   c)$10,869.02 to the wife on account of reimbursement for insurances, rates and maintenance expenses that were to have been paid by the husband to the wife pursuant to order 1(d)(iii) of orders made 12 February 2018.

   4.That there be injunctions restraining the husband from:-

   a)Receiving any funds arising from the proceeds of the sale of the B Street property;

   b)Withdrawing or accessing any further funds from the M Town Loan Account and the S Town Commonwealth Bank Loan Account; and

   c)A mandatory injunction requiring the husband to direct the Commonwealth Bank of Australia to receive at settlement only those funds necessary to release the security for the S Town and B Street properties.

   5.Orders as may be necessary for the provision of documents relevant to management of the S Town property and orders as to the method and manner by which the S Town property is to be sold.

3. On 8 March 2019 an order was made imposing a mandatory injunction requiring the husband to direct the Commonwealth Bank of Australia to receive at settlement only those funds necessary to release the security for the S Town and B Street properties.

4. Judgment was reserved as to the balance of the husband’s Application in a Case filed 27 February 2019 and the wife’s response filed 7 March 2019.

5. Judgment was delivered on 22 March 2019 and the following orders were made:-

   (1)That the net proceeds of sale of B Street in or about the sum of THIRTY FIVE THOUSAND DOLLARS ($35,000) held in Bowden McCormack Lawyers and Advisors’ Trust Account be paid to Withnalls Lawyers Trust Account for and on behalf of the wife.

   (2)That paragraphs 1(a)(i) with respect to fuel expenses and (a) with respect to the wife’s mobile telephone expenses of orders made 12 February 2018 be discharged.

1. The interim proceedings were dismissed.

2. The B Street property was sold for $355,000.  At the date of hearing settlement was to occur on 11 March 2019.  There was uncertainty as to the balance of the net proceeds of sale of the B Street property.  The wife anticipated that given the outstanding liability secured over B Street the net proceeds would be about $133,833.17.

3. I found that the husband may have had a similar understanding given that it was his application that the net proceeds should be distributed in such a way that the outstanding bank liability of A Pty Ltd should be reduced.

4. It is likely that the parties were unable to agree on the distribution of proceeds when they considered them to be $133,833.17. When it became apparent that the bank liability to be discharged at settlement had increased by $96,148, the remaining balance of $35,428.89 was determined by me to be an amount that would be of assistance to the wife in respect of her mounting legal fees, but would have little beneficial effect on the overall liabilities of A Pty Ltd.

5. It could not be said that the husband was wholly unsuccessful in respect of the orders that he sought given that the Court’s decision was predicated upon the most recent information that the net proceeds of the sale of B Street would be significantly less than considered by both parties.

6. I do not ignore the wife’s contention that whilst she accepted the liability to the bank had increased, she asserted that it was yet again a further example of the husband’s non-disclosure.  It is not my recollection that the basis upon which the unexpected increase in liability to the bank was the subject of subsequent exploration.

7. Both parties sought that the S Town property be sold, albeit on different terms.

8. I found that whilst the husband contended that the S Town property was held by the parties on trust for Mr AA, he conceded that the property formed part of the property pool.  There was no indication as to whether either parties’ application for the sale of the S Town property were brought to the attention of Mr AA and in the absence of either party seeking to press for the sale of the S Town property I declined to make any order for sale. 

9. The husband sought that the orders for spousal maintenance made 12 February 2018 be discharged.

10. The wife opposed the husband’s application and sought that order 1(c) of the spousal maintenance orders be enforced by a further order that the wife should receive the sum of $1,000 per week to be paid from the trust account of Bowden McCormack Lawyers and Advisors with the sum to be categorised as a partial property settlement as to $500 of the payment.

11. The wife was unsuccessful in her application.

12. The husband succeeded in a modest variation of the spousal maintenance order which relieved him of the obligation to pay the wife’s fuel and mobile telephone expenses.

13. The husband sought that the wife return the motor vehicle 1 motor vehicle to A Pty Ltd.  The husband offered a replacement motor vehicle of lesser value.

14. The wife resisted the husband’s application and argued that he had not made out a basis for the return of the motor vehicle 1 in circumstances where she alleged the husband had purchased new motor vehicles for his parents that were not used for the business.  In addition she highlights that the husband had purchased a motor vehicle 4 for $93,233 and that the balance sheets of A Pty Ltd show that Mr G who was a business associate of the husband owns a motor vehicle 5.

15. I considered that there was insufficient evidence to support the husband’s application.  In particular, the husband asserted that there would be a financial advantage to A Pty Ltd if the more expensive Motor vehicle 1 was exchanged for a cheaper motor vehicle.  I found that there was an absence of relevant evidence and I declined to make the order as sought by the husband.

16. I am not satisfied that the husband was wholly unsuccessful in respect of his application.  The significant areas of contention between the parties were in respect of the distribution to the wife of the net proceeds of the sale of the B Street property, the competing applications of the parties in respect of the spousal maintenance order made 12 February 2018 and the dispute between the parties as to the status and sale of the S Town property.

17. The issues raised by each of the parties were not unreasonable against the backdrop of the factual matrix of the proceedings, but at least in part some of the issues were not able to be resolved on an interim basis.

18. Neither party achieved the outcome that they sought.

19. I do not interpret the provisions of s 117(2A) of the Act to enable a consideration of costs on the basis that a party may have been substantially successful or unsuccessful.

20. Nor do I consider that the issue of conduct is a relevant consideration.

21. I decline to make any order for costs in respect of the Application in a Case filed 27 February 2019.

P Bank debt

1. The wife seeks an order that the husband pay to the wife:-

   The sum of $7,985 for costs incurred by the Wife from 26 March 2020 arising from the Husband’s non-disclosure as to the Deed of Release dated 26 March 2020 as to the resolution of the P Bank liability to P Bank Limited.[2]

   [2] Application in a Case filed 10 July 2020 at [6(1)(d)].

2. The quantum of costs has been calculated on an indemnity basis.

3. The husband argues that the wife’s application for costs is outside of the 28 day limit within r 19.08 of the Rules given that judgment was delivered and final orders made on 14 May 2020.

4. The wife contends that at least in respect of order 1(d) of the final orders provision was made for the parties to resolve their differences or to bring further application.

5. There has been considerable discussion as to the requirements for a grant of leave.

6. The Full Court considered the applicable principles in the decision of Beckham & Quarrington (2019) FLC 93-913 at [16]:-

   The applicable principles were recently discussed by the Full Court of this Court, by reference to authority, in Gadzen & Simkin (2018) FLC 93-871 (“Gadzen”). These relevant passages from that judgment bear repetition. After setting out the relevant statutory provisions, the Full Court continued from [29] as follows:

   29.The statutorily expressed requirements for the grant of leave in s 44(3) of the Act are in identical terms, for all practical purposes, as those requirements with the grant of leave under s 44(6). It follows that authoritative pronouncements as to the principles applicable to the operation of s 44(3) apply equally to s 44(6). In Whitford and Whitford the Full Court stated:

   Thus, on an application for leave under sec. 44(3), two broad questions may arise for determination. The first of these is whether the Court is satisfied that hardship would be caused to the applicant or a child of the marriage if leave were not granted. If the Court is not so satisfied, that is the end of the matter. If the Court is so satisfied, the second question arises. That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings.

   30.…

   31.      In discussing hardship the Full Court in Whitford said:

   The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted. The loss of the right to institute proceedings is not the hardship, to which the subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned. The requirement, that the Court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the Court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted. …

7. Hardship must go beyond mere detriment.

8. The consideration of hardship and the merits of the application are informed by the evidence and the Court’s findings in the judgment.

9. The husband was clear in his position at trial that he was indebted to P Bank for either $448,587 or $404,000.

10. It was also acknowledged by the husband that the wife had sought documents that related to the purported outstanding liability and in particular correspondence and communication between the husband and P Bank as to the negotiations targeted at reducing the extent of the husband’s purported liability.

11. Significant court time was expended on the topic of the outstanding indebtedness to P Bank.

12. It is self-evident from order 1(d) that the extent of the P Bank indebtedness was a fundamental issue in the proceedings and was at a level of complexity that might well require the Court to further consider subsequent orders.

13. On 26 May 2020 the husband’s solicitors advised the wife’s solicitors that a Deed of Release had been signed between the husband, his business partners and P Bank on 26 March 2020.

14. The consequence of the Deed of Release was that as at 14 May 2020 the husband was no longer liable to P Bank pursuant to any personal guarantee given by him.

15. The wife accepts that the husband incurred legal fees of $17,500 to P Bank to resolve and execute the Deed of Release.

16. There remains some uncertainty as to the extent of the contribution to P Bank’s legal fees by the husband’s business partners.

17. The wife has been steadfast in maintaining her complaint that the husband has been recalcitrant in making discovery of documents relevant to significant issues in the proceedings but in particular the purported P Bank liability.  The husband concedes that he is at fault in not disclosing relevant documents.  He confirms that his solicitor and counsel were unaware that he had reached an agreement with P Bank until 26 May 2020.

18. Paragraph 39 of the husband’s affidavit filed 10 August 2020 provides as follows:-

    [The wife] alleges that prior to the orders of 14 May 2020 I did not disclose anything to [the wife] about my negotiations.  I say I was waiting for the judgment and remembered being told there would be some mechanism for dealing with the P Bank debt.  I truly thought it would be a surprise.  I had a lot going on which I can elaborate on if necessary and am truly sorry that I failed to meet my obligation to disclose.

19. Given the concessions by the husband as to non-disclosure I consider that hardship would be occasioned to the wife were I to not extend time for the wife to bring her application in circumstances where the application has merit.

Quantum of the wife’s costs arising from the P Bank debt

1. I consider that the conduct of the husband is egregious in not disclosing documents that he knew or should have known were highly relevant to the proceedings.  It is difficult to understand how the husband could have listened to the evidence and the final submissions made by his counsel as to the impact on the orders without the husband raising the fact that the debt had been effectively extinguished.

2. I consider the test for indemnity costs to apply has been satisfied and I propose to order that the wife’s costs of $7,985 be paid from the joint funds held in the Darwin Family Law Trust Account.

Should the husband be reimbursed his costs of $17,500 paid to TT Lawyers

1. On 26 May 2020 the husband advised the wife’s solicitors that a Deed of Release had been signed with P Bank on 26 March 2020 and that he had also paid the sum of $17,500 for P Bank’s legal fees.

2. There is a concession by the wife that the husband has paid the fees as stated, but again in the absence of disclosure of relevant documents, it is difficult for the wife to understand the basis upon which the legal fees were incurred.

3. It may well be a matter that could have been properly considered at trial but the opportunity for evidence to be heard and the Court to determine whether it should be a joint matrimonial liability, or whether the husband and/or his business partners should bear the outstanding legal costs in some proportion is no longer a matter that can be properly considered.

4. The inability of the wife to better understand the basis upon which legal fees were incurred and the potential for other parties to have a joint and several liability is a direct consequence of the husband’s non-disclosure.

5. I decline to bring to account as a set off or offset the husband’s purported legal fees paid in the sum of $17,500 to TT Lawyers for P Bank legal fees.

Should the husband be reimbursed for spousal maintenance payments made from 20 January 2020

1. The husband’s application arises from the wife’s evidence that she commenced work on 11 November 2019 and had re-partnered since early 2019, if not before.

2. In the proceedings I found that the wife’s change in circumstances was a significant factor and brought to account that the husband had paid significant additional expenses in respect of the children over and above that which was required by the order.

3. The issue arose consequent upon the wife’s application seeking an arrears of spousal maintenance in the sum of $39,530.

4. A concession was made by the wife’s queen’s counsel that the quantification of the amount as asserted was less than satisfactory.

5. I resolved the matter favourably to the husband in that I found that the evidence did not support a finding in terms of the wife’s application for arrears.  I also accepted the husband’s concession that he did not make maintenance payments because of the sum of $20,000 that the wife had drawn down from the M Town property mortgage.

6. After careful consideration I concluded that the arrears should be set at $12,980 calculated by reference to an amount of $1,180 for 11 weeks.

7. The final order reflected that the wife be paid the sum of $12,980 from the S Town property proceeds as an additional sum to her entitlement.

8. I do not consider that I am in a position to reopen the proceedings in respect of spousal maintenance to determine the husband’s application for reimbursement.

9. The wife’s evidence was clear and there was the opportunity for the issue of reimbursement to the husband to be further considered.

10. I decided to compromise the competing applications of the parties in respect of arrears and purported overpayment of spousal maintenance in the manner as finally determined.

11. I propose to make no order in terms of the husband’s application for a reimbursement of $7,500.

That the property at L Street, M Town be effectively placed on the market for sale

1. The final orders provided for the wife to discharge, refinance or vary the existing CBA loan secured by mortgage over the M Town property and that contemporaneous with the discharge of the debt, the husband would transfer his right, title or interest in the M Town property to the wife.

2. Provision was made in circumstances of the default of the discharge of the debt in that should default extend for a further 21 days then the M Town property was to be sold by way of private treaty or auction upon such terms as agreed between the parties and in default of agreement as ordered.

3. The discharge, refinance or variation of the CBA loan has not occurred.

4. The husband considers that the wife is in default and therefore the property should be sold even though she seeks to retain the M Town property.

5. The husband’s application is the subject of a Reply by the wife in that she seeks that order 1(a) of orders made 14 May 2020 be extended to read “to 60 days from 2 November 2020”.[3]

   [3] Reply filed 21 August 2020 at [2(5)]

6. The wife argues that the husband’s failure to pay the loan repayments pursuant to the order of 12 February 2018 had the effect of placing the loan on “hardship” for six months from 7 May 2020 to 2 November 2020.

7. The further difficulty arises from COVID-19 restrictions in that the wife is not able to vary the hardship conditions for the loan but in particular the delay in the wife being able to receive her entitlement for the funds remaining in Darwin Family Law’s trust account.

8. It is a further relevant consideration that there would be no prejudice to the husband in that if the M Town property was sold, the wife would be entitled to retain the entirety of the net proceeds.

9. It is not open to a court to vary the substantive provisions of a s 79 order.  It is open to a court to vary what might be described as “machinery” or “consequential” provisions of a property order.

10. The power to vary is limited and is to be defined by the intention and substance of the original order.

11. The Full Court in Holland & Holland (1982) FLC 91-243 at page 77,343 found that a court must have regard “to the issues of justice and equity between the parties”.

12. I accept that an order that the wife pay a certain sum to the husband within a particular time is a substantive order and her inability to raise the required finance within the time thereby requiring an extension of time would be a breach of a substantive right.

13. The situation and circumstance as presented by the wife is a different consideration.

14. There is no prejudice to the husband.  The intention of the parties is that the wife is to retain the M Town property providing it is at her cost and expense.

15. The husband considered that it was important for the wife and children to have the security of accommodation. In the absence of any evidence that suggests the timely or early discharge of the CBA loan secured by mortgage over the M Town property represents a prejudice to the husband, it is difficult to see that the wife’s application falls into the category of an order effecting a substantive right.

16. Moreover, it may well be considered that the wife’s circumstances would be fundamentally different if the issue of the P Bank loan had been resolved at trial without the residual uncertainty of what money may be available to the wife.

17. It is now likely that the parties are able to resolve their separate final share of the monies currently held on trust following the sale of the S Town property.

18. It is a reasonable consideration that the wife’s position will now be assisted in being able to refinance the M Town mortgage which currently stands at $308,000.

19. I propose to dismiss the husband’s application and to make orders as sought by the wife.

Conclusion

1. I do not propose to make any order for costs in favour of either party in terms of the hearing of the current applications.

2. I make orders as appear at the commencement of these reasons.

I certify that the preceding one hundred and twenty four (124) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 30 September 2020.

Associate: 

Date:  30 September 2020