Allan and Allan (No. 2)

[2008] FamCA 1239

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN (NO. 2) [2008] FamCA 1239

FAMILY LAW – COSTS –  Whether there should be an order for costs on the applicable principles – consideration of s117(2A) – whether the findings attract such principles – costs order made on party-party basis

Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(2A)

Penfold v Penfold (1980) FLC90-800

APPLICANT: Ms Allan

RESPONDENT: Mr Allan

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 24 November 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Honourable Justice Rose

HEARING DATE: 24 November 2008

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Paul and Paul, lawyers

COUNSEL FOR THE RESPONDENT: M R Aldridge SC

SOLICITOR FOR THE RESPONDENT: John DeMestre & Co., Solicitors

Orders

1. That the husband pay half of the wife’s costs of and incidental to his Application for Review filed 26 September 2008 as may be assessed and agreed upon or failing agreement as taxed.

1. I certify for senior counsel for the wife to be briefed so far as potential taxation of the costs order is concerned.

IT IS NOTED that publication of this judgment under the pseudonym Allan & Allan is approved 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

MS ALLAN

Applicant

And

MR ALLAN

Respondent

REASONS FOR JUDGMENT

Introduction

1. An oral application is made on behalf of the wife for an order that the husband pay her costs of and incidental to the review application that he filed on 26 September 2008.  That application was today determined by me by the Orders that I made.

2. It is well established that there is a wide discretionary power to make an order for the costs pursuant to section 117(1) of the Family Law Act1975 (Cth).

3. The general principle is that, in this jurisdiction, each party bears his or her own costs.  That is subject to the discretion to make an order for costs as may seem just or proper as set forth in of section 117(2A).

4. In Penfolds[1] the High Court held that a special circumstance need not be established but rather that a circumstance or circumstances need to be established before the relevant matters to the exercise of discretion are considered.

   [1] Penfold v Penfold (1980) FLC90-800

5. In this matter each of the parties achieved a certain amount of success so far as the review application was concerned.  That was because, whilst the husband sought an order that the interim spousal maintenance orders made by Judicial Registrar Loughnan on 8 September 2008 be set aside, nonetheless, the lack of failure of that application was accompanied by a lesser success in that the orders for interim spousal maintenance made by the Judicial Registrar were substantially reduced.

6. The wife for her part successfully opposed the application of the husband that the orders of 8 September 2008 be set aside, albeit that ultimately the quantum of periodic maintenance was reduced. 

7. Consequently, each party could claim a measure of some success.  Were it not for the highly significant wealth controlled by the husband through the Allan Family Trust, I would have been minded to find that the wife had not been able to establish the threshold issue, namely, that there was a circumstance that may justify an order for costs being made.

8. I find that there is a circumstance, namely, the high wealth under the control of the husband as opposed to property of the wife which realistically does not amount to significant funds available for her to be accessed, having regard to liabilities as well as funds held at the bank, but also her superannuation entitlements which I referred to in the Reasons for Judgment given today.  Those superannuation entitlements are significant, of that there is no doubt. 

9. The real issue is the legal impact upon her, particularly from a tax viewpoint.  In terms of her accessing those entitlements, notwithstanding her age, as I referred to in the reasons for judgment my attention was not drawn to the provisions of the relevant inter-related legislation and regulations which govern the accessibility by the wife to her superannuation entitlements.

10. Consequently, without knowing what the taxation effect may be upon her, taking into account such matters as whether she is a retired person within the meaning of the legislation or whether she has exceeded the minimum hours of work in order to make it attractive to access those entitlements, it is property which has, at this stage, theoretical importance as opposed to an assessment of the practical implications of accessing those superannuation entitlements.

11. No other issue was raised by either the solicitor for the wife or senior counsel for the husband, to which I should have regard, in view of the provisions of s 117(2) of the Act.

Conclusion

1. I have concluded that it would be just and proper for the husband to pay half of the costs incurred by the wife on a party/party basis in relation to the contested review application filed on behalf of the husband.

2. My reasons are that, notwithstanding the limited success that each of the parties achieved, standing behind the application was the husband’s access and control of very significant net assets in the Allan Family Trust which, despite financial constraints which the husband seems to be meeting of late, could not be properly considered to the full extent.  That was due to the lack of evidence by him of his current estimated weekly expenditure and the extent to which, if at all, he has endeavoured to meet the financial constraints referred to in his affidavit evidence by reducing his own expenditure.

3. The result is that the husband’s loan account balance, to his credit and as a liability of the trust, in December 2007 was approximately $99 million.

4. I have accepted the husband’s evidence that for him to utilise the financial resource represented by the Allan Family Trust, the trust has had to achieve borrowings by way of one or more finance facilities.  Nonetheless, it appears on the evidence that the parties have continued to maintain to a large extent a luxurious lifestyle, notwithstanding the financial constraints to which the husband refers.

5. I infer from those matters that the husband is able to continue to indirectly utilise the assets of the trust for his personal benefit.  In those circumstances, and having regard to the relatively small net assets of the wife and potential implications of accessing her superannuation fund, which was not made clear either during the evidence or in the course of submissions, I consider it just or proper that the order that I have indicated will be made.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Associate: 

Date:  20 April 2009