Allan & Allan & Ors (No 2)

[2014] FamCA 372

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS (NO. 2) [2014] FamCA 372

FAMILY LAW – COSTS – costs order made against 1^st Respondent where the Intervenors were wholly successful – monies paid into court to be made available to satisfy or partly satisfy the costs order

Family Law Act 1975 (Cth)

APPLICANT: Mrs Allan

1^st RESPONDENT: Mr Allan

3^rd RESPONDENT: Ms C Allan

4^th RESPONDENT: Mr L Allan  

5^th RESPONDENT: Ms H Allan

6^th RESPONDENT: Ms E Allan

12^th RESPONDENT: Mr Senne as trustee for AM Trust

13^th RESPONDENT: Mr Senne

14^th RESPONDENT: Mr CC as trustee for AM Trust

INTERVENORS  : Mr D & Mr CP (Receivers)

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 6 June 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 29 May 2014

REPRESENTATION

SOLICITOR FOR THE WIFE: Paul & Paul Lawyers

COUNSEL FOR THE 1^ST RESPONDENT: Ms Oliak

SOLICITOR FOR THE 1^ST RESPONDENT: Hudson Law

SOLICITOR FOR THE 12^TH & 13^TH RESPONDENT: Delaney Lawyers

COUNSEL FOR THE 14^TH RESPONDENT: Mr Kuklik

SOLICITOR FOR THE 14^TH RESPONDENT: Clear Lawyers

COUNSEL FOR INTERVENORS: Mr Roberts

SOLICITOR FOR INTERVENORS: Kelly & Co Lawyers

Orders (Made 29 May 2014)

1. An order will be made that the Husband pay forthwith the costs of the Receivers and Managers of W Nominees No. 2 Pty Ltd (Receivers and Managers Appointed) (in liquidation), Mr D and Mr CP (“the Receivers”) of and incidental to:

   1.1.The Receivers’ Application filed 8 March 2012;

   1.2.The Receivers’ Application filed 31 May 2012;

   1.3.The Husband’s Application filed 5 June 2012;

   1.4.The Husband’s Amended Application filed 14 June 2012

   on a party/party basis in a sum to be agreed in writing and if not agreed, to be assessed.

2. The sum of $15,000 that had been paid in by HH Pty Ltd in respect of which Notice of Payment into Court was filed 28 November 2012 is to be wholly or partially released to the Receivers to satisfy any agreed or assessed amount pursuant to order 1 forthwith upon that agreement or assessment.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allan & Allan and Ors (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 SYDNEY

FILE NUMBER: SYC 3842 of 2008

Mrs Allan

Applicant

And

Mr Allan

1^st Respondent

And

Ms C Allan

3^rd Respondent

And

Mr L Allan

4^th Respondent

And

Ms H Allan

5^th Respondent

And

Ms E Allan

6^th Respondent

And

Mr Senne as trustee for AM Trust

12^th Respondent

And

Mr Senne

13^th Respondent

And

Mr CC

14^th Respondent

And

Mr D and Mr CP (Receivers)

Intervenors

REASONS FOR JUDGMENT

1. On 29 May 2014 I reserved my reasons and I now provide them.

2. By way of an Application in a Case filed 14 May 2014, the Receivers sought an order that the husband pay their costs in respect of and incidental to:

   2.1.The Receivers’ Application filed 8 March 2012

   2.2.The Receivers’ Application filed 31 May 2012;

   2.3.The Husband’s Application filed 5 June 2012;

   2.4.The Husband’s Amended Application filed 14 June 2012

3. The Receivers also sought an order for payment out to them of an amount of $15,000 which was paid into court by HH Pty Ltd as security for costs, or in the alternative, that once any cost order had been agreed or assessed, that all of that money or part of that money (if the costs as agreed or assessed did not exceed the amount of the security) be paid to them.

4. The Receivers’ Application filed 8 March 2012 was in substance proposed orders 1, 2 and 3 as set out in paragraph 3 of my Reasons for Judgment dated 29 October 2012.

   1. The Receivers cause to be paid out of the account created pursuant to order numbered 5 of the orders of this court made 17 June 2010 (BankSA Investment cash account No. …50) (“controlled account”) the sum of $600,000 (inclusive of GST) into a controlled monies account under the joint control of Michael Paul as solicitor for the wife and Michael Delaney as solicitor for [Mr Senne] as trustee of the [AM] Trust to abide the further order of the court.

   2. The Receivers be at liberty to have access to and deal with the balance of the funds remaining in the controlled account following the payment contemplated by paragraph 3 above in accordance with their obligations as Receivers and Managers of [W] Nominees No. 2 Pty Ltd (Receivers and Managers appointed ) (in liquidation).

   3. The Receivers be relieved from the undertaking referred to in paragraph 1 of the orders of this court dated 4 November 2010 and that they be at liberty to sell the items identified in paragraph 9 of the affidavit of [Mr Senne] sworn on 2 November 2010 and filed in these proceedings.

5. The Receivers’ Application filed 31 May 2012 sought an order that the husband provide security for costs of the application filed by the husband pursuant to leave granted on 23 May 2012 in connection with the ownership of certain property claimed to be owned by the AM Trust.

6. The husband’s Application filed 5 June 2012 sought a number of orders but relevantly sought an order that money in a special account relating to the 23 items (being the monies held in the investment cash account with the Bank of South Australia, account ending …40), be paid to the trustee of the AM Trust forthwith. In that application the husband also sought that he be fully reinstated forthwith as the protector of the AM Trust.

7. The husband’s amended application filed 14 June 2012, amongst other things, sought by way of final order, a declaration that the 23 items referred to in the schedule to the orders of 10 June 2010 were the properties of the AM Trust. By way of the interim order, the husband reiterated that he sought a discharge of order 4 made 10 June 2010 which was a restraint on his role as protector of the AM Trust.

8. At paragraph 3 of my reasons of 14 April 2014, I commented that:

   3.  Although the Receivers in their written submissions say that their application should be dealt with first (and if successful would render the husband’s application academic), it was agreed at the start of the hearing that the husband would become the moving party and that his application to be relieved from the injunction against him exercising his powers as protector of the [AM] Trust would be the matter that would be argued first, although all parties acknowledged the connection between the two applications.

9. At paragraphs 71 to 76 of my reasons, I concluded:

   71. I accept the Receivers’ submission that the two applications that I am asked to decide are interwoven.

   72. The consideration as to whether or not the husband’s application to be relieved from the injunction against him limiting his ability to act as protector of the [AM] Trust needs to be decided in the context of what would flow from the result of that application being successful.

   73. The result of the lifting of the injunction would be that Mr [CC] would be appointed as Trustee of the [AM] Trust with the consequence that the Trustee of the [AM] Trust would no longer support the consent orders which are sought by the current trustee. The husband submitted, in an orderly working out of what should happen with a very significant asset, it was appropriate that a contradictor (Mr [CC]) be appointed.

   74. I find that in order to make a decision about reinstalling the husband’s powers as protector, there needs to be a consideration in respect of whether or not Mr [Senne] has exceeded his powers in respect of compromising any claim that the [AM] Trust may have to the proceeds of the sale of the 23 items and in respect of the unsold items.

   75. Between 2002 and the current application by the husband, Mr [Senne] was chosen and maintained by the husband as trustee of the [AM] Trust. Given the nature of the hearing and the difficulties Mr [Senne] would have faced in the foreshadowed litigation and in seeking orders of the court in accordance with the compromise, I find that Mr [Senne’s] decision to compromise, in the way in which he has, is well within a proper exercise by him as trustee of the [AM] Trust. The Receiver and wife have negotiated in good faith with the current trustee of the [AM] Trust. I find that the judgment made by the current trustee should be allowed to stand.

   76. I conclude that the injunctive order against the husband should not be discharged until after the consent orders are made.

10. I am unable to accept the submission made by counsel for the husband that the husband’s application to have the injunctive order, which prevented him from exercising his role as protector of the AM Trust, discharged was in some way unconnected with the Receivers’ application for orders which would finalise the Receivers’ involvement in the case.

11. As is clear from my reasons, I accepted the Receivers’ submission that the Receivers’ application and the husband’s application were interwoven and that the husband’s application needed to be decided in the context of what would flow if that application was successful. Had the husband’s application been successful, the Receivers’ application to have consent orders made would have been defeated.

12. As counsel for the Receivers emphasised, the Receivers only opposed the husband’s application if it were to be made prior to the consent orders being made. After consent orders were made as proposed by the Receivers, the Receivers no longer had any interest in the remaining part of the litigation. This is clear from paragraph 22 of my reasons of 14 April 2014 where I said:

    22. The Receivers made it clear that their objection to the husband’s application to be relieved from the restraint against him as protector of the [AM] Trust is only to the extent that the appointment of a new trustee would interfere with the Receivers ability to obtain the fruits of the agreement that has been struck with the current trustee, Mr [Senne], and the wife. The Receivers’ objections fall away once the consent orders are made as from that time the Receivers will have no interest in any application by the husband to seek reinstatement of his powers as protector of the [AM] Trust.

13. Counsel for the husband submitted that the orders for the security for costs were solely in relation to the orders sought by the husband in relation to having the restraint upon him as a protector of the AM Trust discharged.[1] Counsel for the husband conceded that the husband’s application to lift the restraint upon him as Protector of the AM Trust was to enable him to install a trustee who would oppose the Receivers’ applications. In this case an order for security for costs was made in circumstances where the husband effectively sought to oppose an application made by the Receivers at a time when he was an unsecured bankrupt. Counsel for the husband however argued that even if the husband’s powers as protector were reinstated, he would still not have a basis for himself personally to oppose the applications, and the basis for which he intended to change the Trustee was not relevant to the fact that he did prevail with respect to this particular issue. I cannot agree that the husband’s motivation was irrelevant. Counsel for the husband incorrectly submitted that the orders being sought by the Receivers opposing the husband’s applications had nothing to do with timing; they simply opposed the husband’s application. As indicated, the Receivers made it clear that the timing was critical and they did not oppose the husband’s application as long as no order was made in the husband’s favour prior to the court making the consent orders sought by the Receivers, the wife and the current Trustee of the AM Trust.

    [1] Reference was made to [9] to [30] of Reasons for Judgment dated 29.10.12

14. Counsel for the husband also submitted that because it was necessary for the Receiver to bring that application for the court to make consent orders to give effect to the compromise, and the court was required to discharge order 3 made 17 June 2010 which restrained the Trustee from dealing with any asset of the trust until further order, the husband should not have to pay for costs to the Receivers. Further, counsel for the husband submitted that courts do not usually make orders for costs in favour of a party where it is necessary for them to have to come to court to seek the orders and that a party who is seeking the indulgence of the court should pay the cost of the application irrespective of the outcome. Those submissions ignore the way in which the husband’s application was interwoven with that of the Receivers.

15. Counsel for the husband submitted that it was not unreasonable for the husband to oppose the application. It is noted in that regard that by entering into the Settlement Deed in the first place, the parties had, according to the submissions of the husband, contravened a court order which specifically prevented the parties from dealing with the assets of the AM Trust. The suggestion that orders had been contravened was made and rejected in the substantive hearing.

SECTION 117

1. Section 117(1) of the Family LawAct 1975 (Cth) (“the Act”) provides that subject to ss (2), each party to proceedings under this Act shall bear his or her own costs.

2. The Receivers’ application is made pursuant to s 117(2) of the Act. That subsection provides that if, in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may make such order as to costs and security for costs, as the court considers just.

3. Section 117(2A) of the Act sets out the matters to be considered if any order is to be made for costs.

4. Neither party relied upon any evidence relating to their respective financial circumstances, although I am aware that the husband is an undischarged bankrupt and the Receivers have received funds from various sources by way of liquidating assets held by W Nominees. It was primarily on the basis that the husband was an undischarged bankrupt that the order for security for costs was made.

5. Neither party is in receipt of assistance by way of legal aid.

6. Neither party asserts that the conduct of the other is a relevant matter in respect of the applications to which this costs application relates.

7. Similarly, neither asserts, in the context of this application, that proceedings were necessitated by the failure of a party to the proceedings to comply with previous court orders.

8. There was no reference made by either party to any written offer.

9. The only matter to which the court was referred was s 117(2A)(d) of the Act which provides:

   Whether any party to the proceedings has been wholly unsuccessful in the proceedings.

10. The husband was wholly unsuccessful in obtaining a discharge of the injunctive order preventing him from exercising his powers as protector of the AM Trust to appoint a new trustee prior to the consent orders being made. The husband failed to eliminate the ability of the Receivers to proceed with the application which they had made. The Receivers were wholly successful in obtaining the relief which they sought.

11. I find that it is just that the Receivers be awarded party/party costs against the husband in respect of the four applications referred to above in a sum agreed in writing or failing agreement, to be assessed.

12. The purposes of the payment into court of the sum of $15,000 was to secure the Receivers’ position in the event that a cost order was made in the Receivers’ favour in respect of these applications. I have no evidence as to the likely quantum of the cost order, when agreed or assessed, and whether or not it will be more or less than $15,000. In those circumstances, the security for costs should remain until that sum becomes known. When that amount is agreed or otherwise assessed, then those funds can be released to the Receivers in whole or in part to satisfy or partly satisfy the quantum of the cost order.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 6 June 2014

Associate:   

Date:  6 June 2014