COLVILLE & COLVILLE
[2014] FCCA 3138
•19 August 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COLVILLE & COLVILLE | [2014] FCCA 3138 |
| Catchwords: FAMILY LAW – Costs – failure to provide full and frank disclosure – conciliation conference unable to proceed – matter listed for undefended hearing and unable to proceed – contumelious disregard of disclosure obligations – obligation of the court to preserve and appropriately use its resources. |
| Legislation: Family Law Act 1975, ss.106B, 117 Federal Circuit Rules 2001, rr.1.05, 14.02, 21.02, 21.03, 24.03, 24.04, pts. 14, 24, sch. 1 |
| Burgoyne & Burgoyne (1978) FLC 90-467 Stanford & Stanford [2012] HCA 52 Haset Sali v SPC Ltd [1993] HCA 47 Aon Risk Services and ANU [2009] HCA 27 Stewart v Atco Controls Pty Ltd (in liq) (No.2) [2014] HCA 31 Allesch v Maunz [2000] HCA 40 Sheill & McMurr (No.2) [2014] FamCAFC 134 Black & Kellner [1992] FLC 92-287 Weir & Weir [1993] FLC 92-338 Tate & Tate (2000) FLC 93-047 Prantage & Prantage [2013] FamCAFC 105 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812 |
| Applicant: | MS COLVILLE |
| Respondent: | MR COLVILLE |
| File Number: | PAC 5181 of 2013 |
| Judgment of: | Judge Harman |
| Hearing date: | 19 August 2014 |
| Date of Last Submission: | 19 August 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 19 August 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Schonell |
| Solicitors for the Applicant: | Lci Legal |
| Solicitors for the Respondent: | Mr Ng of Adams & Partners Lawyers |
ORDERS
Pursuant to section 45(1) of the Federal Circuit Court Act 1999 and part 14 of the Federal Circuit Court Rules 2001 I declare that I am satisfied that formal discovery by the husband is appropriate.
The husband shall within 35 days of today’s date i.e. no later than close of business 30 September 2014, file and serve an Affidavit of documents verified by Affidavit with respect to all documents within his possession, custody or control as would be relevant to issues in dispute in these proceedings including but not limited to:
(a)Copies of income tax returns, assessment notices and BASs for the last 3 completed financial years for that party personally and for any entity in which that party has an interest (such as a private company, trust or partnership);
(b)An up to date statement with respect to any superannuation interest of that party together with a valuation of the fund if not an accumulation interest;
(c)Copies of bank statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest such as a private company, trust or partnership;
(d)Copies of credit card statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest;
(e)Market appraisals with respect to any parcel of real estate in which any party has an interest;
(f)Any document proving or tending to prove any allegation contained in that party’s Financial Statement or Affidavit;
(g)Copies of market appraisals or computer site print outs as to value of:
(i)Any motor vehicle the value of which is not agreed.
The husband shall contemporaneous with service of his Affidavit of documents serve upon the wife’s attorneys a copy of each and every document enumerated within the Affidavit of documents, save those suggested to be the subject of any claim for privilege.
The husband shall within 28 days of today’s date pay the wife’s costs of and incidental to the appearances 2 June 2014, 23 July 2014 and 19 August 2014, such costs fixed in the sum of $13,035 and provided that payment is made within 28 days of today’s date interest shall not accrue thereupon, but after the expiration of that period:
(a)Interest shall then accrue upon that sum or such portion of it as remains outstanding at the rate prescribed by the Federal Circuit Court Rules 2001 and/or Family Law Rules 2004, whichever is the greater; and
(b)Such amount shall be a charge upon each and every asset of the husband and/or in which the husband has an interest whether in his personal or in a corporate capacity until the amount is paid (together with interest) in full.
The matter is adjourned to 23 October 2014 at 9.30am for further mention and directions (if the husband has complied with the above orders particularly as to discovery) and if the husband has not complied with the above orders particularly as to discovery undefended hearing of the wife’s Application.
IT IS NOTED that publication of this judgment under the pseudonym Colville & Colville is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 5181 of 2013
| MS COLVILLE |
Applicant
And
| MR COLVILLE |
Respondent
REASONS FOR JUDGMENT
These proceedings come before the Court today for possible undefended hearing.
The proceedings involve claims for property adjustment.
The parties to the proceedings are a husband and wife, namely Ms Colville, who is the Applicant, and Mr Colville, who is the Respondent.
History of proceedings
The matter has some history before the Court, having been commenced by an Initiating Application filed 20 November 2013.
Proceedings first came before the Court on 4 February 2014. By that date a Response had not been filed. An Affidavit of Service has not been filed and thus it cannot be ascertained when service was effected. However, it would appear that service had occurred well prior to 4 February 2014.
On 4 February 2014 both parties were legally presented. By consent the matter was adjourned for further mention and directions and an order made for the husband to file and serve a Response, Affidavit and Financial Statement by 14 March 2014.
Those documents were not, in fact, filed by that date but were filed on the date that the matter next returned before the Court, 28 March 2014. Thus this was the first occasion on which there was clear, demonstrated noncompliance with an order of this Court.
When the proceedings were before the Court on 28 March 2014, both parties were, again, legally represented. With the concurrence of the parties, the proceedings were adjourned to a Conciliation Conference with the Registrar and a number of orders were made by consent. Those orders included orders for the payment of ongoing child support and spouse maintenance in the sum of $600 per week. There is no specificity within the order as to which portion represents child support and which portion spouse maintenance. The Court is advised today that those payments are, in fact, being made.
Orders were also made requiring that the parties join in a sale of the former matrimonial home in which, until that time, the wife and child of the parties had resided in.
The property has been sold and proceeds of a little over $35,000 received. Those funds have been significantly reduced through expenditure itemised by the wife in the material she has now filed.
The parties were to attend a Conciliation Conference on 2 June 2014. On that date, both parties attended and both were legally represented. The bench sheet completed by the Registrar on that day is instructive. It commences with the statement:
Husband has not complied with disclosure.
The Registrar’s bench sheet notes that:
a)The Property O property had been sold although contracts had not yet been exchanged; and
b)A Supreme Court judgment had been obtained against the parties alleged by the husband with a verdict of approximately $1 million. It is noted that no disclosure documents were produced with respect to that suggested liability;
c)A sale of a further property at Property J was in the process of being negotiated;
d)Properties at S1 and S2 Properties were being completed as a development and then to be sold. The ownership of those properties is not clear. They may be either owned by the husband with relatives of his or through a corporate entity in which the husband owns a shareholding. The significance of the husband’s shareholding is suggested, on a basis advanced by the husband today, to have reduced since the separation of the parties. In that regard, it is to be noted that as at September 2002, the husband’s shareholding in the enterprise Colville Pty Ltd was 50 per cent and that on or about 14 November 2011, as a consequence of an additional share issue, the Respondent’s shareholding in that company was reduced to 7 per cent; and
e)The husband denied any interest in additional properties S3 and S4 Properties, suggesting they belong to his brother.
A number of other notations were included, including a notation that the:
Husband agrees he has a one third interest in the company, and yet his shareholding reflects a smaller percentage.
The Registrar concludes their bench sheet with the following statement:
Not possible to ascertain the pool as there has been no disclosure. Financial structure may be quite complex involving third parties. Could not proceed to a conciliation conference as there has been no disclosure.
At that point, it is to be noted as the Full Court observed in Burgoyne & Burgoyne (1978) FLC 90-467, as far ago as 1978 that, it is impossible for the Court to determine whether any particular order is just and equitable without first determining the nature and extent of the property of the parties at the time that the court is making orders.
The fundamental starting point for the Court’s inquiry is to ascertain the pool of property available for division between the parties. That position is given some real credence by the High Court’s dicta in Stanford & Stanford [2012] HCA 52:
Indeed, being able to ascertain the legal and equitable interests of the parties at the commencement of the process let alone to identify the available pool of property for division is fundamental.
Thus nothing could be achieved. The Conference was abandoned and the wife’s costs with respect to the Conference reserved.
The proceedings next came before the Court on 3 July 2014. On that date the husband was not present. It was suggested by his then attorneys that they were without instruction or proper instructions. Accordingly, they were granted leave to withdraw.
The proceedings were adjourned to today for undefended hearing.
It has been submitted that it is unclear from the order as to whether the matter would proceed to undefended hearing or whether it was listed for a “possible undefended hearing” subject to the husband’s failure to attend to certain matters. There is nothing unclear about the order. The matter is listed today for undefended hearing.
Orders were certainly made requiring that the wife and, for that matter, the husband do certain things In the case of the wife, she was required to file and serve an Amended Application and any further Affidavit material to be relied upon by her.
The wife has filed a substantial Affidavit together with an Amended Initiating Application. They were filed one day late on 1 August 2014. Nothing turns upon that slight delay.
An order was also made for the husband to appear in person before the Court today. The husband’s appearance was not flagged as being a condition precedent to the matter not proceeding to hearing.
What is clear is that by the husband’s attendance today, his re-instruction of his attorneys and the position put to the Court by his counsel that the matter can and should be properly treated as an application by him for adjournment of the hearing.
Arising therefrom there would then also be issues with respect to:
a)The interlocutory orders which the Court must make to endeavour to get the matter ready for hearing and to enable it to be properly heard and determined; and
b)Issues with respect to costs.
As a consequence of the husband’s non-disclosure, a subpoena was also issued by the wife’s attorney and addressed to a firm of attorneys previously retained by the husband. The subpoena sought production of documents by those attorneys relevant to various transactions undertaken by the husband, the husband jointly with his brothers or though the corporate entity referred to. That subpoena had not been complied with on 3 July 2014, although documents were required to be produced prior to 3 July 2014.
The subpoena was adjourned to 23 July 2014 and specifically to deal with compliance with the subpoena. On that date, the third party attorneys appeared and were represented by counsel. The wife was represented and attorneys appeared on behalf of the husband, indicating that, in all probability, they would be further instructed.
On 23 July 2014, orders were made with respect to the subpoena which had, by that date, been complied with. Significant orders with respect to costs of compliance were also made. The husband was ordered to indemnify the wife with respect to those costs and to pay those costs on the basis that the documents sought by the subpoena were all documents within the husband’s “possession, custody or control” in the broad sense of that expression, (although the meaning of that term is often forgotten by the majority of litigants and members of the legal profession in recent times) and can and should have been disclosed by him. A separate judgment was delivered with respect to those orders.
It is suggested that the husband has contacted those attorneys and is in the process of making arrangements to address the order for costs, although the basis of those arrangements is not known and need not be for today’s purposes.
Thus, the issues which are at large, as indicated, relate to:
a)The possible adjournment of the proceedings;
b)If the proceedings are adjourned and the matter does not proceed to undefended hearing today, the interlocutory orders required to advance the matter, noting that in the nine months that it has been before the Court it has moved not one millimetre forward; and
c)Issues of costs which would flow upon any adjournment (and the previous court events).
Adjournment application
The husband seeks adjournment and a further opportunity, although it is expressed in his submissions as “an” opportunity, to participate.
The High Court has discussed, at length, the obligation of the court to address, preserve and appropriately use its resources (see, for example, Haset Sali v SPC Ltd [1993] HCA 47 and Aon Risk Services and ANU [2009] HCA 27).
More recently, indeed in the last week, the High Court has dealt with issues relating to same and particularly costs which would flow from any adjournment occasioned by non-compliance (see Stewart v Atco Controls Pty Ltd (in liq) (No.2) [2014] HCA 31).
The Full Court of the Family Court has also dealt with the issue recently in Sheill & McMurr (No.2) [2014] FamCAFC 134, quoting, within that authority, and at some length, dicta of Kirby J in Allesch v Maunz [2000] HCA 40.
There are some real parallels between that argued on appeal before their Honours comprising the Full Court in Sheill & McMurr (No.2) and this case. Indeed, the conclusion drawn by their Honours with respect to the appellant mother’s position, as set out in paragraph 75 of that decision, is “the fatal flaw to the mother’s position is the assumption in the ground that a “right to be heard” means “a right to be heard at a time of the litigant’s choosing”.
Their Honours concluded that the mother had been afforded an opportunity of being heard and of presenting her case in that she had been directed to file documents but did not do so and provided no explanation for her failure. It was suggested by their Honours, in the conclusion of that paragraph, “the mother was in no doubt as to the nature of the hearing which was to take place or that the matter would go ahead, even if she went on holidays”.
That is not to suggest that Mr Colville has been on holidays. He may have been but nothing is suggested to that effect.
The relevant passages quoted from Kirby J’s dicta in Allesch v Maunz [2000] are also instructive, set out at paragraph 73 of the Full Court’s decision and quoting paragraphs 39 of his Honour’s dicta in Allesch v Maunz [2000]:
Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests. This consideration may be especially relevant in relation to the Family Court where emotions, often engendered by the highly personal issues involved, can sometimes cloud rational thought.
I pause to note that Mr Colville, whilst a litigant in Family Law Act1975 proceedings and potentially dealing with those very issues of which Kirby J so eloquently spoke, is also a businessman of some standing. He has engaged with his brothers in operating highly successful businesses over a significant period.
These proceedings, whilst they relate to matters personal to the husband, are commercial proceedings and nothing more. Thus, one would think that the very approach and the very considerations which one would apply in relation to any commercial litigation would apply herein. Clearly, they have not.
His Honour continued:
Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. In the family court, the rights of non-parties, especially children, may be affected.
Again, I pause to note that whilst there is no parenting issue joined in these proceedings, there is a child to the parties. That child lives with the wife. The home in which that child has lived with the wife has now been sold and the level of financial provision by the husband, based upon the suggested asset holdings of the parties, is far from significant.
His Honour continued:
Additionally, as this court has itself accepted the rights of the public and the efficient discharge by courts of their function must be weighed against unreasonable delay in concluding litigation.
That issue was taken up, as indicated, by French CJ in Aon Risk Services and ANU [2009] wherein his Honour, by reference to Haset Sali v SPC Ltd [1993], stated as follows at paragraph 26:
Sali v SPC Ltd was concerned with a refusal by the Full Court of the Supreme Court of Victoria to grant an application for an adjournment of an appeal. By majority, this court held that in the exercise of a discretion to refuse or grant an adjournment, the judge of a busy court was entitled to consider “the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties”. Brennan, Deane and McHugh JJ went on to say:
“What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources.”
Ultimately, what is clear from all of the above discussion, by far greater jurists than myself, is that the court must be vigilant of its own resources and must ensure that due process is afforded, but to the extent that due process comprises an opportunity to be heard.
Failure to grasp an opportunity to be heard is a matter for an individual litigant and beyond the control of the court.
The Court has afforded to the husband abundant opportunity to be heard.
The husband was served sometime between the commencement of proceedings in late November 2013 and the first return date, 4 February 2014. By operation of the Federal Circuit Rules 2001, a period of 14 days, irrespective of the subject matter or complexity of subject matter of proceedings, is permitted to file a response and an affidavit and financial statement. Clearly, that did not occur.
On the first return date an opportunity to participate was afforded through adjournment and an order for the filing of material. That material was filed late; although, ultimately, such as to allow the business of the Court to proceed and to address that which was sought by the litigants on 28 March 2014.
However, thereafter, the husband has done nothing required of him.
Specific orders for disclosure were made on 28 March 2014. Disclosure was to occur within 28 days of 28 March, i.e. by no later than Anzac Day 2014.
The Conciliation Conference was some little time thereafter namely, 2 June.
Even by that time, a period then having elapsed of nearly 10 weeks, there had been no disclosure or no adequate disclosure. Indeed, the Registrar’s bench sheet would suggest no disclosure at all.
The order made on 28 March 2014 was and should have been unnecessary. Whilst there is some controversy as to whether rule 1.5 of the Federal Circuit Court Rules 2001 operates to import into the Federal Circuit Court Rules the pre-Action procedures set out in the Family Law Rules 2004, clearly, those pre-action procedures exist, whether they are, or are not imported in this Court’s rules.
Clearly, parts 14 and 24 and, in particular, rule 24.04 set out clearly for any litigant involved in proceedings before this Court, whether represented or not, the obligations imposed upon them to exchange relevant documents to enable both parties to engage in full, proper and frank discussion towards resolution, including, on this occasion, with the assistance of a Registrar funded by the taxpayer, and if not successful in doing so, to properly conduct their litigation.
Principles of disclosure have been discussed at length by the Full Court and, indeed, the High Court. One need go no further than authorities such Burgoyne & Burgoyne (1978), Black & Kellner [1992] FLC 92-287 and Weir & Weir [1993] FLC 92-338 for an erudite discussion of those principles.
Notwithstanding that well settled law, the husband has taken it upon himself, including periods when legally advised and represented and, I wholeheartedly accept, made aware of his obligation of disclosure, to engage in the folly of failing to attend to his obligations and responsibilities as a litigant in financial proceedings. That has caused significant delay and significant cost, not only to the wife; presumably also to the husband, but, importantly, to this Court and taxpayers.
The lack of resources of this Court, particularly within this Registry, has been the subject of recent media comment, most of it ill-informed, but with some kernel of truth. This Registry, traditionally staffed by five judges, is now staffed by four and will soon to be staffed by three judges. That has a real flow-on effect for the balance of the Court in provision of relief services by judges from other Registries, as well as a simple increase in delay for all litigants.
At this point in time one would think that the expectation is that litigants and those advising them would be acutely aware of those delays.
In the case outline document provided by her counsel, the wife alleges that the husband’s intent at this point is to “…maximise delay and inconvenience”. Indeed, the wife’s counsel sets out, paragraph 9, page 5:
It is now understood that at the time of settling this Case Outline [being yesterday, the date upon which a notice address for service for the husband was filed] the respondent has reinstated his previous lawyers. It is submitted that such conduct has been visited upon the Applicant, [a phrase used advisedly and appropriately] merely to further delay the proceedings and distress the Applicant.
There may well be some truth to that assertion.
The husband has been anything but diligent in prosecuting his position in these proceedings. He has been afforded opportunities, several of them, to participate, and has chosen not to. In those circumstances, there is explicably resistance to adjournment of the proceedings.
I am satisfied, on balance, that justice which might be best distilled to “fairness” and its perception by these litigants would obviate against the matter proceeding on an undefended basis. I make clear that this is influenced not only by consideration of the husband’s position. If it were the only consideration the matter would proceed.
The wife, if successful in her claim for relief (and that is not to suggest that any determination has been made that she will be or should be), faces a number of difficulties with respect to enforcement, as the matrimonial home, a property suggested to have had a value of approximately $1.1 million, has been sold. That home was heavily encumbered. It would seem that the home was used additionally as security for liabilities not directly related to its purchase.
The remaining assets from which the wife would seek satisfaction of any judgment she obtains are held by the husband jointly with others, or through corporate entities in which he has an interest, which at this point is a minority interest.
For there to be any effective conclusion of the proceedings there will need to be, at least potentially, if not in reality, and, it would appear, the latter is more apt, a joinder of one or more of the husband’s brothers they being joint registered proprietors of real estate which will need, if the wife is successful in obtaining orders as she has sought or anything close to them, to be sold to fund that judgment.
There may also need to be a joinder of the company, Colville Pty Ltd, of which the husband and two of his brothers are shareholders. That entity also owns significant real estate which may need to be the subject of suit in relation to substantive relief or satisfaction of any judgment the wife may ultimately obtain.
An application may be necessary pursuant to section 106B of the Act, to seek to interfere with, reverse and set aside the transaction which occurred in November 2013 (some few days prior to the commencement of these proceedings, and when it is alleged that the husband was on notice of the wife’s intention to commence proceedings), so as to restore the husband’s shareholding. The husband has, today, advanced a basis upon which he suggests the transaction occurred. That, no doubt, will be the subject of evidence, with respect to which justice requires notice to third parties, i.e. the husband’s brothers, before any such steps are taken or contemplated.
They are perhaps more accurately and aptly the matters which tip the balance in favour of adjournment.
As indicated, if none of those matters required attention or redress and the sole issue was whether the husband had or had not been afforded due process, I am satisfied the answer would be that he had been and the hearing would proceed. That is particularly by reference to the authorities referred to above as well as the Full Court’s decision in Tate & Tate (2000) FLC 93-047.
The husband’s “opportunities” have been abundant. It is nonsense for him to suggest that he seeks an opportunity to participate. What he seeks is the Court’s indulgence to afford him what would be his third or possibly fourth opportunity to participate over a period of nine months.
Absent the issues with respect to third parties and the practical and logistical problems that would arise with respect to enforcement of judgment, the matter would proceed. However, I am satisfied adjournment should occur. That will, however, be subject to consideration of the remaining two issues.
Future conduct of the proceedings
I am satisfied that formal discovery by the husband is appropriate.
What is clear from rule 24.03 of the Federal Circuit Court Rules is that parties have an obligation of full and frank disclosure. Rule 24.03 has that very heading. It goes on to indicate:
A party required under this Part to file a financial statement or affidavit of financial circumstances must make in the statement or affidavit a full and frank disclosure of his or her financial circumstances.
The rule sets out those matters which are required to be addressed. Rule 24.04 takes the matter substantially further and requires that any party involved in financial proceedings must produce certain documents.
What is also clear is that there have been a number of transactions where the mere production of documents would not be sufficient to properly advise and inform the wife of the circumstances of those transactions. Accordingly, I am satisfied that documents which would prove or tend to prove or be alleged to prove any allegation of fact which the husband raises or seeks to raise in these proceedings should also be disclosed.
Part 14 of the Federal Circuit Court Rules consistent with the Federal Circuit Court of Australia Act 1999 and its requirement that the Court proceed with as little formality of process as possible, obviates against discovery on a formal basis other than by leave. The obligation of disclosure continues, however.
Rule 14.02 allows a declaration of satisfaction by the Court that discovery is necessary and warranted before discovery can be imposed upon a party. That declaration is in fact made under section 45(1) of the Federal Circuit Court Act, which provides for the absence of formal disclosure and the requirement of informal process.
For justice to be achieved in this case, both on the basis of the wife’s perception and in reality, I am satisfied that formal disclosure is required.
Further, the husband has had more than abundant opportunity to comply with his obligations of disclosure by reference to part 24 of the Rules. The obligation of disclosure came into operation the moment the husband was served. He chose to do nothing. It certainly came into operation on 28 March 2014 when an order was made requiring that it occur. He chose to do nothing. He continues to do nothing.
I am satisfied that the wife would be disadvantaged, denied due process, and, indeed, the subject, if not victim of injustice, unless she now has the benefit of evidence, on oath by the husband, confirming his disclosure by way of formal discovery.
In due course a declaration will be made pursuant to section 45(1) of the Federal Circuit Court Act and rule 14.02 of the Federal Circuit Court Rules that discovery on oath is appropriate. A timetable will be set for that to occur in the same terms as has previously been required by rule 24.04, and as has previously been ordered by the Court.
This will be the husband’s third opportunity to give proper disclosure. Thus, should the husband not comply then “three strikes” will be it for the husband. He will be asked to leave the plate promptly and diligently the moment he swings and misses on this occasion.
If the husband does not file his affidavit of documents and produce copies of all of the documents required and deliver them up to the wife’s attorneys within the 35 day period that will be ordered, then his opportunity to be heard will be concluded. That will, of course, be subject to the husband’s right to make submissions, through counsel or otherwise, as to why he has been so negligent in compliance with orders of this Court, not once, not twice, but thrice.
The husband should be under no misapprehension that the bar that will be set for him, should he fail to comply and seek to be excused for his non-compliance, will not be at the Commonwealth Games standard, but the Olympic standard. He will be required to jump a very high distance to satisfy this Court that any further waste of this Court’s resources, the wife’s resources or his own should be countenanced.
As is submitted by counsel for the wife, this Court should not seek to countenance the husband’s contumelious disregard of his obligations through taking no appropriate action. In doing so, I thus turn to the third and remaining issue, costs.
Costs
Costs are sought by the wife in accordance with a schedule of costs, which, for today’s purposes, will be exhibit A. That schedule of costs is signed and dated by me today.
The wife seeks costs on an indemnity basis with respect to three events, namely;
a)The Conciliation Conference. The wife seeks costs of $2750, including GST, being $2500 plus GST.
b)The directions hearing on 23 July 2014, or so it is described in the minute, exhibit A. Costs on that occasion are sought in the sum of $770. I am loath to refer to that claim in those terms as what was addressed on 23 July 2014 was not a directions hearing, but an interlocutory hearing of an Application in a Case filed by the third party attorneys the subject of the subpoena, which the wife’s attorneys had filed and served to seek to obtain necessary information that can and should have been disclosed by the husband, and being documents that were within, or at least largely within, his possession, custody or control.
c)Thirdly, the wife seeks costs with respect to preparation for, and the conduct of the matter today. I propose to deal with these separately.
Conciliation conference
The Registrar reserved costs with respect to the Conciliation Conference.
I am satisfied that as the matter resides upon my docket, that I have jurisdiction to deal with and determine that claim notwithstanding that the Conference was conducted, or had been intended that it would have been conducted, by the Registrar.
The Conference did not proceed due to the husband’s non-disclosure.
Appearance 23 July 2014
The complaint which is raised with respect to this application for costs is that the husband has not been given notice that the application would be made and costs had not been reserved on that occasion. However, what is clear is that:
a)The husband was not present 23 July 2014. If he had been, notice could have been given to him on that occasion.
b)The Notice of Address for Service for the husband was not filed until 18 August 2014, i.e. yesterday. Accordingly, there has been precious little time for anything to occur as between the attorneys for the parties.
c)The application, if made and treated today as an oral application for costs with respect to that event, which I am satisfied it can and should be, is an application that is made within 28 days of the Court event. Thus, I am satisfied that it falls within that which is required by rule 21.02(1), being an application for costs which may be made at any stage in the proceedings, and within 28 days of the decree or order to which the application relates.
The Court’s powers with respect to costs are also addressed in rule 21.02(2). The Court may, in any application for costs, set the amount for costs, set the method by which costs are to be calculated, refer the matter for taxation under the Federal Court or Family Law Rules or set a time for payment.
In determining the quantum of costs to be ordered the Court is to have regard to, but is not bound by, the indicative scale of costs in schedule 1 of the Federal Circuit Court Rules.
The Court is permitted by rule 21.03 to fix a maximum amount of costs that can be recovered on a party/party basis together with other issues.
Reference to the indicative scale of costs in relation to party/party costs is exactly that. It is a reference and the schedule costs are indicative. The schedule does not bind the Court. The scale is intended not as a prescriptive scale of costs, binding practitioners, parties, or the Court, but as a helpful guide to that which a litigant might expect could be ordered if an order for costs were made against them.
To that extent I am satisfied I am not bound by the schedule even if costs are determined on a party/party basis. However, departure from the scale would require explanation in similar terms to that which would arise with respect to indemnity costs under Prantage & Prantage [2013] FamCAFC 105, Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and the other extensive lists of authorities eruditely discussed by the Full Court in Prantage [2013].
Indemnity costs
Costs are sought on an indemnity basis.
Indemnity costs are resisted by the husband. His counsel submits that costs should be awarded in accordance with what is described in, for instance, Colgate-Palmolive Co v Cussons Pty Ltd (1993), as well as the Full Court’s discussion of indemnity costs in Prantage [2013], as “the usual rule”, being party/party costs. If that were to occur then I note that any issue with respect to costs is then dealt with by part 21 of the Federal Circuit Court Rules, and section 117 of the Family Law Act. I will deal with both of those issues shortly.
As is clear from the Full Court’s discussion in Prantage [2013], and the line of authorities which their Honours have eruditely discussed and referred to, the general rule established is that costs, if ordered, should “generally” be ordered on a party/party basis. However, what those authorities also make clear is that indemnity costs might be considered, and might be ordered, if it is considered necessary or proper for the attainment of justice or maintaining or the defending the rights of a party.
I must, in any event, express my gratitude to the Full Court for their erudite discussion of both state and federal jurisprudence on the issue. Their Honours conclude at paragraph 86:
…it will accordingly be seen that if the trial Judge purported to depart from the “usual rule”, he would not only have declined to follow settled authority in this Court, but also authority applied in all other superior Courts in Australia.
What is made clear from a discussion of authorities, particularly the dicta of the Full Court of the Federal Court, is as follows, (and as set out in paragraph 82 of their Honours discussions in Prantage [2013]):
(a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.
Certainly the discussion of authorities which their Honours have undertaken includes cases which have some real parallels with the facts and circumstances of this case, (i.e. chronic and contumelious disregard of the Court’s jurisdiction particularly through failure to provide disclosure).
Section 117 and costs
Before dealing with the issue of indemnity costs, I propose to address the matter by reference to that which would be required by part 21 of the Federal Circuit Court Rules and section 117 of the Family Law Act.
Section 117 establishes a “usual rule” different to that referred to above, being that set out in section 117(1), namely, that each party shall bear his or her own costs.
That “usual rule” is subject of course, to the discretion reserved by section117(2), that the Court may, subject to meeting the dual test, (see the High Court’s discussion of same in Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812, make an order for costs. The dual test requires that there is both a justifying circumstance for ordering costs and that it is just and equitable to do so, both as between the parties and the community at large, but more importantly, as between the parties.
Section 117(2A) sets out a mandatory, but non exhaustive list of considerations. I propose to deal with each.
Financial circumstances of the parties
By reference to the Financial Statement that each party has filed, the husband has control or possession of the majority of wealth of that which might ultimately be considered to be the pool of property. There would appear to be a significant number of real estate holdings, whether in the name of the husband, the husband and his brother, or through the company of which the husband was, until shortly prior to the commencement of these proceedings, a 50 per cent shareholder. The husband remains a minority shareholder.
The interests of the company are separate and distinct from those of the husband, whether he is a minority or majority shareholder. Accordingly, and on that basis, and as already referred to, joinder of the company would appear irresistible. That is all the more so if an application pursuant to section 106B of the Act is to be made.
Clearly the husband’s financial circumstances would, at least on paper, appear somewhat more, if not substantially more, advantageous than the wife’s.
The husband is in a position to have some say at least, whether through familial connection or through his control of real estate owned in a personal capacity, jointly and severally with others, or as a director or shareholder of the company. The wife has no such luxury.
The wife is in a position whereby the home in which she lived with the child of the marriage has been sold. She is substantially dependent upon the funds which are paid to her by the husband pursuant to the interim order which it was necessary for her to apply to this Court to obtain. Thus the financial circumstances of the parties are significantly imbalanced in favour of the husband.
Whether any party is in receipt of Legal Aid
Neither is.
The conduct of the parties with respect to the proceedings, including, without limiting the generality of the foregoing, the conduct of parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, production of documents, or similar matters
What is abundantly clear is that the sole issue which has brought these matters to the Court’s attention today arises from the husband’s failure to provide disclosure or properly and fully engage in the proceedings.
As the Full Court discussed in Tate & Tate (2000) FLC 93-047, participation in proceedings extends beyond the mere filing of a Response. The husband has most assuredly done that. His Response proposes on a final basis, that for a period of 12 months, he continue the payments of interim spouse maintenance and child support, (unspecified as to allocation between the two obligations) and that the home be sold. The husband has already obtained that order; it would seem through some degree of pressure of circumstance, as the liabilities relating to the home were not being serviced appropriately.
The husband seeks that he pay to the wife a sum certain and that the wife thereafter relinquish any interest in and withdraw any caveat recorded by her against four named parcels of real estate. The husband seeks to retain all other property in which he has an interest, whether personal or corporate.
The wife, by her Amended Initiating Application filed 1 August 2014, albeit consistent with the relief she has previously sought, seeks payment to her of a cash sum of $2,675,000 suggested to be appropriately 65 per cent of the total asset pool.
On the basis of accepting for present purposes the wife’s assertion as to the proportion of the pool which the payment to her represents, it would thus seem that the husband’s proposal must represent something around seven per cent of the total pool of property. However, that is not a finding which can be made, it is merely a calculation, doing the best one can, by reference to that asserted by the parties. It will ultimately need to be proven based on admissible and probative evidence.
The husband’s contumelious disregard of his obligations for disclosure is concerning and troubling. Such non-disclosure is a plague upon this particular house.
The conduct of financial matters before this Court falls well short of the standard, not only as regards these litigants, but sadly, the majority, that is expected. It is as though the discussion of the obligation for disclosure imposed upon litigants personally, but particularly in circumstances where they are represented, (as canvassed by the High Court, the House of Lords and other eminent bodies of jurists), has fallen by the wayside, or, as it were, down the back of the couch amongst the used tissues and loose change, never to be found.
That is a state of affairs, which in this case and all others, cannot continue. The Court’s business cannot be properly or effectively transacted when litigants choose to disregard that which is required of them for the effective and appropriate conduct of their litigation.
In this case the husband has taken no active step to participate nor taken any active step to allow the wife to prosecute her application. His complete and absolute failure to provide disclosure is deplorable. I accept and adopt the submissions of counsel for the wife, that this cannot be countenanced by the Court.
The message must be sent clearly to Mr Colville, and whilst it is not the purpose, intent, or function of the orders that I am asked to make today, to the community at large that such absence of compliance with a basic, simple obligation in the conduct of litigation will not be countenanced.
It is completely inexplicable that litigants and those representing them believe that this state of affairs would be tolerated.
I make clear that the above is not a criticism made of Mr Colville’s counsel. They have been in and out of the matter and that is not a choice the attorneys have always controlled. The sporadic participation of Mr Colville’s attorneys is a matter arising from Mr Colville’s failure to provide full and proper instruction. That has left his attorneys without instruction and no option to withdraw.
The withdrawal of lawyers has arisen, appropriately, in circumstances where Mr Colville does not, or will not provide such instruction and thus they have no option but to remove themselves from the record. They have no other option available to them in discharging and balancing their obligation to the client and their overarching and predominant obligation to the Court.
Such behaviour in refusing reasonable disclosure and ignoring the Court’s orders for it to occur would not be contemplated, let alone undertaken, and certainly not countenanced in litigation before, for example, the Federal Court of Australia or the Supreme Court of any State or Territory. That is perhaps because the parties are fully aware of the consequences that would flow to them. Pleadings would be struck out, matters would proceed on a final and undefended basis at a much earlier stage than authorities such as Tate & Tate (2000) FLC 93-047 would seem to authorise and significant and substantial orders for costs would be made.
There should be no expectation for litigants in this Court that consequences will be any different. This may not be a court at the same level as the Federal Court or the Supreme Court of a State or Territory. It is a first instance trial court. However, its standing at the level of a District or County Court would reflect that which parties might also expect would operate in those jurisdictions being exactly the same consequence.
I am satisfied that the conduct of the husband with respect to disclosure and participation is, by and of itself, a justifying circumstance for an order for costs.
In light of the significant assets which are available in these proceedings, I am satisfied that justice and equity would be met if an order for costs were made. The husband can clearly afford it as a charge upon his assets and entitlements if nothing else.
Justice and equity would be denied to the wife if an order were not made. She has not failed in any regard. There is no complaint or criticism that she has not prosecuted her position with diligence. The only criticism which could be levied is that her Amended Application and Affidavit were filed one day later than required. However, I am not satisfied that is of such significance or substance as to possibly found criticism.
The wife has expended substantial funds. Without seeking to buy into any debate as to the quantum of legal fees generally and their appropriateness the costs which are sought even on an indemnity basis are within the range of costs which are advised to the Court in such proceedings, they are modest and perhaps even at the lower end of that range.
The wife’s costs have been significantly inflated through the actions that have been required to seek to address the failure by the husband to comply with any of his obligations. The wife has been required to issue subpoena, engage in further enquiries and interlocutory actions which simply were and should have been unnecessary.
Whether the proceedings were necessitated by the failure of a party to comply with previous orders
Clearly, that is so.
Mr Colville has been ordered on several occasions to do certain things particularly and principally connected with disclosure. He has failed to do so. He is the only person in a position to attend to those obligations. He has simply determined for his own reasons that he will not.
Whether any party has been wholly unsuccessful
One could not describe Mr Colville as being wholly unsuccessful. He has secured an adjournment of these proceedings.
Nor, however, could one describe Ms Colville as being wholly unsuccessful. She is at least now at a point where some appropriate interlocutory order can, yet again, be made and which might bring the matter to a conclusion. The absence of compliance by Mr Colville with his obligations as ordered today will bring the matter to a conclusion on an undefended basis.
Whether any party has made an offer in writing
There are none that are relevant that are advised.
Such other matters as the court considers relevant
The wife has been put to significant expense. She has, as it were, been led a merry dance in these proceedings.
The resistance of proper compliance with disclosure on the part of Mr Colville has been at the level of those brave Soviet souls defending Stalingrad. Each and every inch of territory is blood-soaked and has required the most extreme fighting and action to obtain anything. As it transpires today, to continue the analogy and at a mid-point of that conflict, much has been expended for no advance by either party. That, I most assuredly accept and as submitted by the mother’s counsel, cannot and should not be countenanced by the Court.
The husband’s behaviour makes an order for costs not only irresistible but perhaps a condition to the adjournment.
Quantum of costs on a party-party basis
There has been some submission as to that which is sought by the wife.
In relation to the Conciliation Conference and by reference to schedule 1 if it were applied, the wife would be entitled to costs of $1,661, being that set out in the relevant portion of the schedule, namely Item 4.
Part 21 of the Federal Circuit Court Rules does not bind the Court to make an order in accordance with schedule 1 although I am satisfied that to depart from it would require some explanation. I will return to that issue shortly.
As regards the appearance on 23 July 2014, I am satisfied that an application for costs with respect to same can be made today on an oral basis. To the extent it is suggested that there is an absence of notice, I am satisfied that the husband should have been on notice that costs with respect to that appearance were at large and, indeed, if he had been here to deal with the application, the issue could and no doubt would have been dealt with on the day.
On the basis of proceeding on an oral application for costs, I am satisfied that the appropriate item from schedule 1 that would apply would be item 3, an interim or summary event as a discrete event, $1,661, together with a daily hearing fee.
On 23 July 2014 the matter occupied what was, in essence, a half day hearing. Thus by reference to item 13, the attendance amount would be $997. The issues that were raised on that day, I am satisfied would also attract the advocacy loading in item 12, being a 50 per cent increase. Thus the appearance would be $1,495.50, significantly greater than that which is sought on an indemnity basis.
With respect to the third issue of contention, today’s listing for hearing, I am satisfied that the matter is, in fact, listed to be heard today. On that basis, by reference to Schedule 1, the items that would be appropriate would be:
a)Item 6, preparation for final hearing – one day, $4,250;
b)Together with final hearing costs calculated by reference to items 13 and 12 of the schedule.
I am satisfied that the matter was listed for a one day hearing and even though the matter is concluded now, prior to the lunch adjournment, the amount which should apply is for the one day hearing which was fixed. Thus, the hearing fee of $1,994 and the advocacy loading would be a total appearance fee of $2,991.
Those amounts by and of themselves equate to $12,058.50. That is a difference of $976.50 from that which is sought on an indemnity basis.
There is much discussion, both within and without the Court, as to the adequacy of schedule 1. In this circumstance as in so many as are determined by the Court the amount which is produced by reference to schedule 1 on a party-party basis is comparable with that which is sought on an indemnity basis. Indeed, in this case it falls just short, although in many cases it exceeds that which is sought on an indemnity basis. Thus, one would think the schedule is entirely appropriate and provides a more than adequate recompense.
The costs, if ordered on a party-party basis by reference to schedule 1 would be $12,058.50. However, in addition the wife would be entitled to further costs with respect to the matter, including court fees and other fees and payments levied against her, together with disbursements such as photocopying.
The wife has in preparation for this hearing filed a most significant Affidavit. The document is helpfully paginated at 470 pages. Even at the amount which the scale provides for, photocopying – 69 cents per page, and on the basis of the original and copies required, the disbursement in that regard would be $972.90. If this were added to the schedule 1 costs amount above then the amount is almost identical to the indemnity costs as sought. Indeed, it is different by $3.60.
On that basis, I am satisfied that on a party-party basis that the costs which are sought by the wife on an indemnity basis would be appropriate. To the extent that there is a $3.60 difference, I am satisfied that part 21 of the Federal Circuit Court Rules would allow and permit the fixing of an amount which is not strictly in accordance with schedule 1. Lest I am wrong in that regard I note that fees were incurred in the issue of the subpoena dealt with 23 July 2014 (filing fee, service fee and conduct money) and if those amounts were taken into account then the amount sought by the wife would be exceeded.
Indemnity costs
I make clear that whilst the order that I propose to make on a party-party costs basis will satisfy that which the wife seeks, I am also satisfied that the matter could be dealt with and appropriately would be dealt with by an indemnity costs order.
What the wife faces in these facts and circumstances is a position whereby injustice would be done to her if she were required to meet any of her costs in dealing with the three events for which costs are sought. They are events which are solely brought about and costs thrown away as a consequence of the husband’s contumelious disregard of his obligations.
For the sake of avoiding the potential cost, expense and difficulty of appeal, lest it were suggested that an indemnity costs order fell outside of a reasonable exercise of discretion, and as the amounts would, in any event, be comparable if not identical, I am satisfied that the safer course would be to proceed to preface the order as being made on a party-party basis, fixed as to quantum and by reference to schedule 1.
I certify that the preceding one hundred and fifty-seven (157) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 12 March 2015
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