Amado and Gough (No. 4)

FAMILY COURT OF AUSTRALIA

AMADO & GOUGH (NO. 4)

[2007] FamCA 1182

FAMILY LAW – COSTS – judgment and orders 4 May 2007 – costs on a party/party basis – lack of full and frank financial disclosure

Family Law Act 1975 (Cth)

Penfold & Penfold (1980) FLC 90-860
Gallo & Dawson (1990) 93 ALR 479
DDF & JEL (No. 2) (2001) FLC 93-083

APPLICANT:	Mr Amado
RESPONDENT:	Ms Gough
FILE NUMBER:	SYF	5594	of	2003
DATE DELIVERED:	28 September 2007
PLACE DELIVERED:	Sydney
JUDGMENT OF:	The Honourable Justice Rose
HEARING DATE:	27 September 2007

REPRESENTATION

SOLICITOR FOR THE APPLICANT:	Clinch Neville Long Letherbarrow
COUNSEL FOR THE RESPONDENT:	F D Coyne
SOLICITOR FOR THE RESPONDENT:	Archbold Legal Solutions

Orders

That the respondent pay the applicant’s costs of and incidental to the proceedings determined on 4 May 2007 as assessed and agreed upon or failing agreement as taxed.
That the orders sought in paragraph 2 of the Application in a Case filed 31 May 2007 be amended in accordance with the Minute of Orders dated today, initialled by me and placed on the court file.
That the amended application of the applicant for orders so sought be stood over to a date to be fixed by arrangement with the Associate to the Hon. Justice Rose.

IT IS NOTED that publication of this judgment under the pseudonym Amado & Gough is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

File number: SYF5594 of 2003

MR AMADO

Applicant

And

MS GOUGH

Respondent

REASONS FOR JUDGMENT

On 4 May 2007 I made orders for property settlement in proceedings between the parties and dismissed an application by the respondent for an order for spousal maintenance.
By his Application in a Case filed 31 May 2007 the applicant seeks orders that the respondent pay his costs of and incidental to the proceedings on an indemnity basis, or in the alternative, on a solicitor/client basis.
The applicant also seeks orders that compliance with any order for costs be deemed to have taken place by the payment that would otherwise have been made to the respondent in accordance with Order 1(e) made 4 May 2007.
Counsel informed me on 27 September 2007 that further submissions would be made in relation to that application following judgment being given in respect of the applicant's application for costs.
Pursuant to section 117(1) the general principle in this Court is that each party bears his or her own costs.
However, pursuant to section 117(2) a discretionary power is provided to make an order for costs should there be circumstances which justify the order being made.
As was made clear by the High Court in Penfold & Penfold[1] a special circumstance is not required.
[1] Penfold & Penfold (1980) FLC 90-860
I find that there is a circumstance which justifies consideration as to whether an order for costs should be made.
That circumstance is that the respondent failed to make a full and frank financial disclosure as is required by the Rules in the circumstances set forth in the Reasons for Judgment given 4 May 2007.

Section 117(2A)

I now proceed to consider the relevant matters for that purpose pursuant to section 117(2A).
The applicant is 69 years of age and has serious health issues.
I found on the evidence before me, at the time when I gave judgment, his health was then sound.
The respondent is 55 years of age. I made a finding that her health was sound, in the absence of evidence given by her and especially by any expert medical witness on her behalf to suggest that she did have health issues at the time of the trial.
It has been submitted on behalf of the respondent that during the trial the respondent suffered a “fragile mental condition”. There was no evidence before me in that regard. Of course it would still be relevant for me to take into account the respondent’s state of health subsequent to judgment having been given on 4 May 2007.
It was pointed out to me by counsel for the respondent that paragraph 21 of the written outline of submissions was not relied upon. However, paragraph 22 refers to a condition that the respondent was suffering from and as a result was admitted to N Clinic under the care of Dr W for a period of five weeks from late May 2007.
Yet, notwithstanding that submission, no evidence has been put forward whatsoever in relation to the health issues that the respondent may have been suffering from in recent times whether by way of evidence given by her or, more pertinently by evidence given by a medical practitioner.
Consequently, I am not in a position to make a finding that the mental health of the respondent or indeed any aspect of her physical health is anything other than sound.
The property of the parties on the evidence before me enabled me to make findings as set forth in the Reasons for Judgment.
That revealed the net property of the parties was $571,009 as well as the residential property owned by the respondent in France.
The financial circumstances of the applicant are modest. He has an average weekly income of $1,400.00 gross. The applicant has the physical and mental capacity for appropriate gainful employment as an engineer with the limitations in relation to exercising that capacity that arise having regard to his age.
The income of the respondent I found to be approximately $480.00 per week. A large proportion of that income was represented by distributions described as "family estate" of $340.00 per week.
As I emphasised in the judgment, I was unable to make a finding regarding all relevant aspects of the respondent’s financial circumstances which was due to the failure by the respondent to make a full and frank financial disclosure in the circumstances outlined in the judgment, including but not limited to, the failure to disclose her French bank account and the movement of funds in that account, as well as the utilisation of approximately $219,000.00 from her Commonwealth Bank account which was transferred to a French bank account. Interestingly, those deficiencies have still not been remedied by the respondent. A new financial statement was not placed before me nor an affidavit which attempted to explain and remedy the glaring deficiencies in her financial disclosure at the time of the trial.
This aspect of the matter is further exacerbated in relation to the application that I am not determining as the respondent has been and continues to be legally represented in relation to that application.
No adjournment was sought on behalf of the respondent to enable her to adduce such evidence for the purpose of consideration of all relevant factors in relation to the applicant's application for costs such as her health issues and for a full and frank financial disclosure.
I have also made findings of an adverse nature in relation to the respondent in respect of procedural and interlocutory matters which do not require reiteration.
It is contended on behalf of each of the parties that offers for settlement were made and ultimately rejected. That evidence will not be relied upon by me as there is insufficient evidence to satisfy me that the offers of settlement were in fact received by one party or the other.
As was made clear in the written outline of submissions on behalf of the respondent, the respondent did receive certain offers of settlement made on behalf of the applicant. Indeed, the respondent in her Affidavit sworn 24 September 2007 refers in paragraph 2 to paragraphs 4-7 of the Affidavit of the applicant's solicitor sworn 31 May 2007 and having said that she is unable to say whether letters were received as suggested. On the other hand, the respondent does say that she did see “this offer”. What is meant by “this offer” is not clear. The reason is that paragraphs 4-7 contain a number of alleged offers that were made.
In addition, in paragraph 6 of the respondent’s Affidavit sworn 24 September 2007 provides evidence which is internally contradictory. On the one hand the respondent says she did make offers of settlement and then in the last sentence of that paragraph states that:
“Since I was acting for myself I was unaware of the ability and need for myself to make an offer and was ignorant of the effect of a formal offer being made by him.”
Leaving aside the last issue, that is the effect of a formal offer, it seems that on the one hand offers for settlement were made by the respondent and yet on the other hand the respondent swears that she was unaware of the ability and need for her to make an offer. Clearly, that paragraph does not lead to any rational conclusion.
Consequently, I do not propose to attach any weight to offers for settlement that were allegedly made by one party or the other.
I have concluded that an order for costs on a party/party basis will be made in favour of the applicant.
My reasons are that the respondent failed to make a full and frank financial disclosure, the subject of findings in my Reasons for Judgment on 4 May 2007. The failure to do so did not represent a minor matter. There was a deliberate failure to disclose her French bank account. There was a further deliberate failure to provide any reasonable evidence as to the receipt in France of over $200,000.00, let alone the application of those funds.
The respondent claims that she was ignorant of what was required of her because she was unrepresented. That is a theme which recurs repeatedly in submissions made on her behalf, as well as during the trial. Nonetheless, the respondent was given every opportunity to seek guidance as to any aspect of procedure that she was unfamiliar with or in relation to any questions of law.
There is a limit as to how much consideration can be given for a party who is unrepresented.
Quite clearly, it is a difficult situation to be in with litigation in any Court and especially when one is dealing with property settlement proceedings in this Court. However, as McHugh J stated in the High Court in Gallo & Dawson:
“Lack of legal knowledge is a misfortune not a privilege.”[2]
[2] Gallo & Dawson (1990) 93 ALR 479 at 481
The fact of the matter is that the respondent failed to make a full and frank financial disclosure in a number of material respects.
The Family Court Rules, as well as the principles in that regard, have been established over many years. It is a fundamental requirement of all parties to litigation in this Court that they make such full and frank financial disclosure. Indeed, it is drawn to the attention of litigants, whether they are represented or not, on the front page of financial statements that they are required to swear or affirm. That applies whether a person is legally represented at a trial or otherwise. The seriousness with which a lack of full and frank financial disclosure is regarded is a historic one. The weight which may be attached to that factor was emphasised by the High Court in Penfold's case and in particular the reasons for judgment of Murphy J.[3]
[3] ibid at 75,055
The applicant has sought an order for indemnity costs.
I do not propose to make an order on that basis.
I bear in mind the principles in relation to a possible departure from the ordinary rules relating to costs as set forth by the Full Court in its judgment in DDF & JEL (No. 2).[4] I follow the caution that the Court should not depart lightly from those ordinary rules.
[4] DDF and JEL (No. 2) (2001) FLC 93-083 at 88,441
I consider that there has been substance in the application made by the applicant for indemnity costs principally because of the nature and extent of the failure by the respondent to make a full and frank financial disclosure.
However, I have taken into account that:
(a)the respondent has been unrepresented,
(b)in relation to certain issues including the agreement reached by the parties in respect of division of proceeds,
(c)the sale of one property was as contended by the respondent,
(d)the length of the trial before me was not unduly prolonged, notwithstanding the failure to make a full and frank financial disclosure on the part of the respondent.
The weight that I give to those matters is such that although this application in my view is finely balanced, I have concluded that it is just and proper that the order for costs be on a party/party basis only.

I certify that the preceding forty three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Associate

Dated: 5 October 2007

[2007] FamCA 1182

28 September 2007

Key Legal Topics

Areas of Law

Civil Procedure

Legal Concepts

Costs