Cabasso and Cabasso - [2007] FamCA 511

FAMILY COURT OF AUSTRALIA

CABASSO & CABASSO

[2007] FamCA 511

FAMILY LAW - COSTS - Between parties

APPLICANT:

MR CABASSO

RESPONDENT:

MRS CABASSO

FILE NUMBER:

BRC

1664

2007

DATE DELIVERED:

5 April 2007

PLACE DELIVERED:

Brisbane

JUDGMENT OF:

Barry J

HEARING DATE:

5 April 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Dick of Counsel appeared on behalf of the Applicant Husband

SOLICITOR FOR THE APPLICANT:

Hopgood Ganim

SOLICITOR FOR THE RESPONDENT:

Mr Scott-Mackenzie, Solicitor for WHD Lawyers appeared on behalf of the Respondent Wife

Orders

Within twenty-eight (28) days the Wife pay to the Husband the sum of $4,800 being 50% of the Husband’s costs of and incidental to the application filed by the Wife on 21 September 2006.

The applications for costs of the hearing are dismissed.

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1664 of 2007

MR CABASSO

Applicant

And

MRS CABASSO

Respondent

REASONS FOR JUDGMENT

The parties in this litigation entered into consent orders for property settlement on about 31 January 2006. The document was signed on 20 January 2006. I need not trouble myself with going through the details of all the orders which extend over 18 paragraphs.
Relevantly, for present purposes, O 1.5 provided for the wife to transfer to the husband her shareholding in J Pty Ltd. That company had been valued by a single expert valuer at $200,000 for the purpose of the proceedings. I'm told that the property settlement effected represented an apportionment of 70 per cent to the wife and 30 per cent to the husband excluding superannuation.

RECORDED : NOT TRANSCRIBED

In about mid last year, some four or five months after the property settlement orders, the husband sold the family business for $324,000. The wife instituted proceedings some time thereafter under s 79A seeking that the orders of this Court of 31 January be discharged. Those proceedings were discontinued within four months on 15 January 2007.
The husband now seeks orders in an application filed on 14 February 2007 that the wife pay his costs of and incidental to the application filed 21 September 2006 on an indemnity basis and that; the wife also pay the husband's costs of and incidental to these proceedings on an indemnity basis.
Nothing daunted, the wife filed a response to that application on 2 April 2007 in which she seeks that the husband pay her costs of and incidental to the application filed 21 September 2006 on an indemnity basis and; that the husband pay her costs incidental to these particular proceedings on an indemnity basis, but otherwise his application filed 14 February 2007 be dismissed.
I have been assisted by the written submissions prepared by counsel. I am informed from the husband's position that the indemnity costs, so far as the s 79A proceedings are concerned are $15,500. If the Court was to award costs on a party and party basis that would be $9,600.
RECORDED : NOT TRANSCRIBED
The wife is unable to give an estimate of her costs of either proceedings, the 79A proceedings or these proceedings for the costs on either an indemnity or a party and party basis.
On my calculations the net worth of the parties must have been about $1.7 million together with some minor superannuation interests. To come to Court arguing over $10,000 or $15,000 in costs reminds me of two bald men fighting over a comb. It is so unnecessary.
The reason the proceedings were discontinued was that when the sale of the business was analysed, the husband netted $246,000. Other matters to be litigated in the 79A proceedings I would describe as either a trivial and/or spurious nature.
I shall deal with the wife's cross claim for indemnity costs. In circumstances where she re-opened proceedings on 21 September and discontinued those proceedings within a mere four months after putting the husband and herself to considerable costs, why she should be entitled to her costs, either on a party/party basis or indemnity basis, truly escapes me. She lost resoundingly. It does not normally follow when you lose resoundingly you are entitled to your costs. As I say, costs to be awarded on an indemnity basis is a rare event indeed and certainly the wife's case does not fall within that category.
The complaints against the husband involve a failure to provide prompt disclosure of relevant documents in relation to the sale of the family business and providing an incorrect explanation for the sudden increase in the value of the family business.
The husband engaged three solicitors, C and Company, who are assumed to be relations. He re-engaged T & M who were his solicitors at the property settlement proceedings and, for whatever reasons, he then changed solicitors to Hopgood Ganim, his current firm of solicitor. Hopgood Ganim received instructions, I am informed and accept, on about 11 September. I accept the submission made by counsel for the husband that once proceedings have ceased, as they did with the making of the property settlement orders, for all practical purposes there is no on-going obligation to provide disclosure of documents. The husband was under an obligation to provide details about the sale of the family business. I assume that covers when the business was being sold and when the wife would be paid the balance of moneys owing to her.
T & M replied to correspondence issued from the wife's solicitors on about 10 August. They gave the explanation that the rent roll had increased significantly and that would explain the increase in the sale price. I note that T & M ominously warned in the final paragraph of that correspondence:
“We must put you on notice that should your client make any application to the Court pursuant to s 79A we will also be seeking orders for indemnity costs in our client's favour.”
Thereafter there was a letter from the wife's solicitors on 17 August under the heading "Negotiation". They said:
“After full disclosure has been made pursuant to the pre-action procedures, my client will make a proposal that the parties attend mediation.”
On 12 September Hopgood Ganim wrote to the wife's solicitors:
“We've recently received instructions to act in this matter. We have to hand copies of your correspondence dated 17 August and 31 August. We are in the process of obtaining our client's further instructions and also the file from [T] & [M] and would appreciate if you would note our involvement in this matter and forward all future correspondence to us. In the circumstances we'd be pleased if you'd not take any further action in this matter until we are able to respond after receipt of more detailed instructions.”
It is common knowledge it can take some time to obtain a file from another firm of solicitors. The matter has to be processed. Sometimes it is done expeditiously, sometimes it is not. There was no reply to that letter. There was no phone call. Proceedings were simply instituted on 21 September. To my mind it represented a gross professional discourtesy, however, I will leave that to one side for the moment.
The attitude of the solicitors for the wife was more reminiscent of a gun fight at the OK Corral than a practitioner and a client prepared to comply with both the letter and the spirit of pre-action procedures set out in the legislation and the rules designed to forestall the on-set of litigation. There was no urgency about this matter whatsoever. The parties were financially comfortable. Who needs more litigation? The parties do not; the children do not; the Court does not; lawyers do.
There followed next an eight page letter from Hopgood Ganim dated 10 October 2006. There was a warning given in that letter along the following lines. This is on page 3:
“As you will appreciate our client has also incurred sales costs in relation to the business and there will be taxation consequences associated with same. These were not included in the valuation as prepared on behalf of the parties and will be borne solely by our client.”
Alarm bells should have been going off.
Thereafter, quite properly, they referred to a decision of Jordan J in the matter of Bowman where, in circumstances not entirely dissimilar to here, a property had, shortly after settlement, sold for a higher value than it had been valued at for the purposes of the property settlement proceedings. It happens all the time particularly when the Sydney property market was so volatile. The parties were drawing their consent orders in terms of properties being sold and divided proportionately because it was so difficult to try and get an accurate target on what the valuation would be. Jordan J said:
“Changes in the value of property subsequent to settlement are not only common, they are inevitable.
There are many reported decisions relating to fluctuations in value and such circumstances have never, never by themselves provided a basis to set aside final property orders. To adopt any other approach would promote endless litigation and would defeat the sound purpose of s 81 of the Family Law Act.”
Underneath all the legal jargon; all the references to cases; sections of Act; explanatory memorandum; explanatory statements; quotations of the rules; the matter is quite simple. The wife has litigated. The wife has lost. The wife has lost resoundingly. There are normally consequences for litigating and losing. Litigation is a risky business. Sir Owen Dickson, Chief Justice of the High Court, famously said over 60 years ago:
“The lawyer should really know what he is doing when he stands between his client and the Court and advises for or against entering the Temple of Justice.”
Prophetic words.
I turn to the husband's case. It does not come within a bull's roar of deserving indemnity costs. I do not propose to award the husband 100 per cent of his costs. I certainly do not propose to award the wife any costs in relation to her application. I accept the submissions that the husband was tardy in providing instructions. He had a business to run and he may have had other things on his mind. It is not uncommon for people to want to lead lives outside the stress of litigation. He was, however, tardy in responding to correspondence; tardy in giving instructions to solicitors; tardy in providing disclosure and did not, for whatever reason, give a correct explanation for the increase in the sale price when first called upon.
Having regard to the quotation from Bowman's case, I am not at all sure that he was called upon to give any explanation. Properties increase in value. The parties had a single expert who valued it at that price. It was 12 month's earlier. Businesses can increase in value. However, I leave that aside. The husband ultimately did give an explanation. Any of the explanations he gave would have been reasonable but the correct explanation with costings, presumably, ultimately led to the discontinuance of the proceedings.
I propose in the circumstances to award the husband 50 per cent of his costs. To save time and money, I propose to assess those costs rather than to send the parties off to taxation for yet more costs, on costs; on costs. It is a waste of Court's resources and the parties' resources.
I accept the reasonableness of the assessment of $9600 for the husband's party and party costs. I award him $4800 in relation to the proceedings of and incidental to the proceedings instituted by the wife on 21 September 2006. The wife to pay those costs within 28 days.
RECORDED : NOT TRANSCRIBED
I do not propose to award costs.

______________________________

I certify that the preceding twenty four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate:

Date: 5 April 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as CABASSO & CABASSO