Conrad and Conrad and Anor (No 3)

[2019] FamCA 849

FAMILY COURT OF AUSTRALIA

CONRAD & CONRAD & ANOR (NO. 3) [2019] FamCA 849

FAMILY LAW – COSTS – Where costs applications were made by each party after a trial was conducted between the wife, the husband and his sister as to the interests of each of them in respect of property of the parties and property was split 55/45 in favour of the wife – Where the costs applications of the husband, his sister and an application made by the wife in 2015 are dismissed – Where the recent written offer to settle the matter after the adjourned trial last year would have left the husband $143,000 better off than going to trial – Where the costs application of the wife is partly successful.

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

Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Ms Conrad

FIRST RESPONDENT: Mr Conrad

SECOND RESPONDENT: Ms Stocks

FILE NUMBER: BRC 5264 of 2013

DATE DELIVERED: 19 November 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 24 June 2019

REPRESENTATION

THE APPLICANT: Self-represented

COUNSEL FOR THE FIRST RESPONDENT: Mr Hackett

SOLICITOR FOR THE FIRST RESPONDENT: Holloway Jenkins

COUNSEL FOR THE SECOND RESPONDENT: Mr Hackett

SOLICITOR FOR THE SECOND RESPONDENT: Holloway Jenkins

Orders

1. The Applicant wife’s application for the First Respondent husband to pay her costs of the interim maintenance proceedings heard on 1 June 2015, is dismissed.

2. The First Respondent husband’s application for the Applicant wife to pay his costs of and incidental to the property adjustment and spousal maintenance proceedings, is dismissed.

3. The Second Respondent’s application for the Applicant wife to pay her costs of and incidental to the property adjustment proceedings, is dismissed.

4. The Orders made on 15 April 2019, are discharged.

5. The First Respondent husband shall pay the Applicant wife’s costs of and incidental to the property adjustment proceedings from and including Monday, 9 July 2018, such costs to be on a party and party basis, as agreed, or to be assessed according to the Scale of Costs set out in the Family Law Rules 2004 (Cth).

6. The First Respondent husband shall pay the Applicant wife’s costs of and incidental to his application to discharge, suspend or vary the interim spousal maintenance order of 5 June 2015 pursued through his filing of an Application in a Case on 20 February 2017 and his filing of an Application in a Case to review the Senior Registrar’s decision on 15 November 2017, including the costs of the hearing before Senior Registrar Spink on that issue and that much of the trial before me devoted to that issue, such costs to be on a party and party basis, as agreed, or to be assessed according to the Scale of Costs set out in the Family Law Rules 2004 (Cth).

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Conrad & Conrad and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 5264 of 2013

Ms Conrad

Applicant

And

Mr Conrad

First Respondent

And

Ms Stocks

Second Respondent

REASONS FOR JUDGMENT

1. On 1 March 2019, I made final property adjustment and spousal maintenance orders in these proceedings, bringing to an end several years of litigation between the parties.

2. Subsequently, each of the three parties, the husband, the wife and the husband’s sister (who was the Second Respondent in the proceedings), all made applications for orders for costs. Additionally, the parties pointed out to me that a costs application made by the wife in respect of interim proceedings relating to spousal maintenance decided by me in 2015 remained undetermined.

3. Evidence supporting each party’s fresh costs application was filed, written submissions were delivered and at the request of counsel who appeared for the husband and his sister, the matter was listed for the hearing of oral submissions in respect of the applications. That hearing took place on 24 June 2019.

4. The obligation to hear and determine many other complex and difficult parenting and property disputes has prevented me from delivering judgment in these outstanding costs applications before now. I regret that and any distress caused to the parties by the delay in delivering this judgment.

The principal costs applications

1. By her application made after delivery of my March judgment, the wife seeks an order that the husband pay her costs of and incidental to the proceedings. Her application asks for those costs to be assessed pursuant to the scale in the Family Law Rules 2004 (Cth) (“the Rules”).

2. The husband opposes the wife’s application and seeks an order that the wife pay his costs of and incidental to the proceedings from 30 October 2013 on an indemnity basis.

3. The husband’s sister, who was a party to the proceedings from mid-2014, also seeks an order that the wife pay her costs of the proceedings on an indemnity basis or “such other basis as the Court considers appropriate”.

Costs principles

1. The principles by which costs applications are to be determined in this Court are clear and well established. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) expresses the general rule that each party to proceedings under the Act “shall bear his or her own costs”. That general rule must, however, “yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs”.[1] In considering what order, if any, should be made under s 117(2), regard must be had to matters enumerated in s 117(2A). Those matters, referred to in a non-exhaustive list, include the financial circumstances of the parties, the conduct of the parties in relation to the proceedings, whether any party has been wholly unsuccessful in the proceedings, whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court, whether a party has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer, as well as the all-encompassing “such other matters as the court considers relevant”.

   [1]     Penfold v Penfold (1980) 144 CLR 311, 315 per Stephen, Mason, Aicken and Wilson JJ referring to ss 117(1) and (2) of the Family Law Act 1975 (Cth).

Matters of fact I consider relevant

1. On 2 June 2013, the husband wrote his own letter to solicitors then acting for the wife in which he, relevantly, included a table “setting out the matrimonial property pool”. He introduced that table saying “[t]he assets, liabilities and financial resources in relation to the parties appear to include, or be in relation to, as follows…”. He included the jointly owned former matrimonial home (in which he was living post-separation) and said it was estimated to be valued at $800,000 with no liability attached to it. He also included a 50% interest that he said he had in a property in which his sister owned the other 50% interest. He said that was estimated to be valued at $800,000 in total with his half interest being worth $400,000. After the table was complete, he then wrote:

   There is a trust in relation to my own extended family, however the details of same will need to await, at minimum, the return of my accountant.

2. In that same letter, although the husband spoke of willingness to provide the wife with some funds to facilitate negotiations between them, he implicitly rejected the wife’s claim for spousal maintenance on the twin bases that she did not have a need for it and he did not have the capacity to pay her any.

3. The husband invited a “round table” negotiation as a precursor to any formal mediation. I do not understand that “round table” to have taken place.

4. The wife filed an Initiating Application in the Federal Circuit Court on 2 July 2013. By way of interim application, she sought periodic spousal maintenance of $1,000 per week. When the matter was before the Judge on 11 July 2013, the husband and the wife consented to an interim order that the husband cause the wife to be paid $830 per week to “be characterised at the trial of the application for property settlement”.

5. The husband and the wife then attended a formal mediation conducted by an experienced family law mediator on 30 October 2013. They apparently reached an agreement that day. Its terms were reduced to writing. That document was signed by the wife that day. The husband did not sign it that day, asserting that he wished to obtain legal advice before doing so.

6. The document provided for the husband to transfer his interest in the jointly owned former family home to the wife within 30 days, with the husband to “take over” the mortgage on the property and to indemnify the wife in respect of that liability. Clearly, between writing the letter in June that year and the mediation, the husband had determined that there was a mortgage debt owing on the property. In a balance sheet prepared around that time, the wife had asserted that the property was worth an estimated $800,000 and the husband had asserted that it was worth an estimated $750,000. By the terms of the document, the husband was also to pay the wife $20,000 within seven days and the periodic sum of $830 per week (that he was already paying her pursuant to the July order) for a period of two years. The wife was to retain money in her name, a horse, a horse float, some paintings and other items of personal property and a motor vehicle. The husband was to retain his interests in an extensive list of companies and trusts, including the Conrad Family Trust, H Pty Ltd, N Pty Ltd, and Y Pty Ltd, as well as his interest in the property jointly owned with his sister at Suburb C (the same property as previously referred to in paragraph 9 hereof).

7. The husband and the wife had also agreed that the husband would be responsible for any liabilities in his name or in relation to any of the entities just referred to and he was to indemnify the wife in relation to those, and, in particular, in relation to any money owing to his sister.

8. The day after the mediation, solicitors then acting for the husband wrote to the solicitors then acting for the wife and included a slightly amended version of the documented agreement, including amendments said to reflect the husband’s understanding of the agreement reached the day before. That amended version was signed by the husband. The amendments extended the time by which the husband was to transfer the former family home to the wife, deleted a few items of personal property in the list to be retained by the wife and stated that the $20,000 payment to be made within seven days was to be a lump sum spousal maintenance payment.

9. The document sent to the wife’s solicitors included a clause at the very end that said the parties would enter into a consent order for property settlement and a Binding Financial Agreement for the wife’s spousal maintenance. It is not clear to me whether that clause was in the document originally signed by the wife or was one of the amendments made by the husband on the document that he signed and sent back.

10. There was, it seems, no reply sent to that correspondence of the husband’s solicitor by the wife’s solicitors. Then, in any event, as I understand the evidence, the husband signed an unamended copy of the document and had his solicitors send it to the wife’s solicitors on 5 November 2013, informing them that agreement had been reached.

11. On 13 November 2013, the solicitors then acting for the wife wrote to the husband’s solicitors effectively informing them that the wife resiled from that agreement and offering him other terms upon which she would resolve the dispute. The husband did not accept that offer as the wife asked for more money than he was prepared to pay her. He then made another written offer to the wife. He offered to sell the former family home and for the wife to receive $600,000 with him indemnifying her in respect to the mortgage over that property to N Pty Ltd said to be in the sum of E$320,000, with each of them to retain all assets, liabilities and financial resources in their own name, including that the husband was to retain his interest in the Conrad Family Trust. He also offered to pay her spousal maintenance of a further $100,000 from the net proceeds of the sale of the former family home plus another $80,000 lump sum from the proceeds of sale or, alternatively, in lieu of the $80,000 lump sum, the periodic payment of $830 per week over two years. That was a total of $780,000 of property settlement and spousal maintenance.

12. The wife did not accept that offer and the matter proceeded in the Courts.

13. In early 2014, the wife changed solicitors and on 8 April 2014, a Judge of the Federal Circuit Court directed that any application on behalf of the wife for leave to join a party to the proceedings be filed and served within 28 days of that date.

14. On 7 May 2014, with three very experienced family law counsel representing each of the three parties (including on that day the husband’s sister), an order was made by consent that the husband’s sister be joined as a party to the proceedings and named as the Second Respondent. The husband and his sister also gave undertakings to the Court not to deal with expressly listed properties registered in the various names of H Pty Ltd, Y Pty Ltd and the husband and his sister, except on particular conditions. The matter was also transferred by that Federal Circuit Court Judge to this Court.

15. In February 2015, the wife changed solicitors again. She instructed the solicitors who represented her until earlier this year, just before the hearing of oral submissions in respect to the costs applications now being determined.

16. In March 2015, the husband unilaterally stopped paying the weekly sum of $830 to the wife pursuant to the order he had consented to in July 2013, asserting that he did not have the capacity to pay it any more. The wife brought enforcement proceedings and the husband responded with an application to discharge the obligation.

17. I heard those competing applications on 1 June 2015. Before me that day, the husband was unrepresented and the wife was represented by solicitor and counsel. I discharged the order made by consent on 11 July 2013 as at 23 March 2015 (the time the husband stopped paying it) and in lieu ordered the husband pay the wife $645 per week by way of spousal maintenance from 23 March with the immediate arrears of $7,095 to be paid within 14 days of the date of my orders. Clearly, on that interim issue, neither party had been wholly unsuccessful, though I hasten to acknowledge that the husband was less successful than the wife in terms of the outcome each sought. He had asked for the order to be discharged completely. Instead, the quantum he was to pay was reduced by $185 per week and he was to pay the arrears of weekly maintenance at the reduced amount.

18. Much happened in the litigation between that time and 2017, though the matter did not get much closer to trial. The wife’s health, which deteriorated badly in that time, had much to do with that.

19. On 20 February 2017, the husband applied to the Court once more to discharge his periodic spousal maintenance obligation. On 21 April 2017, without first obtaining an order from the Court, he again unilaterally stopped making the weekly payments of $645. His application, opposed by the wife, was heard by a Senior Registrar over two days in July and August of 2017. On 19 October 2017, the Senior Registrar delivered judgment dismissing the husband’s application to discharge or vary the spousal maintenance. As was his right, the husband filed an application for a Judge to review the Senior Registrar’s decision. When that came before me, I determined to simply list it for hearing at the trial of the property adjustment and spousal maintenance applications that would finally determine the proceedings. In the meantime, the husband simply chose to continue not to make the weekly periodic payments that I had ordered him to pay in June 2015.

20. It was in February 2018, at an interim hearing in respect of some disputed procedural matters, I determined to list the matter for trial in May, later that same year. The barristers who then appeared for the parties on that occasion assured me that the trial would take four days.

21. At that point in time, there was significant dispute between the husband and the wife, as to the “property of the parties or either of them” that could be subject to property adjustment orders pursuant to s 79 of the Act. The husband, by that time, was denying that he owned the beneficial interest in the half share of the property that he legally owned jointly with his sister at Suburb C. The wife asserted that he did. The husband’s sister supported the husband’s position. The husband and his sister also maintained that none of the property of the discretionary trusts with which the husband was connected was property of the husband and they argued that the husband and the wife were heavily indebted to the husband’s sister in a number of ways – to the extent of millions of dollars. Indeed, it was the husband’s position that these liabilities well and truly exceeded the value of property that was available to be made subject to property adjustment orders as between the husband and the wife. Accordingly, the husband’s case was that he could not afford to pay the wife any spousal maintenance (including any arrears for the many months that he had not been paying her) and that a just and equitable property settlement would have the wife receive no further property or money from him.

22. On that February 2018 date, I also ordered the wife to file a Points of Claim document in which she pleaded the basis upon which she contended the husband had interests in the trust and corporate entities such that would bring the assets of those entities within the reach of the Court’s power to make property adjustment orders. That was subsequently done, settled by senior and junior counsel who appeared for the wife at the trial in May.

23. Prior to that trial commencing, the husband and his sister both filed Amended Responses in which they sought orders, inter alia, that the former family home be sold with all the sale proceeds being paid to N Pty Ltd. They each took the position that N Pty Ltd was controlled by the sister and not the husband.

24. For reasons not necessary to go over again now, the trial did not commence on those May 2018 dates and was adjourned to be heard over nine days at the beginning of this year. As a consequence of that adjournment, on the application of the husband and his sister, I made orders that the wife pay the costs of the husband and his sister of and incidental to an unsuccessful application that the wife had made and also their costs thrown away by the adjournment, to be as agreed or assessed on a party and party basis. In the course of these costs applications, the Court was informed that the expectation is that those costs will total in the order of $100,000 to $140,000. Relevantly, I ordered them not to be paid by the wife before the conclusion of the proceedings. The wife simply had no capacity to do so prior to the determination of her property adjustment and spousal maintenance applications, at the very earliest.

25. On 20 June 2018, the wife’s solicitors wrote to the husband’s sister’s solicitors and advised them that the wife offered to settle the proceedings on the basis that she would transfer her interest in the former family home to the husband’s sister in return for the husband paying her $700,000, with all arrears of spousal maintenance owing to be discharged and with the husband to be solely liable to his sister for any debt he owed to her or that any entity he had an interest in owed to her or any other party.

1. That written offer was not sent to the husband but its receipt was acknowledged in writing by the husband’s sister’s solicitors who advised that it was rejected by her. As between the husband and his sister, it was not only their common position that the former family home be transferred to the company they said was the sister’s company, but also that the husband would only be able to pay the wife a sum of money if he sourced that from his sister. In the solicitors’ letter of rejection, they pointed out that at the recent adjourned hearing, the husband’s sister had made an offer to pay the wife $600,000 to settle the proceedings and that the wife had countered with an offer to take $800,000 to settle the proceedings. Those offers apparently were not made in writing.

2. The matter then proceeded to trial before me on the January 2019 dates. Just prior to that trial commencing, the husband and his sister filed documents in which they made it clear that they were now seeking orders that included a transfer of the former family home to the company N Pty Ltd or to the husband’s sister.

3. The wife’s solicitors had retained a different junior barrister to represent the wife at the trial in lieu of senior and junior counsel. On the eve of the trial, that barrister advised the barrister for the husband and the husband’s sister that the wife was no longer arguing that the property of the trusts was property that could be subject to adjustment between the husband and the wife, but rather that the trusts were “financial resources” of the husband to be taken into account pursuant to s 79(4)(e) of the Act when determining property adjustment orders that were just and equitable. At the commencement of the trial, counsel for the wife did not oppose the application made by counsel for the husband and his sister for the Points of Claim previously filed on the wife’s behalf to be struck out. It was.

4. As observed by me in my Reasons for Judgment published on 1 March 2019, the most significant issues that were in dispute that then required determining through the trial process were:

   (i)Whether three discretionary trusts were to be treated as financial resources of the husband and taken into account as such when determining property adjustment orders between the husband and wife that are just and equitable;

   (ii)When determining the property of the parties or either of them that was able to be made subject to any property adjustment orders, whether account was to be taken of any amount said to be owed by the wife and/or the husband to the company, N Pty Ltd, and, if so, then how much, or whether, alternatively, account was to be taken of any amount said to be owed by the wife and/or the husband to the husband’s sister instead of N Pty Ltd;

   (iii)Further, in determining the property of the parties or either of them that was able to be made subject to any property adjustment orders, whether account was to be taken of any amount said to be owed by the husband to the Conrad Family Trust (one of the relevant three discretionary trusts) and, if so, then how much;

   (iv)Further again, in determining the property of the parties or either of them that was able to be made subject to any property adjustment orders, whether the husband’s interests in property included a half beneficial interest in a property consisting of three residential units situated in Region E, the legal title of which was registered in the names of him and his sister in equal shares; and

   (v)Whether the husband should pay spousal maintenance to the wife and, as part of that particular issue, whether the existing interim spousal maintenance order should actually be discharged retrospectively to the date when the husband unilaterally stopped paying it in 2017. 

5. In determining the matter and deciding the property adjustment orders and spousal maintenance orders to make, I did determine that two of the three discretionary trusts were financial resources of the husband and considered the availability of those resources to him when making the property adjustment orders that I did. I determined that no account was to be taken of debt said by the husband and his sister to be owed by the husband and the wife to N Pty Ltd or the sister as to around $2,000,000, as asserted by the husband and his sister. I determined that no account was to be taken of debt said by the husband and his sister to be owed by the husband to his sister through the Conrad Family Trust as to a few million dollars, as asserted by the husband and his sister. I determined that the husband did in fact own the beneficial interest in half of the real property at Suburb C, jointly with his sister, contrary to the assertions of the husband and his sister. I also dismissed the husband’s application for review of the Senior Registrar’s decision to dismiss his application to discharge my June 2015 spousal maintenance order, ultimately ordering him to pay the wife all the arrears owing (around $63,000 at the time of judgment).

6. I determined that a just and equitable property adjustment order would include the husband paying the wife the sum of $780,000 in return for her transfer to him of her interest in the former family home and his indemnification of her against liability for all debts he was asserting he or they owed. In that, I took into account that the wife had retained and had the benefit of the sale proceeds of a horse, a horse float and a motor car – a total of $14,000. I also determined to discharge the periodic spousal maintenance order as of the time the husband paid the sum of $780,000 and the arrears of spousal maintenance owing to that time.

7. The husband met his obligations as ordered and paid the wife within the 45 day period required.

8. Reading over my lengthy written Reasons for Judgment again as part of determining these costs applications, I was reminded of just how troubling the determination of this case was. As I observed early in that judgment, my consideration of the credibility of the parties loomed “as very influential” in determining the matter. Simply stated for the purposes of these reasons, I did not accept the honesty of much of the husband’s evidence on matters critical to my determination of the significant issues and nor did I accept the honesty of the husband’s sisters evidence on some of those same matters. I rejected a lot of their evidence. Indeed, I was satisfied that parts of their affidavit evidence were jointly produced so as to create consistency as between them and to meet the documentary evidence as it emerged over the years the case was pending. I was also satisfied that one piece of documentary evidence had been deliberately created to meet a point of perceived weakness in the case they were jointly presenting, after the trial had been adjourned the first time. These findings were not lightly arrived at and were even more troubling given that both the husband and his sister were practicing solicitors many years into their legal careers.

Consideration of the arguments raised as to costs

1. Reading over my reasons also revealed to me just how many of the disputed issues I was called upon to adjudicate were decided in the wife’s favour and against the husband and his sister. One thing is absolutely clear to me at this point, the wife was not “wholly unsuccessful” in the proceedings. Reading the judgment and the Orders I made, the objective observer would, I expect, consider that the wife had been very successful in the proceedings, save for the fact that I refused her application for periodic spousal maintenance to be paid for a further three years. So, I am quite satisfied that if I was to make an order that she pay the husband and his sister’s costs on an indemnity basis or any other basis, such orders would need to be well and truly “justified” by other circumstances.

2. In any event, with respect to the husband and his sister and their solicitor and counsel, their costs applications were actually not argued on the basis of the wife being wholly unsuccessful in the proceedings. Submissions for the husband were made in respect of the matters set out in ss 117(2A)(a), (c), (d), (f) and (g) of the Act. Submissions for the husband’s sister were made in respect of ss 117 (a), (c), (d), (e) and (g).

The husband’s case

1. I turn firstly to the husband’s reliance on the fact that the parties had settled the matter at a mediation on 30 October 2013, on terms submitted by counsel as “more favourable to the Wife than the Orders”. Counsel set out in his written submissions a table constructed by him in which he purports a comparison of the outcome of the agreement reached at the mediation later resiled from by the wife with the outcome in the light of my Orders. He relies on that table to submit that the outcome of the mediated agreement was more favourable to the wife than the judgment, as well as submitting that resolving the matter in that way would have saved her five years of legal costs totalling approximately $606,000 as well as the costs orders I made against her last year. Implicit in the submission is the assertion that the wife’s decision to resile from the agreement was imprudent. In fact, counsel for the husband submitted that it had been “unreasonable” in all the circumstances.

2. As I have already observed, the evidence establishes that by the agreement reached at the mediation, the wife was to get the former matrimonial home with the husband to “take over the mortgage on the property” and indemnify the wife in relation to same. The evidence is that the wife represented at the time that she thought the property was worth $800,000 and the husband represented that it was worth $750,000. She was to get $20,000 in cash and $830 per week for two years ($86,320) being a total of $106,320. By that agreement, her spousal maintenance would have stopped in late 2015. She was to retain some other items of personal property, including the horse, the horse float and the car that I took into account in determining the Orders that I made.

3. After resiling from that agreement and proceeding to trial, the wife ultimately received $780,000 cash rather than the house property itself which, incidentally, the husband and wife agreed for trial (over five years later) was worth only $740,000. In addition, she received periodic spousal maintenance payments of $830 per week from the time of the 2013 mediation until 23 March 2015 and then, ultimately, at the periodic rate of $645 per week until March 2019. I calculate that to be $60,590 plus $134,160, a total of $194,750 over all those years.

4. With respect to counsel for the husband, I reject the submission that the outcome for the wife had she stuck to the terms of the agreement reached at the mediation was a “more favourable” outcome than that which she obtained by rejecting the deal and taking the matter to trial. Clearly, taking into account the legal costs she has spent along the way, a retrospective cost-benefit analysis will inform the wife and any observer that she would have been better off financially right now if she had stuck to that first agreement having regard to all of her legal costs, even though she would not have received as much from the husband as she did through the Court process. I bear that in mind, but I do not consider that is the principal purpose of including in s 117(2A)(f) reference to written settlement offers and their terms. Critically, it would have to be clear, in my judgment, for the written terms of an offer to be plainly more favourable to the party than the ultimate Court ordered outcome without consideration to money spent on costs in the meantime, for it to be a determinative factor in the consideration of whether a costs order is justified. Otherwise, the Court would likely be called upon to undertake the cost/benefit analysis in every case, even those where a written offer did not provide a better outcome than the ordered outcome but, nevertheless, in which more than the difference between them was spent on legal costs in order to achieve the better outcome.

5. In any event, even if the terms of a written offer are plainly better for a party than the terms of the Orders, consideration of that factor is still but part of the discretionary exercise of determining if a costs order is justified and nothing more. It is not determinative in itself. I do not consider that the terms of that 2013 agreement reached at the mediation provided a plainly more favourable outcome for the wife than that which she obtained in the long run by taking the matter to Court, such that supports a costs order against her being justified in all the circumstances of this case.  Neither do I consider the terms of the offer put in writing by the husband to the wife soon after that mediation would have provided an outcome more favourable for the wife than that which she obtained in the long run, such that makes a costs order against her now justifiable.

6. Counsel for the husband made submissions about the comparative financial circumstances of the husband and the wife. He rightly acknowledged that after the wife pays her liabilities for legal costs and outlays, including those owed to the husband and his sister pursuant to the costs orders I made against her last year, and some other personal liabilities to family members she will have very little left from the funds the husband is to pay her.

7. In addition to that, he submitted that the husband will retain property to the value of $1,415,191 and superannuation of $108,300 and that he had to pay $843,000 to the wife pursuant to the Orders. He then went on to assert that the husband would have to meet other liabilities including a debt of $2,193,460 to N Pty Ltd and a debt to an employee of $19,600, (both debts that I determined I would not take into account in determining property adjustment orders), and a capital gains tax liability about which absolutely no evidence had been given at trial or in the costs application. Counsel further submitted that if the husband was to transfer his interest in the Suburb C property to his sister “consistent with their agreed position”, then he would be left with nothing.

8. Again, with respect to counsel for the husband, I do not accept that is an accurate picture of the financial position that the husband finds himself in as a consequence of the Orders I made. I found that he owned the beneficial half interest in the Suburb C property valued at $650,000. He would keep that and the former family home valued at $740,000, subject to being able to raise the sum of approximately $840,000 to meet the obligations under the Orders. He has met those obligations and there was absolutely no evidence given by the husband as to how he came up with the money to do so. Importantly though, I found, as was argued for the wife at the trial, that the Conrad Family Trust and the AD Trust were financial resources of the husband. I did not find that he controlled those trusts only because the wife did not press that position at the commencement of the trial. Significantly though, I said in my Reasons for Judgment:

   ... all of the evidence in this case left me with a grave sense of underlying disbelief that all three of [the] trusts were truly controlled by the husband’s sister, as the husband and his sister asserted, notwithstanding the strict legal position evidenced by all of the documents that have been adduced into evidence to seek to prove that.

9. In my judgment, I recorded that the evidence of the single expert accountant who valued the Conrad Family Trust was that a valuation of the trust excluding all related-party loan accounts would have the net assets worth $2,445,618. I also recorded that the AD Trust had a real property asset valued at $210,000 generating a 6.67% yield annually.

10. I reject the submission that the husband “will be left with nothing” as a consequence of the Court’s Orders. He remains in a far superior financial position to the wife.

11. Counsel for the husband included in his submissions a page and a half list of assertions of conduct on the part of the wife said to be contrary to r 1.04 of the Rules. That rule provides that the “main purpose” of the Rules is to “ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case”. Those assertions include that she changed solicitors four times, requiring her own legal file to be reconstructed, that she sought unnecessary disclosure, that she delayed valuations by unilaterally communicating with valuers, causing friction and vexation, ignoring compliance dates or failing to comply with orders at all, and the list goes on.

12. The trial evidence of the husband clearly established that even before he and the wife separated, the wife had substance abuse and mental health problems. Those problems appeared to get much more serious post separation. They were exacerbated by physical health problems. The wife suffered from cancer and required major surgical intervention in respect of that. She was hospitalised and institutionalised at times. I accept that some of her conduct of the litigation fell short of what is expected of litigants, not just the model litigant. Indeed, her litigation conduct caused me to make an order last year at the adjournment of the trial that she pay the husband’s costs and his sister’s costs and that, as I have already observed, will amount to around $100,000 to $140,000 in costs that she will be paying them.

13. Having effectively had this matter in my “docket” since the middle of 2015, I am conscious of the litigation conduct of all the parties from that time on. I do not accept that the wife alone was the litigation “miscreant” in this case. Immediately, I recall that it was the husband who twice unilaterally ceased paying spousal maintenance. The first time he did that it was in respect of an order he had consented to, and he did not even apply to the Court for discharge of the order until the wife applied for its enforcement. The quantum of maintenance he had originally agreed to pay was eventually reduced, but by no more than 25% of the amount he had agreed to pay in the first instance. The second time, he did file an application to discharge the order that I had made, but soon thereafter still unilaterally stopped paying it, leaving the wife receiving no maintenance at all, though his application had not been heard. When it was, and it was dismissed, he sought to review the decision without making any payments at all and then went on until it was heard as part of the trial, nearly two years after he had stopped paying it. Eventually, his application was dismissed and he was ordered to repay the arrears owing for all of that time on the basis of my rejection of his argument that he did not have the capacity to keep paying it.

14. I consider it also apposite to again observe that it was the husband’s evidence I principally rejected as dishonest in the proceedings, not the wife’s evidence. It is difficult to consider circumstances where awarding the costs of proceedings to a party whose evidence has been so profoundly rejected as dishonest would be justified.

15. Counsel for the husband concluded his submissions in support of his application for costs with the submission that not to make a costs order in favour of the husband would be to prefer the interests of the wife’s legal advisers over those of the husband and that same would be an inappropriate exercise of discretion in these proceedings.

16. I respectfully reject that submission too. It is reasonably clear in this case that had the solicitors who started to act for the wife in 2015, well after the wife had resiled from the mediated agreement in October 2013, not been prepared to take on the clear risk in this case of not being paid for their professional services and outlays that was presented on the face of the case being run by the husband and his sister at the time they began to act for the wife – that was, that a just and equitable outcome would see the wife get nothing – the wife might very well have not had legal representation and could very well have ended up with nothing at all. They took that risk and the wife ultimately received a cash payment of around $843,000 of property adjustment and arrears of maintenance. What she has to pay the various solicitors who have acted for her in the proceedings, including the firm that acted for her the longest and put most at risk, is a matter between her and them. The argument that the determination of the husband’s costs application is somehow a choice between the wife’s solicitors being paid and the husband getting money that is legitimately owed to him does not persuade me to make a costs order in the husband’s favour.

1. Accordingly, I will not make the costs order the husband seeks.

The husband’s sister’s case

1. Counsel acting for the husband’s sister submitted in support of her application for costs that she was joined to the proceedings by the wife, no orders were ever made against her and that although the wife “abandoned” her case that the husband had an interest in the trusts on the eve of the trial, she did not “release” the husband’s sister as a party to the proceedings. 

2. Where millions of dollars in debt was asserted to be owed by the husband and the wife to the husband’s sister and where the wife did not accept that fact, I do not consider it unreasonable for the wife to have considered it appropriate in 2014 to seek to join the husband’s sister to the proceedings as a party. There were also many serious questions around the financial relationships of the husband and his sister through the various trusts, companies and real properties in which they were connected, that at that point in time, justified, in my view, the wife’s decision to seek to join the husband’s sister. The fact that the husband changed his position in respect of his interest in the Suburb C property during the course of the early part of the litigation and asserted that he did not own any beneficial interest in that property, a position on which he was supported throughout by his sister, his registered joint title holder who claimed all the beneficial interest, also made it entirely prudent, in my judgment, to make an application to seek to join the sister. Relevantly, too, the husband’s sister did not oppose that application and consented to joinder as a respondent in the proceedings. I expect she would have been well aware of the general principle provided for in s 117(1) of the Act when she gave the experienced counsel who appeared for her that day instructions that she consented to a joinder. Never did she seek to be released as a party, even after the wife “abandoned” the course of seeking findings that the assets of the trusts should be included as “property of the parties or either of them” and made subject to adjustment orders.

3. The submission that the fact that no orders were made against the sister at the end of the proceedings is supportive of a costs order in her favour, belies the fact, made clear by counsel for the wife in her submissions, that both the husband and his sister sought orders from the Court at the trial that the Suburb C property be transferred to the husband’s sister, that the husband and the wife pay N Pty Ltd or the husband’s sister over $2,000,000 in satisfaction of debt and that the former family home be transferred to N Pty Ltd or the sister in partial satisfaction of that liability. The husband’s sister also sought an order that the husband pay $2,730,000 to the Conrad Family Trust and the husband sought an order that he and the wife pay that amount to that Trust.

4. Counsel for the husband’s sister, anticipating that those matters would be raised for the wife, nevertheless submitted, in essence, that but for the wife having joined the sister, all of that relief that the husband and the sister sought could simply have been sought by the husband, so that fact ought not disadvantage the sister’s costs application. I am not persuaded by that submission. As counsel himself conceded at the hearing of oral submissions, immediately upon it being made clear by counsel for the wife that no orders were going to be sought directly against any of the trusts or against property of the sister, the sister could have made an application to be released as a party, though she still would have been an integral witness in the proceedings. She did not.

5. As I have already observed, I do not consider it was inappropriate to have joined the sister as a party in 2014 and for her to have remained as a party until the conclusion of the matter, even in circumstances where the wife abandoned her case that the assets of the trusts were the husband’s assets on the eve of trial, particularly given that which I said in my Reasons for Judgment quoted at [51] of these reasons.

6. As counsel conceded in his written submissions, the husband’s sister is a person of considerable financial means. It is correct, as he submitted, that the costs she has incurred in the proceedings in the order of $553,000 are significant by any person’s standards, but there is simply no evidence of her full financial circumstances such that permits consideration of how such an expense sits with her overall financial position and how that might justify a costs order in her favour.

7. Reliance was also placed on the wife’s litigation conduct throughout the proceedings in support of the husband’s sister’s costs application. Again though, I do not consider that there was anything particularly different in respect of the wife’s litigation conduct in respect of the husband’s sister’s participation in the case that persuades me that a costs order against the wife in favour of the sister is justified.

8. Once again, I also point to my rejection of the honesty of the husband’s sister’s evidence on critical facts pertaining to the disputes about the trusts, the monies owing and the beneficial ownership of the Suburb C property as another very significant factor in my rejection of her application for costs against the wife.

The wife’s case

1. For the wife, a written offer to settle the proceedings was made on 20 June 2018, after the adjournment of the trial in May last year. Its terms were concise and clear. She would transfer her interest in the former family home to the husband’s sister in return for payment of $700,000 and indemnity against any of the relevant debts. In addition, she would discharge all arrears of spousal maintenance. I am satisfied that its terms would have been conveyed to the husband though the letter was sent to the husband’s sister’s solicitors. The husband did not give evidence that he was not made aware of it in a timely fashion.

2. The Orders I made in March this year provided for the husband to pay the wife the sum of $780,000, indemnify her against the relevant debts and also to pay her arrears of spousal maintenance that was about $63,000 at that time. In return, certain things would happen, including the delivery of a transfer of the wife’s interest in the former family home, though the orders did not specify to whom it was to be transferred, leaving open to whom that might be transferred. Plainly, in my judgment, the terms of the written offer to settle made by the wife in June last year were more favourable to the husband than the terms of the Orders I ultimately made.

3. As I have already said, I am of the view that this is the significance of the inclusion of reference to written offers of settlement and their terms in s 117(2A). By my Orders, the husband was plainly $143,000 worse off than he would have been if he had accepted the wife’s offer, not to mention the legal costs he and his sister would have saved had they accepted it, if one applies the same cost/benefit analysis argument I have discussed above, though I am giving no weight to that latter fact in this discretionary exercise. I am quite satisfied the offer of settlement was plainly $143,000 more favourable for the husband than my final Orders were.

4. In the circumstances that I have discussed, I consider the existence of that written offer to settle, plainly more favourable to the husband than the Orders I ultimately made, to tip the discretionary scales in favour of making a costs order in favour of the wife. I consider that an order that the husband pay the wife’s costs of and incidental to the property adjustment proceedings from and including Monday, 9 July 2018 is justified. I select that date as it is almost three weeks after the offer was sent providing for ample time for the husband to give consideration to the offer and to take advice on it. I consider that such costs should be as agreed or assessed pursuant to the Rules on a party and party basis. I will so order.

The spousal maintenance part of the proceedings

1. As I have already observed, the husband applied in 2017 for discharge of my June 2015 interim spousal maintenance order. He did that by Application in a Case filed on 20 February 2017. He sought to have it discharged, suspended or varied. Before his application was heard by the Senior Registrar, he unilaterally ceased paying the maintenance. After the hearing, the Senior Registrar dismissed his application. He filed an application for review of that decision. That was heard by me as part of the trial. In fact, by his Amended Response filed just before the trial, the husband sought to have the interim spousal maintenance order that I had made on 5 June 2015 discharged retrospectively as at 10 June 2016. He was wholly unsuccessful in respect of that application, both in terms of the hearing before the Senior Registrar and the review that was heard before me. In almost all the time that application was progressing, the husband was simply not paying the wife the periodic maintenance I had ordered him to pay. Ultimately, I found, after the trial, that he had had the capacity to pay it throughout that time.

2. Accordingly, I also consider these circumstances justify a costs order in favour of the wife. I will order that the husband pay the wife’s costs of and incidental to the husband’s application to discharge, suspend or vary the interim spousal maintenance order pursued through his filing of an Application in a Case on 20 February 2017 and his filing of an application to review the Senior Registrar’s decision on 15 November 2017, including the costs of the hearing before the Senior Registrar and that much of the trial before me devoted to that issue. I will order those costs be as agreed or as assessed pursuant to the Rules on a party and party basis.

The 2015 interim spousal maintenance proceedings

1. As I have already pointed out, it cannot be said that the husband was wholly unsuccessful in the June 2015 interim maintenance proceedings, though the wife was plainly more successful than he was.

2. I am not persuaded that a costs order in the wife’s favour is justified in respect of those interim proceedings and will dismiss the wife’s application for her costs of those.

3. I make Orders as set out at the commencement of these written reasons.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 19 November 2019.

Associate: 

Date:  19 November 2019