Baldoni & Baldoni (No 4)

Case [2023] FedCFamC1F 1111

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Baldoni & Baldoni (No 4) [2023] FedCFamC1F 1111

File number(s): SYC 1234 of 2019
Judgment of: KARI J
Date of judgment: 21 December 2023
Catchwords: FAMILY LAW – COSTS – Where the wife seeks costs on an indemnity basis – Consideration of s 117(2A) of the Family Law Act 1975 (Cth) - Costs order made, fixed in the sum of $200,000 – Where the court makes orders for enforcement in the event of default by the husband
Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited:

Baldoni & Baldoni [2023] FedCFamC1F 337

Baldoni & Baldoni [2023] FedCFamC1A 167

Bhatt & Acharya (Costs) [2017] FamCAFC 71

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248

Kohan & Kohan (1993) FLC 92-340

Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664

Munday & Bowman (1997) FLC 92-784

Robinson & Higginbotham (1991) FLC 92-209
Division: Division 1 First Instance
Number of paragraphs: 52
Date of hearing: 12 December 2023
Place: Heard in Sydney, delivered in Adelaide
Counsel for the Applicant: Mr Lethbridge SC
Solicitor for the Applicant: Edwards Moloney Family Law
Respondent: No appearance

ORDERS

SYC 1234 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS BALDONI

Applicant
AND:

MR BALDONI

Respondent

ORDER MADE BY:

KARI J

DATE OF ORDER:

20 DECEMBER 2023

THE COURT ORDERS:

1.That within 90 days the husband shall pay the wife’s costs fixed in the amount of $200,000 to the Edwards Moloney Family Law Trust Account.

2.That in the event the husband fails or neglects to make the payment of the sum ordered pursuant to Order 1 herein, the parties shall do all acts and things and sign all documents necessary to effect a sale of the property situate at and known as 2 H Street, Suburb L in the State of New South Wales being the whole of the land described in Certificate of Title Folio Identifier … (“the 2 H Street property”) for the best price reasonably obtainable in the following manner:

2.1The wife shall be appointed as trustee to the exclusion of the husband to effect a sale of the 2 H Street property, and this order shall authorise the wife to do all acts and things including instructing a conveyancer, solicitor and real estate agent, negotiating and accepting offers, and signing all documents, electronic or otherwise, on behalf of the husband to give effect to the sale in accordance with these orders including but not limited to contracts, retainers, agency agreements, registrable instruments, discharge authorities and PEXA authorities, dealings, applying for foreign resident capital gains withholding clearance certificate/s;

2.2The parties shall list the 2 H Street property for sale with such agent and conveyancer as elected by the wife;

2.3The husband shall provide vacant possession of the 2 H Street property within 21 days from the date of his default of payment of costs…

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AGLC
Baldoni & Baldoni (No 4) [2023] FedCFamC1F 1111
Case
[2023] FedCFamC1F 1111
Decision Date

CaseChat Overview and Summary

In the case of Baldoni & Baldoni (No 4), the Federal Circuit and Family Court of Australia considered a costs application by the wife against the husband following a lengthy and contentious divorce proceeding. The primary dispute between the parties revolved around the business R Pty Ltd, which the wife introduced into the relationship but which subsequently went into liquidation under the husband’s control. This led to significant financial claims against both parties, with the husband assessed as owing $409,728 and the wife $137,730, totaling $547,458. The litigation process was protracted, with the final hearing extending over eight days, followed by further hearings to address additional issues such as the husband’s sale of real property and dissipation of funds.

The legal issues before the court included whether an order for costs should be made and, if so, on what basis. The wife sought an indemnity costs order, arguing that the husband’s conduct throughout the proceedings justified such an order. The court considered various factors, including the husband’s conduct, the substantial financial resources he had previously displayed, and the significant increase in legal costs incurred by both parties during the litigation. Despite acknowledging the husband’s misconduct, the court determined that an indemnity costs order was not appropriate, given the husband’s financial situation, particularly his ownership of a property valued at approximately $400,000.

The court made a costs order for the wife’s legal costs, fixed at $200,000, to be paid within 90 days. In the event of default by the husband, the court also made detailed orders for the sale of the husband’s property at 2 H Street, Suburb L, to satisfy the costs order. The sale process was to be overseen by the wife, who would be appointed as trustee. The proceeds from the sale would be applied to various debts and costs before any remaining balance would be paid to the husband. Additionally, the court imposed an equitable charge over the property to secure the wife’s costs and restrained the husband from dealing with the property except for strictly complying with the court’s orders.

Orders

Orders of the court

SYC 1234 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS BALDONI

Applicant

AND:

MR BALDONI

Respondent

ORDER MADE BY:

KARI J

DATE OF ORDER:

20 DECEMBER 2023

THE COURT ORDERS:

1. That within 90 days the husband shall pay the wife’s costs fixed in the amount of $200,000 to the Edwards Moloney Family Law Trust Account.

2. That in the event the husband fails or neglects to make the payment of the sum ordered pursuant to Order 1 herein, the parties shall do all acts and things and sign all documents necessary to effect a sale of the property situate at and known as 2 H Street, Suburb L in the State of New South Wales being the whole of the land described in Certificate of Title Folio Identifier … (“the 2 H Street property”) for the best price reasonably obtainable in the following manner:

2.1 The wife shall be appointed as trustee to the exclusion of the husband to effect a sale of the 2 H Street property, and this order shall authorise the wife to do all acts and things including instructing a conveyancer, solicitor and real estate agent, negotiating and accepting offers, and signing all documents, electronic or otherwise, on behalf of the husband to give effect to the sale in accordance with these orders including but not limited to contracts, retainers, agency agreements, registrable instruments, discharge authorities and PEXA authorities, dealings, applying for foreign resident capital gains withholding clearance certificate/s;

2.2 The parties shall list the 2 H Street property for sale with such agent and conveyancer as elected by the wife;

2.3 The husband shall provide vacant possession of the 2 H Street property within 21 days from the date of his default of payment of costs in accordance with Order 1 herein, and shall deliver to the real estate agent all sets of keys in his possession or control for all the locks on the 2 H Street property;

2.4 The parties shall list the property for sale by private treaty or public auction as determined by the wife;

2.5 The sale price at which the 2 H Street Property be listed shall be as determined by the wife;

2.6 The parties shall each execute a contract for sale in the form prepared by the solicitor or conveyancer with carriage at a price determined by the wife;

2.7 That the husband shall co-operate in every way with the Agent and sale process, including (without limiting the generality of the foregoing):

2.7.1 Making the key available to the Agent;

2.7.2 Allowing inspection of the 2 H Street property at all reasonable times requested by the Agent;

2.7.3 Doing or saying nothing to hinder or prevent a sale being effected;

2.7.4 Ensuring the 2 H Street property, including the grounds, are in a neat and clean condition at the time of inspection by the Agent and prospective purchasers; and

2.7.5 Signing all documents requested by the Agent relating to the listing for sale of the 2 H Street property.

2.8 That the husband shall be restrained from conferring on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the 2 H Street property or to any commission;

2.9 That upon completion of the sale of the 2 H Street property (“the settlement date”) pursuant to these orders, the proceeds of sale shall be paid in the following manner and priority:

2.9.1 in adjustment of water rates and council rates;

2.9.2 in payment of the real estate agent’s fees and commission due on the sale;

2.9.3 in payment of legal costs and outlays relating to the sale;

2.9.4 to discharge the mortgage registered over the 2 H Street property in favour of CC Pty Ltd (registration no. …);

2.9.5 the sum equal to the outstanding balance of costs ordered to be paid to the wife pursuant to Order 1 herein, to the wife;

2.9.6 the balance remaining, if any, to the husband.

3 That any monies owing by the husband to the wife pursuant to these orders be secured by way of equitable charge over the husband’s right, title and interest in the 2 H Street property in favour of the wife.

4 That the wife may register a mortgage or caveat (“Instrument/s”) against the 2 H Street property for the purpose of securing the equitable charge created by Order 3 herein.

5 That within two business days of receipt of the Instrument/s from the wife, the husband shall execute and return, in registrable form, the Instrument/s and shall do all acts and things necessary to support the registration of such Instrument/s at the wife’s expense save and except for legal costs which shall be borne by each party respectively, so as to secure the wife’s charge and beneficial interest hereby created, second in priority to the existing mortgage registered on title in favour of CC Pty Ltd (registration no. …).

6 That except for the purposes of strictly complying with these orders, the husband is restrained and an injunction is granted restraining the husband from dealing in any way with his interest in the 2 H Street property, including but not limited to disposing, assigning, transferring, further encumbering by way of mortgage or charge, or increasing the indebtedness of any mortgage or loan secured against the title of same.

7 That in the event the husband fails, refuses or neglects to sign any documents necessary to give effect to these orders, a Judicial Registrar of the Federal Circuit Court of Australia at Sydney and/or Adelaide is appointed, pursuant to s 106A of the Family Law Act 1975 (Cth), to execute the Deed or instrument in the name of the husband and do all acts and things necessary to give validity and operation to the Deed or instrument and the wife shall be at liberty to make an application for costs arising in respect of the default.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

For the reasons that follow a costs order shall be made in a fixed amount.BACKGROUND The background to the proceedings and the history of the dispute is set out in detail in the reasons delivered on 5 May 2023. I rely on those reasons, and otherwise summarise those aspects herein which are salient to the costs application. As set out in the reasons:8 The short history of the parties and their relationship is as follows:(a) The husband was born [in] 1963 and he is 60 years of age.(b) The wife was born [in] 1969 and she is 53 years of age.(c)The parties began their relationship after meeting on an online dating website sometime in late 2014.(d)The parties began living together [in] 2015, when the husband moved to live with the wife at her property at [B Street, Town C], NSW.(e)The parties married [in] 2015, having earlier participated in a "symbolic" wedding ceremony in [Country W] in […] 2015.(f)There is a dispute as to the date of final separation. The wife asserts that the parties finally separated on 4 December 2018, whereas the husband asserts the relationship ended in January 2019. It is not clear what if anything turns on this dispute, other than perhaps matters related to the [R Pty Ltd] business.(g)[In late] 2019, the wife obtained a Final Apprehended Domestic Violence Order naming the wife as the protected person and the husband as the defendant. That order expired [in late] 2021.(h) The parties divorced [in] 2020.(i)Prior to their final separation, the parties separated for a period of approximately 4-5 months between about October 2015 and February 2016.(j) There are no children of the relationship. A significant bone of contention between the parties that coloured the entire litigation related to a business known as R Pty Ltd, which the wife introduced to the relationship, but which went into liquidation under the husband’s control following the breakdown of the relationship. The liquidation of R Pty Ltd ultimately resulted in the liquidator being joined as a party to the proceedings seeking to recover funds from the parties. The liquidator’s claim was ultimately resolved prior to the final hearing on the basis that the husband was assessed as owing R Pty Ltd $409,728 and the wife was assessed as owing $137,730 (a combined total of $547,458), with the question of how those liabilities were to be paid to be determined at trial. The final hearing ran over 8 days with judgment reserved on 20 June 2022. The hearing was however reopened in October and November 2022 for the purposes of receiving further evidence relating to the husband’s sale of real property which he had earlier been restrained by injunction from dealing with, and the dissipation of $100,000 from the net proceeds of sale of $215,000 across a little over a two week period. A consequence of the further hearings that took place after judgment was initially reserved was that an order was made on 7 November 2023 for the husband to pay costs in favour of the wife in the amount of $9,000 and costs in favour of the liquidator in the amount of $5,000.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Of equal significance is that whilst the husband’s costs at that time are not clear, it is understood that the husband’s outstanding legal costs just two months prior on 16 November 2021 were in the amount of $313,371,[8] a far cry from the amount incurred up to the end of the trial in the amount of $761,660 (see reasons at [39(a)]). I also note from the costs notice filed by the wife on 16 November 2021, a mere two months prior to the offer being made, the wife’s legal costs were $420,837, a far cry from the $816,182 incurred up to the trial (see reasons as [39(b)]).[8] Husband’s Costs Notice dated 16 November 2022.Conclusion as to whether a costs order should be made Weighing all of these factors, I am satisfied that circumstances exist which weigh in favour of the making of an order for costs.On what basis should the order for costs be calculated? It is well understood that an order for indemnity costs is a “very great departure” from the “normal standard”.[9][9] Kohan & Kohan (1993) FLC 92-340. I have had regard to those matters discussed in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, particularly at 262. I have also had regard to the helpful summary of the circumstances that might justify an order for indemnity costs, enunciated by Holden CJ in Munday & Bowman (1997) FLC 92-784 at 84,660:(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397. (b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).(c) Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).(e)An imprudent refusal of an offer to compromise.(As per the original) While I accept that the husband’s conduct in these proceedings (as outlined earlier in these reasons) enlivens active consideration of the making of an order that costs be paid on an indemnity basis, I do not consider it appropriate to make an order in those terms. I have come to this view principally as a result of matters I have already outlined, but also because of the reality of the husband’s financial circumstances; despite my earlier acknowledgment that that impecuniosity is not a bar to making a costs order. In particular where the husband retains one asset of significance, namely the property at 2 H Street, Suburb L, which has a value of approximately $400,000 with a mortgage liability of $184,521.

Ratio Decidendi

Legal Principle Established

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