Baldoni & Baldoni (No 4)
[2023] FedCFamC1F 1111
•21 December 2023
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 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;
2.4The parties shall list the property for sale by private treaty or public auction as determined by the wife;
2.5The sale price at which the 2 H Street Property be listed shall be as determined by the wife;
2.6The 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;
2.7That the husband shall co-operate in every way with the Agent and sale process, including (without limiting the generality of the foregoing):
2.7.1Making the key available to the Agent;
2.7.2Allowing inspection of the 2 H Street property at all reasonable times requested by the Agent;
2.7.3Doing or saying nothing to hinder or prevent a sale being effected;
2.7.4Ensuring 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
2.7.5Signing all documents requested by the Agent relating to the listing for sale of the 2 H Street property.
2.8That 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;
2.9That 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:
2.9.1in adjustment of water rates and council rates;
2.9.2in payment of the real estate agent’s fees and commission due on the sale;
2.9.3in payment of legal costs and outlays relating to the sale;
2.9.4to discharge the mortgage registered over the 2 H Street property in favour of CC Pty Ltd (registration no. …);
2.9.5the sum equal to the outstanding balance of costs ordered to be paid to the wife pursuant to Order 1 herein, to the wife;
2.9.6the balance remaining, if any, to the husband.
3That 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.
4That 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.
5That 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. …).
6That 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.
7That 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.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Baldoni & Baldoni has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These reasons are in relation to an application for costs brought by the wife in relation to property settlement proceedings which were finalised by me with final orders made 5 May 2023 (“the final orders”) (Baldoni & Baldoni [2023] FedCFamC1F 337) (“the reasons”).
The wife’s application is that the husband pay her costs in relation to those proceedings on an indemnity basis. The amount sought by the wife is $608,896.42.[1]
[1] See ‘Exhibit CW2’.
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.
Thereafter the final hearing was again reopened at the instigation of the court in February 2023 for further submissions directed to the overly complicated balance sheet that the parties had provided to the court.
As earlier identified the reasons were published and final orders were made on 5 May 2023.
As the reasons bear out the controversies between the parties were numerous and included:
(a)Disputes as to the initial financial contributions of the parties.
(b)Dispute as to how the liabilities of the parties as assessed by the liquidator of R Pty Ltd were to be paid.
(c)Dispute as to individual items on the balance sheet.
(d)Dispute as to whether any dissipated property should be notionally added back into the pool of property to be divided between the parties.
(e)Dispute as to the conduct of each of the parties and the extent to which that conduct was improper and/or contributed to the demise of R Pty Ltd.
Of significance, credit findings were made against the husband.
The following findings were made as to the property available for division:
150 With reference to all of the matters that I have discussed, and in summary:
(a)The pool of assets total $4,414,958 and are comprised of the following:
(i) Real property with a value of $5,095,000;
(ii) Proceeds from the sale of properties with a value of $120,165;
(iii) The [U Trust] with a net negative value of ($819,115)
(iv) Bank Accounts with a value of $2,908
(v) Motor Vehicles with a value of $16,000
(b) The liabilities total ($1,272,735) and comprised of the following:
(i) Real Estate liabilities of ($725,277); and
(ii)The parties respective liabilities to [R Pty Ltd] of ($547,458), which I understand the parties are in dispute as to whether this is treated as a joint matrimonial liability or whether the parties are to be separately liable for their respective debt as assessed by the liquidator; the wife in the amount of $137,730 and the husband in the amount of $409,728.
(c) The wife has superannuation entitlements of $133,489.
(d)It is appropriate to add back an amount of $115,000 received and expended by the husband from the sale of the [J Street] property.
(e)I have determined that it is not appropriate to notionally add back any further sums.
(f)I shall however bring to account in my consideration of factors pursuant to s75(2)(o) those funds received by the husband and expended by him in the post separation period including the following, noting there is likely to be some overlap in the calculation of the various amounts, the extent of which is unclear:
(i)Gambling losses during the relationship of no less than $212,000;
(ii)Post separation gambling and unexplained cash withdrawals of no less than $103,620;
(iii)Mortgage arrears for the [Suburb F] property in the amount of $44,817; and
(iv) Superannuation draw down in the amount of $103,804.
(v) Legal fees paid by the husband of approximately $112,500.
(g)I shall otherwise in due course have regard to the fact that the parties have personal liabilities they will have to fund and repay from their respective resources following the conclusion of these proceedings (excluding their legal fees); on the wife's part that liability is $10,483 and on the husband's part that liability is $82,837.
In broad terms and leaving aside the disputes about individual items on the balance sheet, the position of each of the parties was as follows:
(a)The husband asked the court to make orders that would see the liability to R Pty Ltd paid in the first instance, and thereafter that there be an equal division between the parties of the net property available for division.
(b)The wife asked the court to make orders that would see each her and the husband restored to the position that they were in at the commencement of the relationship, and that thereafter they each be responsible for the payment of their own personal liability to R Pty Ltd in the amount assessed by the liquidator.
(c)The liquidator’s position was that the liability owed to R Pty Ltd be treated as a joint liability of the parties and paid prior to any division of the net assets of the parties.
So far as the dispute between the wife on the one hand and the husband and the liquidator on the other as to how the R Pty Ltd liability was to be treated, the reasons record:
231While the Court accepts that after the wife ceased working in the business (and possibly from as early as when she resigned as a Director), the wife was no longer in charge or control of how the [R Pty Ltd] bookkeeping was carried out, the fact remains, that the wife's own evidence admitted to either personally or through the [U Trust] having the benefit of significant [R Pty Ltd] funds.
232While I am satisfied that the husband's conduct in relation to [R Pty Ltd] was abhorrently fraudulent, negligent and wasteful, I am not on balance satisfied that it would be appropriate to leave the parties' respective debt to [R Pty Ltd] where it lies and exclude it from the net assets of the parties in the overall assessment of the matter.
Orders were otherwise made to effect a 90/10 division in favour of the wife, which were recorded in the reasons as follows:
238An adjustment that sees the wife retaining 90 per cent of the net assets and the husband 10 per cent of the net assets would see the wife retaining net assets to the value of $3,051,641, and the husband retaining net assets to the value of $339,071.
239If the wife were to retain the jointly owned real property as she proposes, the wife shall retain and/or hold net property valued at $3,471,526 comprised as follows:
ASSETS OWNER VALUE 1. [B Street, Town C] (“the [Town C] property”) Joint 3,550,000 2. [N Street, City P] (“the [N Street] property”) Wife 350,000 3. [1 K Street, Suburb M] (“the [K Street] property”) Joint 375,000 4. [1 H Street, Suburb L] (“the joint [H Street] property” Joint 420,000 5. Net value of the [U Trust] Wife (819,115) 6. [BM Pty Ltd]
Westpac Business One (x[…23])Wife nominal 7. T Pty Ltd Wife (6,251) 8. ANZ Access Advantage ([…34]) Wife 1,976 9. [AV Bank Savings account] (x[…24]) Wife 7,183
LIABILITIES OWNER VALUE 10. [N Street, City P]
[BB Ltd] ([AW Finance]) (x[…66])Wife (178,276) 11. [1 K Street, Suburb L]
[CC Pty Ltd] (x[…22])Joint (167,752) 12. [1 H Street, Suburb L]
[AX Finance] (x[…45])Joint (194,728)
SUPERANNUATION OWNER VALUE 13. BM Pty Ltd - SMSF Wife $133,489
240 The husband holds net property of $346,479, comprised as follows:
ASSETS OWNER VALUE 1. [2 H Street, Suburb L] (“the husband’s [H Street] property”) Husband 400,000 2. [Motor Vehicle 3] Husband 13,500 3. [Motor Vehicle 5] Husband 2,500 4. Notional Property added back Husband 115,000 5. [2 H Street, Suburb L]
[AX Finance] (x[…57])Husband (184,521) 241As can be seen from the property to be retained by each of the parties, the husband is retaining net assets with a value of $346,479, which is slightly in excess of 10 percent (which I have calculated at $339,071). I am satisfied that it is appropriate that there be no further adjustment.
242The wife on the other hand is retaining net assets of $$3,471,526 which is far in excess of the entitlements that I have determined ($3,051,641). Therefore, the practical effect is that the wife will be required to meet the liability to [R Pty Ltd] from the assets that she is to retain.
243In the first instance the liability to [R Pty Ltd] is to be met from those funds held by the wife's solicitors in their trust account from the proceeds of sale of the two properties totalling $120,165.
244Thereafter, the wife is to make a payment in the amount of approximately $427,293 to satisfy in full the liability to [R Pty Ltd].
The husband filed a Notice of Appeal with respect to the final orders on 22 May 2023. That appeal was determined on 3 October 2023 (Baldoni & Baldoni [2023] FedCFamC1A 167). The appeal was dismissed. Orders were made for the husband to pay the wife’s costs of the appeal in the amount of $20,000 and the liquidators costs in the amount of $12,000.
After filing the Notice of Appeal, the husband also filed an Application in a Proceeding, by which he sought a stay of the final orders made 5 May 2023. That application was dismissed by orders made 15 June 2023 (Baldoni & Baldoni (No 3) [2023] FedCFamC1F 550). Orders for costs were made in favour of the wife in the amount of $6,000 and the liquidator in the amount of $3,000.
THE COSTS APPLICATION
The wife filed an Application in a Proceeding on 2 June 2023 directed to costs. That application was amended twice, with the Further Amended Application filed on 6 December 2023 being before the court.
By that application the wife seeks orders for the payment of her costs by the “husband and/or any lawyer or other non-party as determined by the [c]ourt” on an indemnity basis. With reference to the schedule received as an exhibit at the hearing, it would appear that the wife is seeking costs from the time that her current solicitors commenced acting for her on or about 22 December 2020 until 2 June 2023 in the amount of $608,896.42.[2]
[2] See ‘Exhibit CW2’.
The wife additionally sought a raft of orders by way of enforcement in the event that a costs order was made. Those orders are largely directed to the sale of the real property retained by the husband at 2 H Street, Suburb L in the state of New South Wales (“2 H Street”).
At the hearing on 12 December 2023, the wife abandoned her application that a costs order be made against the “husband’s lawyers and or other non-party”.
Having had regard to the itemised schedule of costs received in support of the quantum sought by the wife, it would appear that the entries following the making of the final orders (and in particular those between 16 May 2023 and 2 June 2023) relate to the application for costs and total an amount of $16,551 plus GST ($18,206.10). Accordingly, the sum of $590,690.32 is the quantum of costs sought excluding those costs incurred pursuing the costs application.
Between the making of the final orders on 5 May 2023 and the wife filing her costs application on 2 June 2023, the husband’s solicitor filed a Notice of Ceasing to Act (filed 22 May 2023). Thereafter the husband has been self-represented in these proceedings, including in the appeal and the stay application.
The costs application was listed for mention on 14 June 2023. On that day, the application was listed for further mention on 19 September 2023. The husband appeared at that hearing.
The hearing on 19 September 2023 was vacated administratively in chambers in circumstances where the appeal had not yet been determined. On 18 September 2023 the parties were advised by correspondence that the hearing had been adjourned to 12 December 2023.
On the day prior to the hearing (11 December 2023) my chambers received two separate requests. The first was a formal request made by the wife to attend the hearing on 12 December 2023 virtually by Microsoft Teams. The second was a communication by email from the husband (copied to the wife’s solicitors) received at 10.17 am which read as follows:
Dear all, I am unable to attend court in person tomorrow as the wife’s solicitors have obtained a court order which has garnished my bank accounts. This has left me with not 1 cent to buy medication, food, fuel or transport. I am currently living out of my car in Sydney, looking for regular work… I need to buy medication and food. I still have some credit on my phone to attend via Teams.
Both requests to attend the hearing on 12 December 2023 electronically were refused.
At the hearing of the costs application, there was no appearance by the husband and the hearing proceeded in his absence in circumstances where I was satisfied that the husband was on notice and aware of the hearing, not only because of the communication sent by my chambers but also by virtue of his communication to my chambers the previous day. Given the matters that I have already outlined, I am satisfied that the husband made a choice not to attend the hearing on 12 December 2023 nor be heard in relation to the wife’s application for costs.
In addition, I was satisfied that the husband had been served by email with the Further Amended Application in a Proceeding filed 6 December 2023 (Exhibit CW1).
THE LEGAL FRAMWEWORK
Costs applications in respect of proceedings under the Family Law Act 1975 (Cth) (‘the Act’) are governed by s 117 of the Act.
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the court may give such weight as it considers appropriate to any relevant factor.[3]
[3] Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 at [24].
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) also provide assistance when considering the making of an order for costs. In particular, r 12.17(1) provides the method for the calculation of costs:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a)of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
In addition, r 12.17(3) sets out the matters that may be considered in the calculation of costs:
(3) In making an order under subrule (1), the court may consider the following:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c)the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre-action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
DISCUSSION
I propose to have regard to only those factors prescribed by s 117(2A) that are relevant.
The financial circumstances of the parties
The wife’s counsel readily conceded that the wife’s financial circumstances are greater than the husband’s. This is plainly so when regard is had to the schedules set out earlier in these reasons as to the effect of the final orders. The wife however asserts that the husband’s financial circumstances are a construct of his own making and that in any event the husband’s impecuniosity is not a bar to the making of an order for costs.
I accept the submissions that the husband’s apparent impecuniosity is not a bar to the making of an order for costs. As identified in by the Full Court in Bhatt & Acharya (Costs) [2017] FamCAFC 71 (at [20]):
On their face, and on the assumption that the net property of the applicant will be divided between the parties in some way, neither party would appear to be in a particularly strong financial position. Nonetheless, impecuniosity is, of itself, no bar to a costs order, otherwise an impecunious litigant would be free to pursue meritless applications at will: Lenova & Lenova (Costs) [2011] FamCAFC 141.
Conduct of the parties in relation to the proceedings
The wife submits that the husband’s conduct throughout the litigation has been particularly egregious. Whilst the wife outlined more expansive incidents, I accept this submission as a result of the following conduct in particular:
(a)The disproportionality of the costs incurred in the proceedings, which is something that I commented upon in the reasons (at [34-45]).
(b)The manner in which the husband’s solicitors pursued the litigation, presumably on the instructions of the husband, including but not limited to voluminous daily email communications, including on occasion up to eight emails being sent in a single day, with at least six of those emails sent within a space of 13 minutes.[4]
(c)The husband’s unreasonable and entirely untenable position of seeking an equal division of the assets, which again is something that I commented upon in my reasons, in particular in light of the exchange that I had with the husband’s counsel during closing submission (at [62-64]).
(d)The findings of fraud made in relation to the husband which are set out in my reasons (at [80, 192, 199(a) and (h), and 225).
(e)The husband’s conduct in dissipating funds, after the final hearing had concluded, resulting in not only further hearings, but importantly for present purposes, in an amount of approximately $115,000 being spent by the husband in a very short space of time, thus removing those funds from the pool of property available for division between the parties.
[4] Wife’s affidavit filed 2 June 2023, paragraph 58.
Whether any party has been wholly unsuccessful in the proceedings
In Robinson & Higginbotham (1991) FLC 92-209 at 78,417, Nygh J stated that the concept of being wholly unsuccessful is “a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed”.
I do not accept that the husband was wholly unsuccessful in the proceedings. Whilst I accept that this was so in relation to his application that there be an equal division of the net assets of the parties, the same cannot be said in relation to the treatment of the parties’ liabilities to R Pty Ltd. As identified by Austin and Christie JJ in the appeal (Baldoni & Baldoni [2023] FedCFamC1A 167 at [33]):
Ultimately, her Honour resolved to make orders that more closely resembled those sought by the wife, but she did not have it all her own way. The primary judge found the parties’ debts to the corporation they once controlled should be brought to account in their schedule of assets and liabilities (at [232] and [237(b)]) with the greater share borne by the wife (at [242]–[244]).
Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer
In her affidavit filed in support of her application for costs on 2 June 2023, the wife set out various offers that she made to settle the proceedings. It is the wife’s position that when regard is had to the final orders that were made, she has well exceeded the outcome she obtained when compared to that which she was prepared to compromise to resolve the matter. That submission is accepted, particularly with regard to the second and third offers that were put.
In total the wife made 3 written offers as follows:
(a)On 13 July 2021 an offer was made on the basis that the husband retain the properties at J Street, Suburb M (“J Street”) and 2 H Street, Suburb L, together with a payment from the wife in the amount of $378,553, and further payment from the wife in the amount of $51,625, from which the husband was to meet his liability to the liquidator in the amount of $409,728.[5]
(b)On 11 November 2021 (which was repeated on 23 November 2021) an offer was made on the basis that the husband retain the properties at J Street, 2 H Street, 1 H Street, Suburb L (“1 H Street”) and 1 K Street, Suburb M (“1 K Street”) together with a payment from in the amount of $43,194, from which the husband was to meet his liability to the liquidator in the amount of $409,728.[6]
(c)On 27 January 2022 an offer was made on the basis that the husband retain the properties at J Street and 2 H Street, together with a payment from the wife in the amount of $366,500, with the wife to meet the husband’s liability to the liquidator in the amount of $409,728.[7]
[5] Wife’s affidavit filed 2 June 2023, paragraph 12.
[6] Wife’s affidavit filed 2 June 2023, paragraph 16.
[7] Wife’s affidavit filed 2 June 2023, paragraph 28.
In relation to those offers, it is of some significance that the wife’s offer of 27 January 2022 included an offer that she pay the entirety of the parties’ liability to R Pty Ltd, leaving the husband with two properties and a cash payment of $366,500. On any view the husband has achieved an outcome far less than this. Importantly, the wife offered to resolve the matter on the basis that the husband not be personally responsible for the payment of his liability to R Pty Ltd, which is the one aspect he was successful in achieving at trial.
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.
I am also mindful from the submissions made on behalf of the wife during the hearing, that each of the earlier costs orders remain unpaid, other than an amount of approximately $1,200 which has been garnished form the husband’s bank account.
For all of the reasons I have outlined, I have determined that it is appropriate that an order for costs be made in favour of the wife in the amount of $200,000.
In addition, I consider it appropriate to make orders in default of payment to enable the wife to sell the real property owned by the husband. I consider this course of action is appropriate taking into account:
(a)The husband’s email communication sent the day prior to the hearing which identifies that he is presently “looking for work”, and therefore presumably unemployed and without a regular income from which to make any payment towards the costs order.
(b)That the wife has already been forced to take further steps in these proceedings to enforce the earlier costs orders, which resulted in a garnishee order directed to the husband’s bank account.
(c)The husband’s choice not to participate in the hearing of this application, which when coupled with his conduct throughout the substantive proceedings (including but not limited to the events which led to the final hearing being re-opened in October and November 2022), generally reflects the husband’s poor regard towards the court and his willingness to comply with orders of the court.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 21 December 2023
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