Crafter & Crafter
[2013] FamCA 624
•26 August 2013
FAMILY COURT OF AUSTRALIA
| CRAFTER & CRAFTER AND ORS | [2013] FamCA 624 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) |
| Fevia & Carmel-Fevia (Costs) [2010] FamCA 143 Haykal v Krawiec (No 4) [2012] FamCA 748 I and I (no. 2) (1995) FLC 92-625 |
| APPLICANT: | Ms P Crafter |
| 1ST RESPONDENT: | Mr B Crafter |
| 2ND RESPONDENT: | M Crafter |
| 3RD RESPONDENT: | W Crafter |
| 4TH RESPONDENT: | D Pty Ltd |
| 5TH RESPONDENT: | P J Crafter |
| FILE NUMBER: | ADC | 142 | of | 2007 |
| DATE DELIVERED: | 26 August 2013 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | By way of Written Submissions |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 24 May 2013 |
SUBMISSIONS RECEIVED FROM:
| COUNSEL FOR THE APPLICANT: | Mr Tredrea |
| SOLICITOR FOR THE APPLICANT: | Jo-Anne N Milen & Associates |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Mcginn |
SOLICITOR FOR THE 1ST RESPONDENT: | Lindleys Solicitors |
| COUNSEL FOR THE 2ND, 3RD, 4TH AND 5TH RESPONDENTS: | Mr Stockes |
| SOLICITOR FOR THE 2ND, 3RD, 4TH & 5TH RESPONDENTS: | Stokes Legal |
Orders
That the husband pay one-half of the wife’s costs of the proceedings, including the application in relation to costs, by agreement and in default of agreement, as assessed on a party and party basis.
That the 3rd, 4th and 5th named respondents pay one-half of the wife’s costs of these proceedings, including the application in relation to costs, by agreement, and in default of agreement, as assessed on a party and party basis.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Crafter and Crafter has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: ADC 142 of 2007
| Ms P Crafter |
Applicant
And
| Mr B Crafter |
1st Respondent
And
| M Crafter |
2nd Respondent
And
| W Crafter |
3rd Respondent
And
| D Pty Ltd |
4th Respondent
And
| P J Crafter |
5th Respondent
REASONS FOR JUDGMENT
After a contested property dispute hearing involving a variety of third parties before Murphy J in which orders were made, an appeal was lodged, heard and dismissed. The wife now seeks costs arising out of the hearing before Murphy J.
The wife’s application was filed on 19 December 2012. At a mention before me in Adelaide on 24 May 2013, I set out a timetable for written submissions to be filed.
The wife having filed her material, the husband filed a responding submission on 1 July 2013. The third parties filed a submission on 28 June 2013 and the wife filed a responding submission on 4 July 2013.
The wife sought that the husband along with the third, fourth and fifth respondents pay her costs. She sought those costs on a indemnity basis.
The husband sought that no order for costs be made and that the wife’s application be simply dismissed.
The third parties concede that they should pay 50 per cent of the wife’s costs, the other 50 per cent in their view should be paid by the husband. Their submission was that any order for costs should not be on an indemnity basis but rather as agreed or otherwise, on a party and party basis.
The hearing before Murphy J arose out of the wife’s application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which she filed in January 2007 against the husband. In September 2007, the third parties were joined. These parties were the husband’s mother, his two brothers and two companies. The second respondent has since died and the sixth respondent which was a company controlled by the husband and the wife was not a respondent to this costs dispute.
The argument at trial concerned just who were the legal and/or equitable owners of the property in dispute.
The trial proceeded before Murphy J over six days in August 2010 and his Honour pronounced orders and published his reasons on 3 March 2011. His Honour largely found in favour of the wife.
As earlier indicated, an appeal by the respondents followed but that was dismissed on 4 December 2012.
The husband and the third parties were not ad idem about costs. The husband sought to distance himself from the third parties. The wife did not discriminate but sought costs against the husband and the other respondents.
Murphy J determined the dispute as a single justiciable controversy with attached claims. He held that the determination of the respective property interests of the respondents was central to the proceedings between the husband and the wife. Having regard to his Honour’s remarks about the evidence, it would be artificial to separate the claims as against each of the respondents. I refer specifically to paragraph 17 of the reasons for judgment.
In respect of the hearing, Murphy J described the difficulty in assessing the evidence where there was an intermingling of matrimonial, familial and commercial relationships. His Honour said:
Frequently, the “matrimonial partnership” is an integral part of the familial commercial enterprise or context, even if its precise role, and the parameters of that involvement, are neither spelled out nor specifically addressed. The breakdown of the “matrimonial partnership”, and the consequent need for the examination of a just and equitable settlement of property between the parties to that relationship, can create many evidentiary and legal difficulties for this court. This is such a case.
Murphy J expressed concern about the evidence presented to the Court. It was clear from reading his Honour’s judgment that he approached that evidence with considerable caution and in particular, noted how the parties’ respective perceptions affected the outcome. His Honour said:
[90] Assertions as to intention, joint endeavour and the like are being made, I have no doubt, by all parties in the knowledge that consequences relevant to the s 79 proceedings (or, as they might see it, or phrase it, “the family assets”) might follow from findings about those matters. The task of arriving at conclusions about those matters is made all the harder, as I find, by needing to unravel the extent to which present assertions as to past intentions and conduct are influenced by what is now perceived by the parties to be (as they see it) the potential legal or other consequences of findings about those intentions.(my emphasis)
[91] I consider the evidence of all of the parties (and [Mr J Crafter]) was influenced by this factor. An example is the nature and extent of discussions said to have been had by [Mr J Crafter] with family members, and, particularly, the wife, about the “overall plan” hatched, it is said, by Mr M to which reference will later be made.
[92] The evidence of the respondents and [Mr J Crafter] is also, I find, influenced by what I perceive to be an animosity toward the wife by other members of the family by her seeking (as they would see it) to claim for herself property which they assert to be “the family’s” property. There is undisputed evidence that the wife, pre-separation, sought to claim money which she considers was hers (or, more accurately, hers and the husband’s). I consider that the wife’s evidence is influenced by a similar animosity, provoked by an opposite assertion as to entitlement. (my emphasis)
[93]Further, I consider the evidence of the members of the [Crafter] family is coloured by a number of factors: the desire to keep “the family business” and “the family assets” together; familial, or blood loyalties; intra-familial and sibling jealousies and idiosyncratic notions of “fairness” not necessarily connected with section 79’s central mandate of justice and equity, or equity’s concept of “unconscionability”.
[94] I think it entirely likely that the parties’ acquiescence in arrangements which now occurred in the region of 20 years ago, including arrangements attended by legal informality, is likely to have been productive in each of the parties (and [J Crafter]) of assumptions that were not necessarily shared by fellow family members.
[95] I consider that the evidence of all parties (and [J Crafter]) was tainted, in some cases very significantly, by the factors just referred to. (my emphasis)
The statements just mentioned and my noted emphasis are relevant to the fundamental question of whether or not there is a justification for departing from the intention of 117 of the Act and to which I turn below.
The husband submitted that the wife’s application for costs had been made out of time. My impression is that the husband took the view that the wife’s costs application was not made until May 2013. Rule 19.08 of the Family Law Rules 2004 provides that an applicant has 28 days after the final order is made to make an application for costs. I find that the costs application was filed on 19 December 2012.
In any event, the issue of the application was raised before me on 23 May 2013. I understood all parties conceded that the application was in time after the release of the Full Court’s judgment on 4 December 2012. Even if there was some doubt about that, I find that the conduct of the husband at the hearing on 23 May 2013 amounted to a waiver such that the Court should hear and determine the application by the wife as if it was within time.
Section 117 of the Act provides that in proceedings under the Act, each party shall bear their own costs. That is subject to s 117(2) which provides that if the circumstances so justify it, the Court may make an order as it deems just and appropriate. There must be a finding by the court that the overall circumstances justify the making of the order (see I and I (no. 2) (1995) FLC 92-625 at 82,277).
Section 117(2) requires the court in considering what, if any, order for costs should be made to take into account those matters set out in s 117(2A) and relevantly here, they include the financial circumstances of the parties, their conduct in the litigation, any offers in writing to settle and such other matters as the court considers relevant. There are clearly other matters but these are the relevant ones here.
Having regard to what Murphy J said about the view taken by the respondents and their approach, I find there are justifiable circumstances here to depart from the main principle in s 117 but an order should only be made taking into account the matters set in s 117(2A).
There is a significant financial disparity between the parties. The wife is not in permanent employment but, as submitted by the husband, she was in paid part time employment during the case. The husband and the third parties point to the very outcome of the proceedings under which, the wife is to receive $888,892 whilst the husband receives $820,516. What that shows is that neither party is impecunious.
The husband points to the wife having repartnered.
The husband submitted that the wife was capable of meeting her own costs.
The wife referred to Fevia & Carmel-Fevia (Costs) [2010] FamCA 143. There, Murphy J considered the wealth disparity of the parties in deciding to make an order for costs. The husband distinguished that decision on the basis that the parties there had “very considerable wealth” and certainly this case is not anywhere near equivalent. With that I agree but the relevant point is that wealth disparity is an appropriate matter to take into account in contemplating the parties’ financial circumstances. Indeed, the financial circumstances are not determinative of the appropriateness of making an order but rather only one of the factors. As was said in Haykal v Krawiec (No 4) [2012] FamCA 748, modest financial circumstances are not a defence to an application for costs. All of the financial circumstances of the parties must be considered.
Bearing in mind that costs are designed as compensation for involvement in the proceedings and not a punishment, it is appropriate to observe that there is not much difference between at least the husband and the wife and that as a result of the way the proceedings were conducted, the wife’s financial circumstances have been diminished. Because I have found there are justifiable circumstances to make an order, the fact that each party is not impecunious and there is little between their financial strengths, is significant.
The third parties submitted that the wife’s ability to meet her own costs would be irrelevant in other jurisdictions bearing in mind the width of this dispute and the issues that Murphy J had to deal with. Here, s 117(2A)(a) requires a court to take into account those circumstances.
I have set out above the way Murphy J expressed concern about the evidence but it must also be said that his Honour was concerned about disclosure of documents. For example, his Honour said that the Court had not been told the “full story” and that “reconstruction” had occurred. His Honour was critical of one key witness whose evidence was startling. In that vein, his Honour said:
[110] The intentions of the parties surrounding the transactions at the centre of these proceedings, and the events preceding and succeeding those transactions, as revealed by the affidavit or oral evidence of the parties and such documents as are in evidence, remain clouded and uncertain. Assertions of “understandings” between the parties abound but factual depositions about who said what to whom and who did what and when are much more difficult to discern.
His Honour used expressions such as “shifting sands” relating to the respondents’ pleadings and their various formats. His Honour clearly had some sympathy for the husband because he was described as being between “a rock and a hard place”. Bearing in mind that the issue concerned the identification of the respective legal and equitable interests in contentious property, it is easy to understand his Honour’s frustration. In the end, his Honour thought the respondents produced a wholly unconvincing portrayal of those interests. His Honour remarked:
[264] I have already indicated that the evidence here is, in my view, a long way short of establishing what contributions (direct and indirect) were made by any of the parties (or others, for example, [P J Crafter’s] wife) to the various properties. The best, I think, that can be said is that it appears that unequal contributions of various sorts were made to the acquisition, maintenance and improvement of property said to be the subject of equitable interests.
His Honour thought the portrayed picture from the respondents by no means clear.
I have concluded therefore that his Honour was not at all impressed with the approach of the respondents which in essence meant that the task for the wife was so much harder than it should have been having regard to the ultimate outcome.
The Court is also obliged to consider offers in writing.
The wife contended that the husband was given a written offer which was more than what he ultimately received in the outcome. For his part, the husband submitted the offer was vague. I disagree with the husband. On 23 May 2008, the wife offered to settle for 50 per cent of the net value of all assets in which the husband and wife had a legal interest. Whilst that may not have satisfied the precision test required of an application to the Court or indeed an opening at trial, it could not have been misunderstood by the husband because of its simplicity. The husband must have known what it was that the case was about at that early stage.
Even if the offer was not particularised, that alone is not determinative of the costs issue; it is simply a factor to be taken into account and it is clear to me that very early in the litigation, the wife’s position was clear and that should have been something that made the husband vigilant. That offer was well before trial and therefore something that did not affect the third parties. That goes to the question of whether any order should be made joint and several as distinct from a specific portion of the costs.
The wife also submitted that the “unmeritorious” claims of the husband and the third parties directly protracted the proceedings. It is difficult for me to accept that proposition bearing in mind Murphy J’s view that there was a long history of transactions involving the family businesses. Having said that, his Honour made clear in his reasons that the third parties were intent on protecting the family business. In my view, the real problem here was the evidence rather than the unmeritorious claim.
If the approach of the parties is examined from his Honour’s words as to who was successful and who was not, of the respondents, the husband was not wholly unsuccessful but the third parties were. On that basis, there is every reason to think that the third parties significantly contributed to the protraction of the litigation.
In my view, it is hard to distinguish between the respondents including the husband. They equally contributed to the protraction. The husband should be responsible for one half of the costs allocated because of the disclosure issue and the problems of the evidence. The third parties contributed by being wholly unsuccessful and also because of the poor evidence.
In my view, an order should be made and the husband should pay one half and the other relevant respondents, the other one half.
The wife sought indemnity costs. Nothing I have read in either his Honour’s judgment or in the respective submissions puts this case in the category of the line of cases which describe the exceptional as the basis for an order for indemnity costs.
I certify that the preceding Thirty Eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 21 August 2013.
Associate:
Date: 26 August 2013
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