Bass and Bass & Anor (No 2)

[2014] FamCA 1062

FAMILY COURT OF AUSTRALIA

BASS & BASS AND ANOR (NO. 2) [2014] FamCA 1062

FAMILY LAW – PROPERTY – TRUST – Where the parties were directed to prepare short minutes of order to give effect to previous orders – Whether the order for child support be back dated – Where a trust is established for the benefit of a child – Where the child is seventeen years of age – Where the parties disagree as to whom should administer the trust – Where it is found that it would not be just and equitable to return the corpus of the trust to the husband – Where the husband and wife are removed as trustees of the trust– Where the wife seeks indemnity costs – Where the wife claims that the husband’s application was wholly without merit – Where costs are ordered on an ordinary basis.

Family Law Act 1979 (Cth) ss 79A(1A), 117(4), (5), (6), (7), (7A), (8)

Child Support (Assessment) Act 1989 (Cth) ss 122, 123A, 124, 125, 129(2), 141(1), 151, 151B, 151C

NSW Trustee and Guardian Act 2009 (NSW) ss 12, 13

Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225

APPLICANT:  Mr Bass

RESPONDENT:  Ms Bass

CASE GUARDIAN:  Ms Shaw

FILE NUMBER: PAC 5029 of 2012

DATE DELIVERED: 2 December 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 31 October 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Tilley Family Law & Mediation

SOLICITOR FOR THE RESPONDENT: Broun Abrahams Burreket

COUNSEL FOR THE CASE GUARDIAN: Mr Meek SC

SOLICITOR FOR THE CASE GUARDIAN: Abrams Turner Whelan

Orders

1. That Order 16 of the Orders made on 17 July 2008 by this Court be modified pursuant to s 129 of the Child Support (Assessment) Act1989 (Cth) by:

   (a)   inserting in clause 16 of the orders:

   16.11          By way of payment for the maintenance, welfare and support of [the child] other than as to be provided by the parties pursuant to Order 16.9 herein.

   (b)   inserting Order 22.4.6 as follows:

   As from 31 October 2014 the trustees may charge costs associated with the administration of the CST at a rate of $250 per hour.

1. That Mr Bass (“the husband”) and Ms Bass (“the wife”) be removed as trustees of the Trust created pursuant to the Orders of 17 July 2008 and in their place Ms Shaw and Mr DN be appointed as trustees.

2. That the husband and wife do all acts and things and sign all documents necessary to implement Order 2 above.

3. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

4. That the Case Guardian be indemnified in full by the CST (“Child Support Trust”) in respect of her costs and expenses for appearing as case guardian and that the trustees of the CST forthwith pay those costs.

5. That the husband indemnify the CST in respect of the costs and expenses of the case guardian and pay to the trustees of CST such sums that the trustees have paid to the case guardian pursuant to Order 5 hereof.

6. That the husband is to pay one half of the costs of the wife as agreed or in default of agreement as assessed.

7. That all applications and cross applications be and are hereby otherwise dismissed.

1. That all issues be removed from the Active Pending Cases List.

10. That all material produced on subpoena shall be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same not before fifty-six (56) days from the date of these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bass & Bass 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 SYDNEY

FILE NUMBER: PAC 5029 of 2012

Mr Bass

Applicant

And

Ms Bass

Respondent

And

Ms Shaw

Case Guardian

REASONS FOR JUDGMENT

1. On 11 September 2014 I delivered the judgment in this matter and directed the parties to prepare short minutes of order to give effect to it (Bass & Bass and Anor [2014] FamCA 1000). A number of issues arose from the parties’ proposed orders that require determination.

The Variation of Order 16

1. In the judgment given on 11 September 2014 I indicated that it would be appropriate to vary clause 16 of the order of the court made on 17 July 2008. 

2. The parties are agreed that, having regard to the terms of the judgment, the appropriate order is to vary clause 16.11 by the addition of the following words:

   By way of payment for the maintenance, welfare and support of [the child] other than as to be provided by the parties pursuant to Order 16.9 herein. 

3. The controversy that requires determination is the application of the wife that that order operate from 1 July 2014.  It was submitted that the order should be back dated because:

   ·Five months have elapsed since “the period of the hearing”;

   ·The child turns 18 years of age in ten months; and

   ·The husband has failed to approve any claim for expenses from the Trust for the child since early 2014.

4. I am not satisfied that it is appropriate to do so.  I do not know what expenses have been paid for which reimbursement would now be sought.  I am, therefore, unaware of the effect of such an order. Further, any payments that have been made on behalf of the child in respect of which reimbursement might now be sought from the Trust have been incurred without regard to the prospect of reimbursement.

5. Order 22.4.5.1 of 17 July 2008 orders provided:

   All income of the CST is to be paid to the husband as and when it is received, on the basis that the husband is solely responsible for:

   22.4.5.1All costs associated with the administration of the CST (except the costs referred to in Order 22.2); and

   22.4.5.2All tax arising on income received by the CST. 

6. Order 22.2 deals with the costs associated with the formal establishment of the CST (“Child Support Trust”) and is not presently relevant.   

7. The husband sought the inclusion of an order that order 22.4.5.1 of the orders made on 17 July 2008 be varied so as to read:

   All costs associated with the administration of the CST (except the costs referred to in Order 22.2 and the costs of the NSW Trustee and Guardian in administration of the trust). 

8. The effect of the proposed order is that the Trust would bear the costs of the trustees and not the husband. It is based on the premise that the court accepts the submissions of the husband that the NSW Trustee and Guardian is the appropriate appointment as the new trustees of the CST.  With appropriate amendments, however, the order could also  be made whosoever the new trustees might be. 

9. The position under the existing orders is that the husband is to receive all of the income of the CST but is to pay all costs associated with its administration and any tax arising on the income. 

10. The husband submits that, as the Trust will be administered by either NSW Trustee and Guardian or professional trustees, they will all be charging the Trust for the time they spend in its administration and it would be inappropriate for the husband to have to bear that liability.  It was submitted that the Trust, as originally envisaged, had the parents as the trustees who would not be charging for their time spent in administering the Trust.

11. The wife submitted that I could not make the order because that order had not been sought in the proceedings up until now and that, as I had given judgment in the matter, I was functus officio.   Although I have given judgment in the proceedings I have not yet concluded the matter by making final orders.  Accordingly, I am not functus officio.

12. There is force in the wife’s submissions that the order sought is a variation of child support orders pursuant to the Child Support (Assessment) Act 1989 (Cth), it cannot be made because the necessary legislative steps necessary for the court to be satisfied that the amendment is just and equitable and otherwise proper have not been taken.

13. I accept that submission. The proposed variation to order 22.4.5.1 is not necessary to give effect to the reasons I pronounced earlier. It is a separate consideration which was not raised prior to judgment being given and would require a full consideration as to whether the variation was firstly just and equitable within the meaning of s 129(2) of the Child Support (Assessment) Act 1989 (Cth) and that it was also otherwise proper to make the order in going to that finding the court must consider the matters raised by s 117 of the Act. It is now not appropriate to undertake that assessment and that order will not be made. That consideration would involve a consideration of the appropriateness of that order given that the orders that continue provide for the husband to receive the income of the Trust and not the Trust itself.

14. In any event, I do not anticipate that the expenses of the new trustees will be extensive. Given that, and that the husband will continue to receive the income of the Trust, having regard to the matters discussed in the substantial judgment, I would not regard it as just and equitable that the husband receive the income from the Trust and that the Trust pays the expenses of the Trust from its corpus.

Trustees

1. I determined that the trustees, who are presently the wife and the husband, should be removed and they should be replaced.  There are two proposals on foot.  The wife and the Case Guardian for the child propose that the Case Guardian herself and an independent accountant, Mr DN, be appointed as trustees. 

2. The evidence satisfies me that they both consent to the appointment and are fit and proper persons to be appointed as trustees.

3. The husband, on the other hand, submits that the NSW Trustee and Guardian should be appointed.  The NSW Trustee and Guardian is created by the NSW Trustee and Guardian Act 2009 (NSW). Pursuant to s 12 of that Act the NSW Trustee may be appointed to be a trustee under a trust instrument as an original, new or additional trustee. It seems that no consent by the NSW Trustee is required prior to its appointment but pursuant to s 13 of the above Act it may refuse to act in a trust capacity.

4. The husband submitted two advantages flowed from the NSW Trustee’s appointment. 

5. Firstly, it would be less expensive.  The evidence establishes that it is likely, that on its appointment, NSW Trustee would charge a 2.2 per cent fee and would thereafter make continuing charges for preparation and lodgement of tax returns and yearly administration fee.  What they are is unknown.  On the other hand the professionals proposed would charge costs at the rate of $250 an hour.

6. I would not expect the administration of the trust for the next year or so to be either complex or time consuming.  I am not satisfied that it would be less expensive to appoint the NSW Trustee as trustee. 

7. Secondly, it was submitted by the husband that the appointment of the NSW Trustee would assist when the Trust comes to an end. 

8. Order 22.4.3 requires the CST to be wound up on 31 December 2015, unless the parties agree in writing to extend the date for the winding up of the Trust.  Upon its winding up the trustees are to hold any residual corpus for the child absolutely. 

9. It was submitted as that, as it is likely that it would be found that the child would not have the capacity to manage his own funds, the NSW Trustee is likely to be appointed to manage those funds and that its appointment now would assist the transition and the management of the Trust. 

10. However, as correctly submitted by the Case Guardian, the Trust will be wound up on 31 December 2015 unless it is otherwise extended by consent.  That is to say on that date the outstanding liabilities of the Trust will be paid and the remaining corpus will be held by them for the child absolutely.  This means it will be free of the terms of the CST and the trustees will hold the assets for the child as bare trustees. 

11. Although it is quite likely that the NSW Trustee might then be appointed to manage the child’s funds that is by no means the only outcome.  Even if it does occur I do not see any disadvantage in it occurring on the winding up of the Trust as opposed to now. 

12. For these reasons I will appoint Ms Shaw and Mr DN as the trustees.  They sought, without opposition, that there be an order that they may charge their costs at a rate of $250 per hour against the assets of the Trust and that order will be made. 

Costs

1. There are two aspects to the parties’ costs applications.  First is that the Case Guardian sought, without opposition, that her legal fees be paid out of the assets of the Trust on an indemnity basis.  The wife proposed and the husband opposed an order that the husband indemnify the Trust against those costs. 

2. As to the parties’ costs, the wife sought an order that the husband pay her costs.  The husband sought an order that each party should otherwise pay their own costs. 

3. Costs are determined by reference to s 117 of the Family Law Act1975 (Cth). Subject to s 117(2) each party to proceedings under the Act should bear his or her own costs. When the court considers making a costs order it is obliged to take the matters set out in s 117(2A) into account.

4. The two grounds raised by s 117(2A) that were the subject of submissions by the parties were their respective financial positions and the measure of success that each had in the proceedings.

5. As set out in the substantive judgment both the husband and the wife are asset rich but income poor.  The wife submitted that she was in a worse financial position than the husband by reason of her primary care of the child A, the care of her other child with a health related condition, the absence of any economic capacity and the fact that she has been the primary carer for the four children of the marriage for some years.  She also points to the continuing care of the child P by her and his continuing support. Whilst there is some force in that submission, the evidence was that the husband was also in receipt of limited income albeit the demands on his income are less than the demands on the wife’s income. 

6. The second matter that was raised was that the parties’ relative success in the proceedings.

7. The wife’s position was that the husband was wholly unsuccessful notwithstanding that the wife accepted that she was unsuccessful in her interim application for the cross vesting proceedings of the proceedings to the Supreme Court of New South Wales and was unsuccessful on aspects of the child support departure order application. 

8. The husband submits that the wife was also unsuccessful in her contention that the court lacked jurisdiction to deal with the matter, that she unsuccessfully contended that the court lacked power to vary the terms of the Trust and was unsuccessful in her application for periodical lump sum child support. 

9. The proceedings were commenced by the husband who sought an order that he receive all, or, as his position became during the hearing, most, of the corpus of the Trust.  He asserted that the Trust had failed and that, if it had not, it should be varied so as to return the funds held by it to him. He was entirely unsuccessful in that application. 

10. The wife sought a back dated child support departure order and an order for child support until 31 December 2015.  She did not succeed on that application but was successful in obtaining a variation of the earlier orders so as to permit the Trust to pay expenses related to the general welfare of the child P.

11. Each party was successful, to an extent, in that each sought the removal of the other as a trustee of the CST and both were removed. 

12. The significant part of the proceedings concerned the CST, its nature, whether it could be varied under the Child Support (Assessment) Act 1989 (Cth) and if so whether it should be varied. Those considerations arose because of the husband’s application for the return of the funds held by the Trust, whether that return was based upon the trust having failed or the terms of the Trust being varied. A larger proportion of the case was concerned with these issues than with the wife’s child support departure order applications.

13. Having regard to the various successes and failures of the parties and the time spent on various aspects of the matter this factor supports an order that the husband pay one half of the wife’s costs. The consideration of the parties’ financial position does not lead to a different result.

14. The husband should indemnify the Trust for the Case Guardian’s expenses and fees.  Those fees would not have been incurred but for the application of the husband as the Case Guardian was appointed to represent the child, as the beneficiary of the CST, on that application.  That application having failed the husband should bear the costs of his representation. To do otherwise would unfairly diminish the assets of the Trust which are held for the child’s benefit.

15. Finally it was submitted by the wife that these proceedings were not proceedings in the ordinary course of family law proceedings where one would expect that there be no order as to costs.  It was submitted it was not a matter that would necessarily have had to have arisen from the breakdown of a marital relationship.

16. There is force in those submissions particularly having regard to the issues surrounding the Trust. They support the making of the indemnity order as to the Case Guardian’s expenses and fees.  They do not, however, compel a different result in relation to the wife’s fees.

17. The wife sought that the costs payable to her be assessed on an indemnity basis. 

18. Costs on an indemnity basis are exceptional.  A number of cases have considered the circumstances in which indemnity costs should be ordered including the well-known authority Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 at [24].

19. In support of her application for indemnity costs the wife submitted that the case at its core was a monumental waste of costs that arose upon the decision of the husband to embark upon a claim wholly without merit.

20. Although the husband’s claim as to the Trust was ultimately unsuccessful it required the consideration of complex issues.  I am not satisfied that the case was commenced in wilful disregard of known facts or clearly established law or was prolonged by groundless contentions. 

21. I bear in mind that the wife has obtained only an order for the partial payment of her costs. That order recognises that she was not entirely successful in the proceedings. That of itself, is sufficient to dispose of the application for indemnity costs.

22. It has not been established that costs be other than on the ordinary basis.  Accordingly the appropriate orders are as set out at the commencement of my reasons for judgment.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 2 December 2014.

Associate: 

Date:  2 December 2014