Berge and Berge and Anor (Costs Application)

[2010] FamCA 546

FAMILY COURT OF AUSTRALIA

BERGE & BERGE AND ANOR (COSTS APPLICATION) [2010] FamCA 546

COSTS – wife seeks that the husband and his father (the second respondent) joint and severally pay her costs – issues relating to level of disclosure – capacity to meet a costs order – disparity in parties’ incomes – offers of settlement – conduct during proceedings

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPLICANT: Ms Berge

RESPONDENT: Mr Berge

2^nd RESPONDENT: Mr Berge Snr 

FILE NUMBER: SYF 4280 of 2006

DATE DELIVERED: 30 June 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Fowler

HEARING DATE: 26 November 2009, 14 April 2010, 15 June 2010 and written submissions

REPRESENTATION

APPLICANT: Mr Cumming

RESPONDENT: In person

2^ND RESPONDENT: In person

Orders

1. All applications for orders for costs are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Berge and Berge and Anor (Costs Application) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4280 of 2006

MS BERGE

Applicant

And

MR BERGE

Respondent

And

MR BERGE SNR

2^nd Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court is an Application in a Case filed by the wife (“the wife”) on

   
   

   6 November 2009, seeking orders for costs against the respondent husband (“the husband”) and the husband’s father as the second respondent (“the husband’s father”) in proceedings in which judgment was delivered on

   
   

   9 October 2009.  A copy of that Judgment should be read in association with this Judgment.  In his response to the wife’s application the husband seeks an order for costs against the wife and the husband’s father seeks that the wife’s application for costs be dismissed.

Background facts

1. In the substantive proceedings the wife in short sought orders for alteration of property interests.  The husband’s father, with whom the husband held a property as a joint registered proprietor, was joined in the proceedings.  A major issue was whether the husband, although he was on the title, had any beneficial interest in that property.  The husband denied that he did.  The husband’s father asserted, and the husband agreed, that he held the property in trust for his father.

2. The Court held that the husband did have a beneficial interest in the property and ordered the payment of a sum by the husband to the wife, secured against the property.  The property was one which was capable of subdivision and indeed one in respect of which at the time of hearing the evidence was that a development application had been granted.

3. On the hearing of this Application before me it was said that development application, having expired had therefore lapsed and it was argued that consequently the value of the property had diminished from the amount assigned to its value in the proceedings.  There was no evidence before me of the basis on which a fresh development application might be granted or the terms on which a reinstatement may take place of the former approval.

4. The husband sought an order for costs against the wife in the proceedings, relying upon a number of bases, which are set out below.  In short, the husband referred to the comparative financial positions of the parties and brought before the Court assertions that the wife had not fully and properly disclosed her assets at the time of the hearing.  Although he initially sought to re-litigate some of the issues which had previously been before the Court and determined, he did not press those matters before the Court on the hearing of the wife’s costs application.

5. In support of her Application the wife pointed largely to the fact that the husband and his father had wholly failed in their assertion that the property was held in trust by the husband for his father, and that is true.  However, the husband also pointed out correctly that the amount ultimately awarded to the wife was significantly less than her initial claim.

Section 117 considerations

1. Although the usual rule is that in proceedings such as these each party pays and bears his or her own costs, the Court has a broad discretion as to the orders that it can make for costs and that discretion is set out in section 117(2) of the Family Law Act 1975 (“the Act”). In considering whether to exercise that discretion I am obliged to consider the matters set out in section 117(2A) of the Act. Those matters are set out in the following sub sections of that section namely:

(a)      the financial circumstances of each of the parties to the proceedings

1. The financial circumstances of the parties to the proceedings were the subject of Financial Statements updated and filed on the hearing of the present application.

2. In his statement of financial circumstances it seems that the husband’s father now has a reliance on a Swedish age pension.  The husband’s father is the beneficial owner of a home unit in Darwin which is subject to mortgage, and it was asserted that property has been on the market for sale for some time, but has attracted no offers.  The income which was derived from the unit was applied to the payment of the outgoings of that property, and it was not asserted that there was any surplus.  The husband’s father says that the value of his property interests has diminished by reason of the lapse of his development approval in relation to the property owned jointly with the husband.

3. In his Financial Statement filed 9 March 2010 the husband said his personal expenditure exceeded his weekly income, with his total average weekly income being $785, and total personal expenditure being $796.  His income is derived from his employment, a small amount from share dividends and the Family Tax Benefit.  The husband further disclosed that the total value of property owned by him was $4,347, the total gross value of his superannuation as $57,700, and said his total liabilities were $188,352.  The husband said he had nil financial resources.

4. However, the husband’s stated assets do not include the asset found to be his in the proceedings and, were that to be included at the value then found, his liabilities might be exceeded by his assets.  He certainly did not appear to be in what might be described as a liquid position and it may be that depending on a realisation at some future time of his real estate assets and the payment to the wife of the amount ordered to be paid there would be at least only a modest amount left over.

5. The husband is currently residing with his girlfriend and her father, to whom he pays $250 per week towards expenses, in lieu of rent.  The husband asserts that whilst she earns an income she largely supports herself and does not support him financially.  Her income is said to be an amount which could only be regarded as modest.  In his written submissions filed 30 March 2010 the husband describes his girlfriend’s financial position as “precarious”, submitting that she receives less than $500 per week from her business which is running at a loss, and that she is responsible for mortgage repayments and the support of her father, with whom she and the husband reside.

6. In addition, the husband says his partner, E, is expecting their child and that when the child is born in the latter part of 2010 then both he and his partner will need time off from their employment, or will need to pay for childcare.  In his written submissions the husband says that his partner is the owner and principal of her business, in which the husband also works, and two other analysts are also employed by the husband’s partner.  The husband says he expects to be the main carer of the child, in part due to his belief that the business will be unable to function if his partner is absent for long periods.

7. The husband has incurred a liability in respect of a personal loan obtained to pay his legal fees, and says he has been making minimum repayments on that debt.

8. The husband’s father filed a Financial Statement on 4 February 2010, in which his expenditure is said to exceed his income.  The husband’s father is a pensioner who is self-employed and in receipt of an average weekly income of $1,424.50, with total personal expenditure of $1,544.71.  The total value of the property owned by him was said to be $1,539,770 with liabilities of $1,103,535.02.  He did not disclose any value in relation to superannuation or the existence of financial resources.  The husband’s father’s statement was not created having regard to the findings of this Court as to the interest of the husband as in the jointly owned property.

9. In his written submissions, the husband’s father sought that the wife’s application for costs be dismissed, in support of which he set out six grounds, including that an assertion that he should not have been joined as a second respondent to the proceedings and that he has no means to pay any costs order against him.  He asserts that his expenses exceed his income, and that he is living off credit cards and that he was unable to afford further legal representation but found it difficult to appear in Court due to his ill health.

10. In his Financial Statement the husband further disclosed he was currently being casually employed by R Finance Pty Ltd.  He says his income has decreased this year as a result of having to take leave from his employment as a result of the legal proceedings and also due to the downturn in the global economy, which has had a negative impact on the finance industry.  The husband says he hopes that at the conclusion of all court proceedings his income will be restored to $960 per week, however says that if he is again bankrupted then he will be disqualified from working in finance.  In addition, the husband asserts that an increase in his income will reduce the amount he receives under the Family Tax Benefit.

11. The wife resides with her mother in premises purchased by the mother since the hearing.  She continues to be in paid employment with the Australian Public Service.  The premises in which she resides are rented from her mother at a rent which is under market value.  The husband submitted that the wife has also re-partnered and is expecting a child, a fact which the husband in his written submissions says was not disclosed by the wife at the hearing, and argues that she did not thus disclose that her financial circumstances had changed.  In her Financial Statement filed 23 December 2009 in Part E, the wife did not provide the details of any other income earners in her household, and only provided the child’s name.  The wife also disclosed a debt in relation to the litigation.

12. The wife’s income meets her outgoings and her Financial Statement was deficient in that it did not include as an asset the amount which had been awarded to her in the proceedings.  In her Financial Statement filed

    
    

    23 December 2009 the wife disclosed her average weekly income as $E1,729 and her total personal expenditure as $E1,579.  It further set out that the total value of property owned by her was $E45,000, the gross value of her superannuation as $100,000 and her total liabilities as $20,000.  The wife said she had nil financial resources.

13. The wife was the subject of some cross examination on her Statement and her disclosures to the Court.  It seemed to me at the end of the process it was admitted by the wife that, in making disclosure of her bank accounts for example, she had omitted an account in the sum of $10,000 and had also failed to include her entitlement under the Orders because it had not yet been realised.

14. The wife likened the entitlement under the Orders to having a ticket in the lotto for a prize which had not yet been drawn.  Although it should have been disclosed it has not in fact been realised and there may be some question now of the extent to which it can be realised.  As to her other “non or false disclosures” I accept that there was a failure to disclose certain amounts in her Financial Statements and that in respect of some of them she adjusted balances of accounts to take into account expenditure not at that time debited to the account but either incurred or planned.

(b)      whether any party to the proceedings is in receipt of legal aid and, if so, the terms of the grant of that assistance to that party

1. In his written submissions the husband disclosed that he was in receipt of legal aid in relation to proceedings currently before the Federal Magistrates Court, in respect of child support.  However, there was no evidence that the husband was in receipt of such assistance in respect of the proceedings before me, and he represented himself before the Court on this application.  There was no evidence that either the wife or the husband’s father were in receipt of legal aid.

(c)      the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters

1. Each of the husband and wife has been guilty of a measure of inaccuracy in disclosing matters in accordance with the requirements of the Rules.  The husband asserts that the wife failed to disclose that certain monies were held on behalf of her mother, when she asserted that they were hers beneficially and that she has failed to disclose accurately the balances in certain accounts and indeed one account at all.

2. The wife asserted that the husband in the documents initially filed gave no indication that he held his interest in the property at C other than beneficially and it was only subsequently in Financial Statements that he asserted he held his interest in the property in trust for his father.

3. The wife pointed out that the husband denied initially making any mortgage payments with respect to the property but late in the day admitted that he had.  This claim was supported by the husband’s father.

4. The conduct of the husband and documents provided by him were inconsistent with his asserted trusteeship of the property for his father.  There were other examples of inconsistent financial disclosures.

(d)      whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. The proceedings were not necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.

(e)      whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The husband and his father were unsuccessful in achieving the relief that they sought, namely a declaration that the husband held his interest in the property in trust for the husband’s father.  The wife did not wholly succeed in the claims she made but she did establish beneficial ownership of an interest in the property in relation to the husband and procured an order for the payment of a sum by way of alteration of property interests.  The husband’s father sought a declaration that the husband held the title to the property in trust for him and he failed in that application.

(f)       whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

1. The wife points to the proposals of the husband set out in his applications and certainly the decision of the Court is significantly more favourable to the wife than those proposals.

2. The husband in his written submissions claims that he provided offers of settlement which were not accepted.  He asserted that his written offers of 2007 and 2009 were declined by the wife, but that she then did not make any offers.  It was further asserted by the husband that his written offer was closer to the figure which was ultimately determined by the Court.

3. Attached at “C” to the written submissions filed by the husband on 30 March 2010 is a letter dated 21 August 2006 from the husband’s then solicitor to the wife’s legal representatives and which says:

   …despite numerous requests on our part, your client has not addressed specific matters in our correspondence nor has your client made any genuine effort to resolve the dispute as required by the Family Law Rules.

   Further attached at “D” is a letter which refers to the husband’s offer of settlement dated 8 March 2007, but does not particularise such offers said to have been made.  Although the husband submitted that he had made three offers to settle at the current assets split, no evidence was adduced identifying the offers or giving the particulars of their terms.

4. The wife asserts that in any event given that the husband did not disclose his beneficial interest in the property she was not in a position to accept a proposal for settlement from the husband.

(g)    such other matters as the Court considers relevant

1. On the basis of disclosure no party comes out of these proceedings with “clean hands”.  I consider that the husband’s failures were more egregious than those of the wife however she failed also in this requirement of litigation.  The amount she initially claimed was, in the view of the Court, not reasonable in the end and a significantly lower amount was awarded to her.

2. I consider the wife’s present financial position to be superior to that of the husband and his father as to income but not as to capital.  However, the value of the property in the hands of the husband and the husband’s father at the present time is the subject of evidence that it has been presently reduced by reason of the lapsing of the development approval.

3. In all the circumstances and taking into account all the matters argued before me, I do not find it fit to depart from the provisions of section 117 that each party should pay and bear their own costs, and will order accordingly.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate: 

Date:  30 June 2010