ATIKA & ATIKA

[2012] FamCA 859

FAMILY COURT OF AUSTRALIA

ATIKA & ATIKA [2012] FamCA 859

FAMILY LAW — ENFORCEMENT OF ORDERS

Family Law Act 1975 (Cth)

Palmolive v Cussons Proprietary Limited 46 FCR 225

APPLICANT: Ms Atika

RESPONDENT: Mr Atika

FILE NUMBER: MLC 730 of 2012

DATE DELIVERED: 12 September 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 12 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Neal

SOLICITOR FOR THE APPLICANT: Coote Family Lawyers

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: N/A

IT IS ORDERED THAT

1. By 4:00pm on 19 September 2012 the wife do all such acts and things and make all such payments as are required to pay to the Australian Taxation Office all taxation including penalties, interest, arrears or other imposts arising from the husband’s personal taxation returned for the Financial Years ending 30 June 2008, 2009, 2010 and 2011 in aggregate (“the Husband’s Taxation Liability”).

2. The wife in her capacity as the Sole Director of I Pty Ltd execute the Disclosure Statement in the lease for the property at C Street, R suburb in triplicate and deliver them to the husband’s solicitors by 4:00pm 19 September 2012.

3. The wife pay the husband’s costs of this Application fixed in the sum of $8,000.

4. In the event that the Husband’s Taxation Liability in accordance with paragraph 1 and the costs in accordance with paragraph 3 hereof are not paid within 28 days, the parties do all necessary acts and things to transfer to the husband, upon trust for sale, the property at P Street, M suburb being the whole of the land described in Certificate of Title Volume … Folio …on such terms and conditions as set by the husband and that upon completion of the sale, the proceeds be distributed:

   a.   to meet all costs, commissions and expenses;

   b.   to discharge any and all other encumbrances affecting the M suburb property;

   c.   to pay the husband’s taxation liability to the Australian Taxation Office;

   d.   to pay the costs set out in order 3 hereof; and

   e.   the balance to the wife

5. In the event that the wife fails to sign the Disclosure Statement pursuant to paragraph 2 hereof or do any act and thing and sign any documents required to give effect to the transfer upon trust, sale and settlement of the M suburb property pursuant to paragraph 4 of these orders a Registrar of this Court be appointed pursuant to s.106A of the Family Law Act 1975 to sign the Disclosure Statement and do all acts and things and sign all necessary documents to give effect to these orders upon in each case of a failure to so do filing of an affidavit by the solicitors for the husband deposing as to the wife’s failure to comply with these orders.

6. The wife be restrained from disposing of, encumbering, or otherwise dealing with the property at P Street, M suburb being the whole of the land described in Certificate of Title Volume … Folio …until payment in full of the husband’s Taxation Liability and payment of costs in the sum of $8,000 pursuant to paragraph 3.

7. The Application foiled 31 August 2012 be otherwise dismissed and removed from the list of cases awaiting hearing.

8. As soon as practicable the solicitor for the husband serve a sealed copy of these orders upon the wife at P Street, M suburb.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Atika & Atika 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 730 of 2012

Ms ATIKA

Applicant

And

Mr ATIKA

Respondent

REASONS FOR JUDGMENT

1. On 17 April 2012, Registrar Lethbridge made final property orders by consent.  Those orders, in summary, provided that I Pty Ltd, the company which operated the family business be granted leave to intervene in the proceedings.  The orders also provided that by 30 June 2012 the wife pay the husband $1 million, the wife transfer her interests in the real properties in Y suburb and R suburb to the husband, the husband sign personal tax returns prepared by Mr W and the wife pay and indemnify the husband in relation to any taxation liability arising from such returns.

2. The orders further provided that the husband transfer his interest in the M suburb property to the wife and that the company, I Pty Ltd, execute a lease on the current terms on the R suburb.  The husband, in good faith, proceeded with the settlement in accordance with the orders but now says that the wife has not paid his personal tax liability and did not, until after service of his application for enforcement, sign, as the sole director of I Pty Ltd, the lease in relation to the R suburb property.  And notwithstanding that she has now signed the lease, she has not signed and delivered the Disclosure Statement to his solicitors, which forms part of that lease.

3. It is the wife’s failure to comply with these orders which leads to the issue of these proceedings.  The husband’s application was filed on 31 August 2012.  On that date, the husband’s solicitors wrote to S Legal, who acted on behalf of the wife, asking them whether they had instructions to accept service.  Time was abridged for the hearing of the application today and it was directed that the documents be served upon the wife by 4 pm on 3 September 2012.  After the application was filed, the husband’s solicitor telephoned the wife’s solicitors asking whether they had received instructions to accept service.

4. On 3 September 2012 the husband’s solicitor again contacted the wife’s solicitor and advised them that if they did not confirm that they had instructions to accept service, they would serve the documents personally upon the wife.  Later that day, the husband’s solicitors were advised by Ms K, Ms L’s secretary, that the firm had received instructions to accept service of the husband’s application.  The documents were immediately served upon S Legal.  On 6 September, Mr P of S Legal wrote to the husband’s solicitor confirming receipt of the application and advising that he would be unlikely to be acting on the return date.

5. On 7 September, the husband’s solicitors received an email from Mr O, a senior lawyer at S Legal, confirming that they did not hold instructions to act on the wife’s behalf.  On 10 September 2012, someone describing herself as Ms X from S Legal, left a telephone message for the husband’s solicitor to the effect that S Legal did not have instructions to accept service and would be filing a notice of withdrawal that day.  A notice of ceasing to act was filed by S Legal on 11 September 2012.

6. On 10 September 2012, the husband’s solicitor telephoned the wife directly.  She confirmed that she had received the application in a case and the affidavit in support and would be acting on her own behalf.  The wife sent the husband’s solicitor an email the same day, indicating that she was trying to engage a new lawyer and it was likely that the matter would need to be adjourned.  However, on 11 September 2012, the wife emailed the husband’s solicitor advising that she had paid $9000 to the ATO on 9 September and would be paying a further $25,000 to the ATO that day and would pay the balance of $20,000 by 10 October 2012.

7. She advised that she had not been able to appoint new lawyers and would not be attending the return date.  I’m satisfied that the wife gave instructions to S Legal to accept service of the documents, had received copies of the application and the affidavit and was aware of the hearing today and I propose to proceed with the application on an undefended basis. 

8. The husband’s estimated tax liability, after completion of his tax returns by Mr  W, in accordance with the orders, was $60,523. 

9. The husband concedes that the wife paid $10,000 to the ATO on 25 July 2012.  The wife, in her email dated 11 September 2012, asserts that she paid a further $10,000 on 9 September 2012 and as previously indicated, she would be paying a further $25,000 that day.  According to the printout of the husband’s account from the ATO portal, the closing balance as at 10 September 2012 was $54,274.32, which would suggest either that the wife has not paid the sum of $10,000 on 9 September as she asserts, or that the payment has not been processed.

10. Whether the wife has or has not made the payment she says she has made, the husband’s case is that it is in all of the circumstances of this case, it is too late and that I should make the orders he seeks.  The final orders were made by consent after, I’m told, lengthy negotiations.  The wife was represented by experienced solicitors and counsel.  She has not sought to set aside those orders nor has she sought to review the Registrar’s decision.  The husband has, in good faith, complied with his obligations pursuant to the orders, whereas the wife has failed to do so.  The husband also says that he has given the wife every opportunity to comply and has made concessions he was not required to make to facilitate the wife’s compliance, but to no avail.

11. On 19 June 2012, the wife’s solicitors advised that she would not be in a position to meet her obligations to pay the husband’s tax liability.  The husband’s response was to ask when the wife would be in a position to comply.  On 27 June 2012, prior to the settlement, the husband asked for evidence that the wife had in fact paid his income tax liability.  On 29 June 2012 the husband’s solicitors, again, asked for confirmation that the wife had paid the husband’s tax liability.  Notwithstanding that the wife had not paid the tax, the husband proceeded with the settlement. 

12. On 2 July 2012, the wife’s solicitors advised that the wife would pay the tax in full by the close of business that day.  She did not do so.  On 5 July 2012 the husband was advised by Mr W that he had been approached by the wife requesting the husband’s consent to enter into a payment plan with the ATO to pay his tax in six, monthly instalments of $10,000 each.  The husband initially rejected the wife’s proposal for a payment plan and required confirmation of payment in full.  When the husband found out that the wife was leaving for India on 13 July 2012, having met her obligations, he requested written confirmation that day, that she had paid his tax.

13. On 20 July 2012 his solicitors were advised that S Legal were no longer acting for the wife.  On 23 July 2012, the wife emailed the husband’s solicitors and advised that she had started paying the husband’s taxation liability.   Contrary to the orders, the husband reluctantly agreed to the wife’s proposal for a payment plan.  However, the wife would not confirm that she had formally entered into a payment plan with the ATO.  It is also clear that she did not, at least prior to the husband filing this application, make any further payments to the ATO. 

14. The significance of the wife failing to either reach agreement for payment with the ATO or making any further payments, is that, as advised by Mr W, the husband’s liability for tax is now due and payable and that the ATO is likely to take recovery action against the husband.  It is also significant, because even though Mr W was able to obtain the ATOs agreement to remit almost $15,000 of penalties and interest, if recovery action is instituted, this decision is likely to be reversed.  There is also interest being incurred on an ongoing basis as a result of the wife’s failure to comply with the orders.

15. The wife has also failed, in her capacity as the sole director of I Pty Ltd, to comply with the order that the company execute a lease for the R suburb property.  The lease was sent to the wife’s solicitors on 11 July 2012.  On 23 July 2012 the husband’s solicitors wrote to the wife, as she was then acting on her own behalf, asking her to execute the lease.  On 31 July 2012, the wife wrote to the husband’s solicitors requesting three amendments to the lease.  The husband initially rejected the proposed amendments.  However, on 10 August 2012, in order to finalise the matter, accepted those amendments.

16. The lease was eventually returned to the husband’s solicitors on 21 August 2012.  However, the wife did not return the Disclosure Statement which forms part of the lease.  And despite requests to do so, the wife has not provided that statement to the husband or his solicitor as at the date of today’s hearing.  I am satisfied that the wife has failed to comply with the orders, both with respect to the tax liability and the lease of the R suburb and I propose to make the orders sought by the husband to give effect to the final property orders.  It is not possible to specify the exact amount of the tax debt owing as interest is accruing as a result of the wife’s failure to comply and, because of the possibility that the ATO will reverse it’s decision with respect to the penalties.

17. On that basis I am prepared to make the order as it is drafted by the solicitor for the husband.  I am satisfied that any interest that is accruing or penalties imposed, which are clearly as a consequence of the wife’s failure to comply with the order, should be met by the wife.  I also propose to make an order that the Registrar be authorised to sign the Disclosure Statement in the event that the wife fails to do so and any other documents that might be required in the event of a sale of a property, to give effect to these orders.

18. I propose to do so, notwithstanding that this application is proceeding on an undefended basis and the application served upon the wife did not include an application for the Registrar to sign documents.  These are enforcement proceedings and an order for the Registrar to sign these documents will give effect to the original property orders and my orders made this day, without the necessity of a further application, in the event that the wife fails to comply with my order or the previous orders.  I have also been asked to make an order that the wife pay the husband’s costs of this application on an indemnity basis, which are said to be in the sum of $12,500.

19. I have cited an unsigned copy of the costs agreement and the husband, who is in Court today, confirms that he has signed that agreement. As of 1 July 2012 I am told, the hourly rate for Ms Neal has increased from $450 to $475 an hour and for Mr Jones, from 300 to $350 per hour. The general rule is that each party to proceedings in this Court shall bear his or her own costs. That general rule is subject to section 117 subsection 2 of the Family Law Act 1975.  Which provides that:

    If the Court is of the opinion that there are circumstances that justify doing so, the Court may make such order as to costs as it considers just.

20. Section 117 (2) (A) sets out the matters the Court must have regard to in determining what, if any, orders should be made for costs insofar as they are relevant. The weight to be given is a matter for the Court’s discretion. This is an application for enforcement, brought about solely by what I have found is the wife’s failure to comply with the orders. The husband’s application has been wholly successful. I do not have detailed information before me or been taken to any detailed information in relation to the parties’ financial positions. However, I do note that, as a consequence of the orders, the wife was left with a business and some real estate and the husband received a payment of $1 million and also retained some real property.

21. I’m satisfied, on the basis of the wife’s failure to comply and her conduct, both leading up to the filing of the application and since that application was filed, that an order for costs is appropriate.  Generally, orders for costs are made on a party/party basis, however, the Court does have a discretion to order indemnity costs.  The decision to order indemnity costs should not be taken likely and there must be some aspect of the case which sets it apart from other cases and would justify a departure from what is the general rule and I refer to the case of Palmolive v Cussons Proprietary Limited 46 FCR 225.

22. I’m not satisfied that this is such a case. The wife’s failure to comply and her conduct generally in relation to her obligations pursuant to the orders, leaves much to be desired. However, in my view, these are matters to which I must give consideration pursuant to section 117 (2) (A). They do not, of themselves, set the matter apart to the extent that an order for indemnity costs would be appropriate.

23. Whilst I am prepared to make an order for costs, I am not prepared to make an order for indemnity costs.  The costs sought by way of indemnity were $12,500.  It is now submitted that an appropriate order for costs on a party/party basis would be $8000 given the history of the matter and the obviously work that has been involved in obtaining the wife’s compliance with these orders, I am satisfied that $8000 is an appropriate order and I will make that order. 

24. Finally, an oral application has been made for an injunction restraining the wife from dealing with the M suburb property pending compliance with these orders.  Given the wife’s failure to comply with the final property orders and her general conduct with respect to her obligations to comply with those orders, I am satisfied that it would be appropriate to make an order restraining her from disposing of, encumbering or otherwise dealing with the M suburb property until she has complied with these orders.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 12 September 2012.

Associate:

Date:  11 October 2012