FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Coleman & Coleman (No. 2) [2022] FedCFamC1F 80
File number(s): BRC 15612 of 2019 Judgment of: CAREW J Date of judgment: 23 February 2022 Catchwords: FAMILY LAW – COSTS – Where the husband seeks an order for costs on a party/party basis in a fixed sum – Where the wife resists the costs application of the husband – Where at trial the wife was found to have failed in her obligation to provide full and frank disclosure – Where a section 75(2) adjustment was made of 2.5 per cent in favour of the husband – Where the wife argues she has already borne a financial consequence from her non-disclosure in the form of a 2.5 per cent adjustment – Where the wife argues any costs order would be unjust – Where the wife is ordered to pay the husband’s costs in a fixed sum amount. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)Cases cited: Fitzgerald vFish sub nom PBF v TRF (FLR) (2005) 191 FLR 294
Kilich & Wood [2003] FamCA 629
Lenova v Lenova (Costs) [2011] FamCAFC 141
Penfold v Penfold (1980) 144 CLR 311
Pennisi & Pennisi (1997) FLC 92-774Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Number of paragraphs: 35 Date of last submissions: Husband’s written submissions filed 22 December 2021;
Wife’s written submissions filed 24 December 2021Date of hearing: In Chambers on the papers Place: Brisbane Counsel for the Applicant: Mr P W Hackett Solicitor for the Applicant: Hirst & Co Family Lawyers Solicitor for the Respondent: Hopgood Ganim Lawyers ORDERS
BRC 15612 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR COLEMAN
Applicant
AND: MS COLEMAN
Respondent
ORDER MADE BY:
CAREW J
DATE OF ORDER:
23 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The respondent contribute to the applicant’s costs of and incidental to the proceedings commenced by Application for Final Orders on 23 December 2019 and the Application for costs filed 10 November 2021 in the fixed sum of $53,500.
2.The sum of $53,500 be paid within 90 days of the date of this order.
3.The respondent’s application for costs be dismissed.
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…
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- Case
- [2022] FedCFamC1F 80
- Decision Date
CaseChat Overview and Summary
In the case of Coleman & Coleman (No. 2), the parties, who were married for 17 years and had three children, were in dispute over the division of their assets following their separation in 2018. The husband, a professional, and the wife, who worked in a family business in the financial services industry, had various properties and financial assets that needed to be divided. The husband sought a 60/40 division in his favour, while the wife sought a 55/45 division in her favour. The court determined a 52.5/47.5 division in the husband’s favour, requiring the wife to pay him $330,265. The wife also had a potential future payment contingent upon the sale of an investment property.
The legal issues before the court included the valuation of the investment property, the wife's retention of a property at Suburb A, the wife's claims of financial contributions from her father, and whether the wife had an equitable interest in the family business and concealed the proceeds from its sale. The husband argued that the wife's conduct during the proceedings, including the unsatisfactory evidence provided and failure to disclose certain information, warranted an order for costs against the wife. The wife contended that the husband's offer at mediation should be considered in determining the costs.
The court found that the wife's conduct, including non-disclosure and unsatisfactory evidence, justified an order for costs against her. The court relied on the principle that the power to award costs should be exercised judicially but does not require a scientific or formulaic approach. The judge considered the wife's conduct in relation to non-disclosure, which was also a factor in determining the division of property, and found it relevant to the costs application. The court concluded that a costs order against the wife was justified due to her conduct, even though it was a factor in the property division decision.
The court ordered the wife to pay the husband's costs, which were fixed in the sum of $53,500. This decision highlights the importance of full and frank disclosure in family law proceedings and the potential consequences of failing to do so, including the imposition of costs.
The legal issues before the court included the valuation of the investment property, the wife's retention of a property at Suburb A, the wife's claims of financial contributions from her father, and whether the wife had an equitable interest in the family business and concealed the proceeds from its sale. The husband argued that the wife's conduct during the proceedings, including the unsatisfactory evidence provided and failure to disclose certain information, warranted an order for costs against the wife. The wife contended that the husband's offer at mediation should be considered in determining the costs.
The court found that the wife's conduct, including non-disclosure and unsatisfactory evidence, justified an order for costs against her. The court relied on the principle that the power to award costs should be exercised judicially but does not require a scientific or formulaic approach. The judge considered the wife's conduct in relation to non-disclosure, which was also a factor in determining the division of property, and found it relevant to the costs application. The court concluded that a costs order against the wife was justified due to her conduct, even though it was a factor in the property division decision.
The court ordered the wife to pay the husband's costs, which were fixed in the sum of $53,500. This decision highlights the importance of full and frank disclosure in family law proceedings and the potential consequences of failing to do so, including the imposition of costs.
Orders
Orders of the court
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Background
Background to the litigation
For the reasons which follow I propose to order the wife to pay the husband’s costs fixed in the sum of $53,500. BRIEF BACKGROUND After a 17 year marriage (including two years pre-marriage cohabitation) the parties separated in 2018. They had three children. The husband was a professional and the wife worked throughout the marriage in a financial services business, O Company (“OPL”), a family business. Upon its sale in 2007 the wife continued to work in the business then known as P Pty Ltd (“PPL”). During their marriage the parties bought and sold various properties and at the end of the marriage each lived in a property owned by them, which they respectively retained under the final order. The wife also retained a property at Suburb A. At trial the husband contended for a net asset pool of $5,928,852 and the wife contended for a net asset pool of $6,780,723. I found the net pool to be $6,258,075. The husband sought a division of the assets in the proportion 60/40 in his favour and the wife sought a division of the assets in the proportion 55/45 in her favour. The final order provided for a division of the assets in the proportion 52.5/47.5 in the husband’s favour and in order to give effect to that order the wife was required to pay the husband $330,265. There is a prospect of the wife receiving a payment from the husband in the future, if an investment property, G Property, sells for more than $4,650,000. If that occurs she is entitled to receive 47.5 per cent of any amount in excess of $34,337 (which was the net value attributed to the family trust that owns the G Property). There were a number of significant issues at trial including the following:(a)The value that should be attributed to the G Property which were always going to be sold;(b)Whether the wife should be able to retain the Suburb A property;(c)The wife’s claim that her father had gifted and/or lent her various sums of money during the marriage;(d)Whether the wife had an equitable interest in OPL and hidden her share of the sale proceeds. HUSBAND’S SUBMISSIONS In summary, the husband relies on the following matters in support of his application for costs:(a)While the husband earns a greater income than the wife, it was found by the trial judge (at [140] and [143] of the Reasons) that the wife has the capacity to work more than two days per week and the Suburb A property is an income producing asset; (b)The wife’s conduct during the proceedings as found by the trial judge are as follows:(i)The unsatisfactory nature of the evidence relied upon by the wife in support of her claims that her contributions included sums provided by her father (at [102] of the Reasons);(ii)Despite the wife describing herself as a hoarder, the source documents proving where certain sums came from were not provided (at [103]);(iii)The wife and her father gave a totally implausible and inconsistent story about an alleged payment of $50,000 to the wife in August 2009 and no evidence was produced of a deposit for the sum at the relevant time (at [104]);(iv)The wife failed to disclose the ‘separate agreement’ (referred to in the sale contract between OPL and PPL) which raised the real possibility that the wife was not a mere employee of OPL and had received benefits from its sale (at [122]);(v)No documents were produced to corroborate the wife's father's claim that the entire proceeds of sale of OPL were paid into his superannuation fund in circumstances where the wife had a demonstrated ability to obtain relevant documents (at [120]); and(vi)The wife failed in her obligation to provide full and frank disclosure of all information relevant to the case (at [16]).(c)While neither party was wholly unsuccessful there were aspects of each party’s case that did not succeed and in particular, the wife did not succeed in relation to the following matters:(i)That the sums identified by the wife totalling $225,116 should be treated as a contribution made on behalf of the wife rather than the sum of $94,000 conceded by the husband.(ii)That the husband's interest in the Coleman Property Trust was valued at $304,337 when the value was found to be $34,337 for the purposes of the proceedings, but with the husband to account to the wife should a higher sale price be achieved.(iii)That the wife's credit cards of $17,521 ought be included.(iv)That the contingent tax and realisation costs of sale of the G Property as per the report of single expert Mr MM be excluded, when it was clear the G Property was to be sold.(v)That the husband's paid legal fees of $234,864 ought be included as an addback.(d)The husband made an offer at mediation, which was confirmed in writing to the wife on 13 December 2019. While it is not contended that, on the asset pool as found at trial, the wife would have been in a better position had she accepted the offer, the husband contends that the wife’s failure to respond to his offer or make any offer at all until during the trial, is a relevant consideration on the question of costs. WIFE’S SUBMISSIONS
Evidence
Evidence Before The Court
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Decision
Reasons for decision
In Parke & the Estate of the Late A Parke[13] Murphy J quoted with approval the observations made by Einstein J in Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus[14] when that court was considering an analogous provision to that contained in r 12.17(1)(a) of the new Rules:130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2) [1995] FCA 1250; (1995) 57 FCR 119, at [24]cited in Idaport at [9]). The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport at [9](v), citing Harrison v Schipp[2002] NSWCA 213; (2002) 54 NSWLR 738).131.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:...the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner. At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. ...(Idaport, at [10] per Einstein J.)[13] (2016) FLC 93-748 at 81,943–81,944, [122]–[134]. [14] [2007] NSWSC 23 at [9].CONCLUSION In my view, a costs order against the wife is justified in the circumstances of this case. Although the wife’s conduct in relation to non-disclosure was a factor taken into account pursuant to s 75(2) when determining the division of property between the parties, I was not taken to any authority which precludes that matter nevertheless being taken into account in a costs application. There were in fact 13 factors taken into account pursuant to s 75 (2), some of which favoured each party. The disclosure factor was described in my Reasons in these terms:(c)The failure by the wife to provide full and frank information about the sale proceeds of [OPL] in 2007; 132. As already discussed earlier in these reasons, the unsatisfactory evidence relating to the numerous deposits and withdrawals from the wife’s numerous bank accounts and absence of evidence to substantiate the bare denials of the wife and her father that the wife did not receive a share of the proceeds of sale of [OPL], together with the unusual arrangements and unsatisfactory explanation surrounding the wife’s involvement in the [OPL] business permit, a robust view to be taken of the wife’s financial circumstances. While it is impossible to quantify any undisclosed funds, I find that it is more likely than not that the wife has access to funds that she has not disclosed in the proceedings. Consistent with authorities such as Weir & Weir[15] the disclosure factor enabled a more robust view to be taken about the wife’s financial circumstances. It was not in truth a ‘conduct’ factor. Accordingly, in my view, it remains a factor relevant to the determination of the costs application. [15] (1993) FLC 92-338.
Ratio Decidendi
Legal Principle Established
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