Aitken and Murphy (No. 3)

[2012] FamCA 397

FAMILY COURT OF AUSTRALIA

AITKEN & MURPHY (NO. 3) [2012] FamCA 397

FAMILY LAW – COSTS - Application for costs – Costs sought on an indemnity basis – Quantum of costs identified – Finding that it is just for the payment of costs – The court to assess quantum of costs rather than ordering an assessment by a Registrar thereof – Updated financial evidence of the applicant – Transcript of evidence ordered – Outstanding further issues of discovery to be resolved or heard

Family Law Act 1975 (Cth)

APPLICANT: Mr Aitken

RESPONDENT: Mr Murphy

FILE NUMBER: MLC 11907 of 2010

DATE DELIVERED: 28 May 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 28 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Barbayannis

SOLICITOR FOR THE APPLICANT: Barbayannis Lawyers

COUNSEL FOR THE RESPONDENT: Ms Smallwood

SOLICITOR FOR THE RESPONDENT: T.J. Mulvany & Co

Orders

1. THAT the applicant pay the respondent’s costs of and incidental to the hearings in this Court on 15 December 2011 and on 13 and 28 March 2012 fixed in the sum of $29,500, and the payment of such costs be deferred until the settlement or determination of the final property and financial proceedings before the Court.

2. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to the parties.

3. THAT the evidence of the applicant, Mr Aitken be transcribed, placed upon the Court file and made available to the parties.

4. THAT within sixty (60) days a valuation be obtained at the joint expense of the parties of the business in the construction industry conducted by the respondent and for that purpose Mr Y, of Z Valuers, be appointed as the agreed single expert to undertake such valuation and produce a report for the parties that is to be filed with the Court.

5. THAT within sixty (60) days a valuation of the real property in Melbourne Suburb 1 (18 apartments) and the Melbourne Suburb 3 house be undertaken by the agreed single expert, BB Valuers, at the joint expense of the parties and that such report when prepared be made available to the parties and thereafter filed with the Court.

6. THAT within sixty (60) days a valuation of the property situate at C Street, Sydney Suburb 1 be prepared by the agreed single expert CC Valuers, with that report to be provided to each of the parties and be filed with the Court.

7. THAT for the purposes of all valuations of real property and the business the respondent forthwith pay the actual costs of such valuations and later be reimbursed by the applicant fifty per cent (50%) thereof upon the settlement or determination of the property and financial proceedings before the Court.

8. THAT for the purposes of the valuations the applicant and the respondent are to co-operate in all ways, give instructions to their accountants or other relevant persons or employees and facilitate a speedy and effective valuation(s) process.

9. THAT the Financial Conciliation Conference currently scheduled for 20 June 2012 be vacated and instead the parties attend before Registrar Moser a Financial Conciliation Conference fixed for 11.00 a.m. on 29 August 2012.

10. THAT otherwise all extant applications be listed to a case management and directions hearing before Young J on Wednesday 22 August 2012 at 10.00 a.m.

    IT IS CERTIFIED

11. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for each of the Applicant and Respondent.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Aitken & Murphy (No. 3) 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 11907 of 2010

Mr Aitken

Applicant

And

Mr Murphy

Respondent

REASONS FOR JUDGMENT

1. On 13 April 2012 I pronounced certain orders including the dismissal of interim property orders as sought by the applicant and I directed that the reserved cost issues be heard and determined on a future hearing.  As it transpires that hearing has been today and I have received submissions from Mr Barbayannis of Counsel for the applicant and Ms Smallwood on behalf of the respondent. 

2. As an initial issue I permitted evidence to be given under oath by Mr Aitken as to an update or amendment to his most recent Financial Statement which had been filed on 9 November 2011.  That was the financial circumstances affidavit that was before the Court on the interim property hearing and the other matters related thereto and in part the subject of my Reasons for Judgment delivered 13 April 2012.  In his evidence today, which of necessity was brief, Mr Aitken deposed to his now financial employment and circumstances, his temporary job earning $1,200 per week net and his changed expenses and outgoings and the fact that his friend, Mr U, no longer pays any of the outgoings.

3. Mr Aitken confirmed his ownership and possession of a BMW motor vehicle and his ownership of a Porsche motor vehicle, though he emphasised the alleged debt that he said is attached to that motor vehicle is not in his name.  He identified that Mr U is holding, through his corporate entity, a sum of approximately $35,000 which are moneys rightfully owing and payable to himself.  There was some limited cross-examination but I emphasise that the financial investigation was modest in the available timetable for this interim hearing on costs and the quantum and payment of costs and other issues.

4. I have directed that a transcript be taken out of the evidence of Mr Aitken and that will be placed upon the Court file and made available to both parties.  Otherwise I am therefore generally aware of the present financial circumstances of Mr Aitken, his somewhat limited income and modest current expenses.  I make no finding at this stage on the pool of assets or indeed on the assets of Mr Aitken.  I am, however, well aware of the way in which Mr Davis, who appeared as Counsel for Mr Aitken in the interim hearing, opened his case and his projection of what would be a reasonable and proper award of property on a section 79 division basis to his client.

5. On that basis a sum of approximately two million dollars or more was sought by Mr Davis as the appropriate future division of assets.  Again, I carefully make no finding in that regard and do not further comment upon the way in which the case was presented to the Court other than I have in my substantial Reasons for Judgment delivered 13 April 2012. 

6. The respondent has also filed an updated Financial Statement on 25 May 2012 and I have read that document and his updated statements of income and, as Ms Smallwood was at some length to emphasise, the way in which it is expended in maintaining or supporting assets.  Nevertheless the average weekly income of the respondent is in excess of $20,000 per week and subject to all of the expenses and outgoings to be paid therefrom.

7. In my Reasons for Judgment in the interim property matter I reserved to a further hearing the question of any payment of costs and it is this Application and the submissions and addresses of Counsel this day and the updated evidence before me which I have considered.  That further evidence includes the affidavit of the respondent filed 25 May 2012 and in particular paragraphs 1 – 6 (inclusive) thereof.  Helpfully the solicitor for the respondent has identified the costs sought as to Counsel and solicitor’s costs and disbursements.  They total $34,143.  They are said to represent the entire costs, that is, as if calculated on an indemnity basis.  It is acknowledged that the fees are not at scale but are costed on an hourly rate as identified in paragraph 4 thereof. 

8. Significantly it is said that the disbursements are paid as invoiced and thus those costs sought include the full fees for Counsel including Senior Counsel and in particular that is relevant to the hearing on 15 December 2011 when Mr North of Senior Counsel led Ms Smallwood and their fees of and related to the two days preparation on 12 and 13 December and the appearance for the hearing which did not eventuate on 15 December totalled approximately $14,000 or thereabouts. 

9. The primary Application made by the respondent is that there should be an award of costs made on an indemnity basis.  They should be made having regard to s 117AB and otherwise the factors identified in s 117(2A) of the Family Law Act 1975.  Finally and helpfully, Ms Smallwood identified that it would be reasonable and not contrary to her client’s instructions that any award of costs or order for costs be assessed by a Registrar or otherwise costs as considered by me to be appropriate could be stayed and that they would be paid on the settlement or determination of the property proceedings in this matter pursuant to section 90SM of the Act.

10. Ms Smallwood firstly submitted that the particular facts of this case do justify a rebuttal of the proposition that each party should pay his own costs.  The essence of her submission was that section 117AB remains in force and effect notwithstanding that notice has been given that it is to be repealed as and from 7 June of this year, but for reasons not related to the issues before the Court in this case.

11. The emphasis of Ms Smallwood is that there must be an order for payment of costs, be it some or be it all of the costs, once a finding is made that a party has knowingly made a false allegation or statement in the proceedings.  That false allegation or statement was identified as being the intentional non-disclosure of the agreement reached as a result of proceedings in the Supreme Court of Victoria to pay a sum of $390,000 or thereabouts in what is known as the R Pty Ltd matter. 

12. Ms Smallwood identified the material that was before the Court on the interim hearing and the affidavits relied upon and that included the affidavit of Mr W sworn 11 October 2011 and which document was an annexure to the affidavit of Mr Murphy filed 14 December 2011.  These are matters that I have identified in paragraph 88 of my previously published reasons for judgment.  The response of Mr Barbayannis was more to identify a timetable issue and when that debt crystallised, it being said that it was after the 15 December hearing date. 

13. My Reasons for Judgment certainly identified that was a significant issue in the proceedings.  I recall that I prudently declined making findings on all issues in those interim proceedings because indeed they were interim proceedings.  Nevertheless the issue of the R Pty Ltd liability and the agreed payment sum were matters before the court.  Ms Smallwood addressed the Court that they were likely the reasons why the solicitor and Senior Counsel for the applicant withdrew on or about 15 December but it is not necessary for me to consider that conclusion for the purposes of this Judgment.

14. The other limb of the argument of Counsel that it is just that there be a costs order involved a careful consideration of the factors identified in subsection 2A of section 117 of the Act.  In particular, emphasis was placed upon subparagraphs (c) and (e) thereof.  I conclude that as a result of my Reasons for Judgment the applicant, Mr Aitken, was unsuccessful.  Likewise there are significant issues involving the conduct of the proceedings including issues of discovery that were raised and which took the time of the court and some of which remain an ongoing issue. 

15. The financial circumstances of the parties are important in assessing those factors and I am acutely aware of the individual financial circumstances of both parties.  It is a matter of very real importance that Ms Smallwood has wisely based her claim upon a deferred payment, that is, upon settlement or judgment of the property claim.  Thus there is not the immediate financial pressures upon Mr Aitken to find money or to call in the $35,000 that is currently available to him but held by his friend, Mr U.

16. My assessment of this case on the basis of those subsection 2A factors is that it is just for there to be a costs order.  I am particularly attracted to the matters identified in subparagraphs (c) and (e) thereof and they are sufficient in my judgment to conclude a costs order to be made in favour of the respondent.  Having concluded those grounds it is somewhat unnecessary to further pursue the alternate ground of section 117AB and thus I refrain from making any particular finding of a knowingly made false allegation or statement. 

17. Ms Smallwood sought costs on an indemnity basis.  I am reminded, and indeed Ms Smallwood highlighted Mr Davis’ comments from the actual arguing of the case, where he identified that likely indemnity costs would or should be available to one or other of the parties, whoever was successful.  On balance I will not award indemnity costs.  I do so with some reluctance but bearing in mind the exceptional test for indemnity costs and balancing the issues of Counsel’s disbursements and the contents of paragraph 5 of the respondent’s affidavit as to the quantum of counsel’s fees of $23,880. 

18. I very carefully make no criticism of Counsel’s fees.  That may be what the market bears, but a finding of indemnity costs might be thought to follow that all costs will be paid on that full basis and on balance I do not think that is just within the Act or appropriate.  What I intend to do is make a finding for an order of costs and substitute what I think to be an appropriate quantum.  I have no issue whatsoever with all of the fees charged by instructing solicitor or indeed with the GST as payable.

19. I have raised with both Counsel this position, that is, that I conclude a quantum of costs.  Each of them has agreed that I have that discretion and have not opposed that course of action.  I intend to exercise that discretion in this case as I think it brings about what is most likely a just situation, avoids any further assessment of costs by a Registrar and saves costs, time and expense for the parties.  

20. Having said that, the discount that I think is appropriate is extremely modest.  I propose to order, and I find that it is just to order, a sum of $29,500 as the appropriate payment and I will defer payment of that sum to be made by the applicant to the respondent until the settlement or hearing and conclusion of the property and financial proceedings before the court. 

21. Thus, in summary I base my conclusion that costs are appropriate upon a consideration of the s.117(2A) factors and my assessment of an appropriate just sum of costs independent of any determination that they are of a level which would normally reflect an indemnity basis.  It is that discretion which I think is proper and important to achieve a just outcome and thus I will order $29,500 to be paid on that deferred basis.  I emphasise that these reasons were given ex tempore without leaving the bench and without further considering the cases which Ms Smallwood helpfully identified, two of which were most often used in these matters and she certainly highlighted, as well as one could expect on behalf of her client, all of the arguments in support of his submissions.

22. I will have these reasons transcribed, placed upon the court file and made available to both parties.  I will now proceed to pronounce appropriate orders.

I certify that the preceding twenty-two
(22) paragraphs are a true copy of the reasons
for judgment of the Honourable Justice Young
delivered on 28 May 2012

Associate: ……………………………………………………………

Date:  …………………………………………………………………