Deputy Commissioner of Taxation and Fell and Anor

[2007] FamCA 1597

FAMILY COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION & FELL AND ANOR [2007] FamCA 1597

FAMILY LAW – PRACTICE AND PROCEDURE – Adjournment – Costs

Family Law Act 1975 (Cth)

Kohn (1977) 30 FLR 175
Brown & Brown (1998) FLC 92-822

APPLICANT: Deputy Commissioner Of Taxation

1st RESPONDENT: Mr Fell

2nd RESPONDENT: Ms Cook  

FILE NUMBER: SYF 4247 of 2003

DATE DELIVERED: 4 December 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 4 December 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr T. North SC, with Ms S.L. Johns

SOLICITOR FOR THE APPLICANT: ATO Legal Services Branch

COUNSEL FOR THE 1ST RESPONDENT: Ms E.A. Strong SC, with Mr G.P.L. Thompson

SOLICITOR FOR THE 1ST RESPONDENT: Forte Family Lawyers

COUNSEL FOR THE 2ND RESPONDENT: Mr M. Bartfeld QC, with Dr R.S. Ingleby

SOLICITOR FOR THE 2ND RESPONDENT: Gadens Lawyers

Orders

AND UPON THE UNDERTAKING OF the Deputy Commissioner of Taxation of the Commonwealth of Australia by her counsel to the Court to abide any order for damages which this Court may hereafter be of the opinion that the husband and/or the wife have sustained by reason of either or both having undertaken not to deal with assets as set out in their respective undertakings (which follow) and which the Deputy Commissioner of Taxation ought to pay. 

UPON THE FURTHER UNDERTAKING OF the Deputy Commissioner of Taxation of the Commonwealth of Australia will not issue any summons for summary judgment or require the filing and serving of a defence:-

(a)against the wife in the Supreme Court of Victoria proceeding No … of 2007 before 24 April 2008;

(b)against the husband in the Supreme Court of New South Wales proceedings No … of 2007 before 24 April 2008.

UPON THE UNDERTAKING OF THE HUSBAND Mr Fell, to the court that until further order:-

1. He will not by himself, his servants or agents charge or deal with in any manner whatsoever any of the assets in which he has either a legal or beneficial interest other than in the normal course of business and/or to meet his reasonable living and legal expenses and expenses associated with the support of the children of the marriage without first giving the Deputy Commissioner of Taxation 21 days notice in writing by facsimile … followed by pre-paid post marked to the attention of Ms K of the Melbourne Office of the Australian Government Solicitor.

2. He will not by himself, his servants and in his capacity as a director and/or shareholder of any corporate entity cause or join in the causing of any such entity charging or dealing with any of the assets in which that entity has a legal or beneficial interest other than in the normal course of business without first giving the Deputy Commissioner of Taxation 21 days notice in writing by facsimile … followed by pre-paid post marked to the attention of Ms K of the Melbourne Office of the Australian Government Solicitor.

AND UPON THE UNDERTAKING OF THE WIFE Ms Cook to the Court that, without admission as to the necessity or basis for an injunction against her that:

1. She will not by herself, her servants or agents charge or deal with in any manner whatsoever any of the assets in which she has either a legal or beneficial interest other than in the normal course of business and/or to meet her reasonable living and legal expenses and expenses associated with the support of the children of the marriage without first giving the Deputy Commissioner of Taxation 21 days notice in writing by facsimile … followed by pre-paid post marked to the attention of Ms K of the Melbourne Office of the Australian Government Solicitor.

2. She will not by herself, her servants and in her capacity as a director and/or shareholder of any corporate entity cause or join in the causing of any such entity charging or dealing with any of the assets in which that entity has a legal or beneficial interest other than in the normal course of business without first giving the Deputy Commissioner of Taxation 21 days notice in writing by facsimile … followed by pre-paid post marked to the attention of Ms K of the Melbourne Office of the Australian Government Solicitor. 

IT IS ORDERED:

1. That the further of the these proceedings to 22 April 2008 at 10am as an Interim Duty List matter estimated to take not less than one day. 

2. That in anticipation of the adjourned date the parties file and serve documents as follows:-

   (a)By not later than 18 January 2008 the wife file and serve any amended application in a case and affidavit material in support thereof;

   (b)By not later than 8 February 2008 the husband file and serve any response to the wife’s application in a case (including any amendment thereto) and any affidavit material in support thereof;

   (c)By not later than 14 March 2008 the Deputy Commissioner of Taxation file and serve any response to the applications in a case and the wife communicate in open correspondence to each other party to the proceedings her opposition and/or agreement to the various orders sought by the husband and/or the Deputy Commissioner of Taxation. 

3. That for the avoidance of doubt and notwithstanding that the preceding paragraphs refer to affidavits being filed in support of applications or responses the parties be and are hereby relieved from filing any further evidence in these proceedings if he/she is not inclined to do so.

4. That on the adjourned date:-

   (a)All evidence will be by way of affidavit;

   (b)Any application of the husband will precede any applications of the wife and/or the Deputy Commissioner of Taxation;

   (c)Any application of the wife will precede any application of the Deputy Commissioner of Taxation. 

5. That the parties deliver written submissions in support of the relief they seek or oppose to my Associate, … as follows:-

   (a)       The husband by 12 noon on 2 April 2008;

   (b)       The wife by 12 noon on 9 April 2008

   (c)       The Deputy Commissioner of Taxation by 16 April 2008. 

6. That contemporaneously with delivering written submissions to my Associate, the delivering party transmit a copy to each other party to the proceedings. 

7. That on or before 7 January 2008 the Deputy Commissioner of Taxation pay the wife’s costs thrown away this day fixed in the sum of $7,825, such payment to be made direct to the lawyers for the wife. 

8. That my reasons for judgment this day be transcribed and when transcribed a copy be sent to each of the parties.

IT IS FURTHER ORDERED BY CONSENT:

1. That question of the husband costs thrown away this day be reserved for determination by me on 22 April 2008. 

2. That question of the Deputy Commissioner of Taxation costs thrown away this day be reserved for determination by me on 22 April 2008. 

3. That the husband and the Deputy Commissioner of Taxation file and serve any submissions in relation to costs they seek in relation to the proceedings this day in writing by not later 14 days prior to the adjourned date. 

IT IS NOTED that publication of this judgment under the pseudonym Deputy Commissioner of Taxation & Fell & Cook is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: SYF 4247 of 2003

DEPUTY COMMISSIONER OF TAXATION

Applicant

And

MR FELL

First Respondent

And

MS COOK  

Second Respondent

REASONS FOR JUDGMENT

(ex tempore)

1. I have allowed the application of the husband for an adjournment of these proceedings and now the wife makes application that her costs of this day which are thrown away by reason of the adjournment.  The application is put in the alternative.  First it is sought that the applicant Deputy Commissioner of Taxation (“DCT”) pay the wife’s costs.  However, if the wife does not recover costs against the applicant, his client seeks that the husband pay her costs.  

2. The costs sought were initially quantified at $8900 but have been re-quantified in accordance with the family law scale.  Now the wife would be content with the reduced sum of $7,825 and that is her application.  

3. Neither respondent to the costs application takes issue with the quantum of costs claimed.  The issue in relation to costs is liability. 

4. The parties to the proceedings are the husband, who is represented today by Mr North of senior counsel with Ms Johns of counsel; the wife, who is represented by Mr Bartfeld one of her Majesty's counsel with Dr Ingleby of counsel; and the DCT is represented by Ms Strong of senior counsel who appears with Mr Thompson of counsel.  The DCT has earlier been given leave to intervene in these proceedings between the husband and the wife for final alteration of property interests.  

5. The matter is listed today as the only matter in the interim defended list because it was to be the determination of an application by the DCT for an injunction restraining the husband and the wife from dealing with assets which are divisible in the proceedings under Part VIII of the Act.  Broadly speaking, the DCT seeks a Mareva injunction.  That application in a case is filed on

   
   20 July 2007

   although it has subsequently been refined by submissions and draft minutes of orders sought submitted by counsel for the DCT.  The DCT also seeks that the husband and the wife file and serve an up-to-date financial statement and that there be orders for discovery and inspection.  The application for discovery and inspection and for the financial statements was not pressed today. 

6. The husband’s application for an adjournment of the proceedings was based on two grounds.  One was that the DCT sought to rely on affidavit material which had been sworn and filed on 30 November 2007.  It is an affidavit which together with annexures is some 164 pages long.  It is filed late.  On 9 October 2007 I had made orders providing a timetable within which each party was to file documents in respect of the then application.  My order provided as follows:

   1.That the application of the Deputy Commissioner of Taxation for injunctive relief be adjourned to a date to be fixed by the Judicial Support Court Services Manager of the Court and to be advised to the parties in writing as soon as practicable, noting that this interim issue is be allocated a hearing time of not less than 1 day and, as currently advised, it appears that the hearing will be not earlier than

   
   

   20 November 2007 and not later than 15 December 2007 (“the adjourned date”). 

   2.That in anticipation of the hearing on the adjourned date:-

   a)The Deputy Commissioner of Taxation file and serve any further affidavit material upon which the Deputy Commissioner relies in relation to the interim orders sought by 12 noon on Thursday

   
   

   18 October 2007;

   b)The husband file and serve any material upon which he seeks in opposition to the injunctions sought by the Deputy Commissioner by not later than 12 noon on Monday 5 November 2007;

   c)The wife file and serve any material upon which she seeks to rely in opposition to the injunction sought by the Deputy Commissioner by not later than 12 noon on Monday 12 November 2007.

7. Mr North informed the court that his client had only recently come back into Australia and there had been insufficient time in which he could obtain instructions on the contents of the affidavit sworn on 30 November 2007.  The affidavit sworn on 30 November 2007 is in addition to an affidavit of some 158 pages (inclusive of exhibits) had been filed by the DCT on 18 October 2007.  

8. Mr North submitted that his client also required time to consider a recent application brought by the wife.  That is the wife's application which was filed on 29 November 2007.  As indicated, the wife was required to file and serve any material upon which she relied in relation to the injunctive relief by

   
   12 November 2007

   .  However, the principal matter to which the wife’s recent application is directed is that, on 19 November 2007, she was served with a writ issued out of the Supreme Court of Victoria in which the DCT sues her to recover unpaid taxes and penalties in excess of $5 million.  The wife says that she does not want to fight proceedings in two courts and she seeks a stay of proceedings in this court until the conclusion of the proceedings in the Supreme Court. 

9. Mr North's client has foreshadowed that the husband may ultimately seek relief similar to that sought by the wife.  However, consideration will also be given to whether other relief, including an anti-suit injunction against the DCT continuing the Supreme Court proceedings, might be more appropriate relief to be sought by the husband.  I mention here that, whereas the wife has been sued by the DCT in the Supreme Court of Victoria and served with that process, the DCT has issued proceedings against the husband out of the Supreme Court of New South Wales and that writ has not been served yet.  The DCT informs the court and the parties that the NSW process will be served shortly.  

10. Counsel for the DCT did not oppose the husband’s application for an adjournment. 

11. Counsel for the wife did not oppose the husband’s application for an adjournment. 

12. The earliest date upon which the matter can return to court, I assess, is 22 April 2008.  That assessment is based on the fact that this matter is allocated to me as a judge manager and that is the first date that I am sitting in the duty list in 2008.  The tentative aspect is that listings for April 2008 have not yet been finalised by the court and the listing date and configuration may alter. 

13. That concludes the facts relevant to the costs application.  Turning to the relevant legal principles, s 117 of the Act contains the general rule that each party to the proceedings under the act shall bear his or her own costs.  The object of the rule is to ensure that parties are not deterred from bringing or maintaining legitimate applications for fear of incurring an intolerable burden of costs if they lose.  I refer to the case of Kohn (1977) 30 FLR 175 at 177. The court, however, retains a discretion to make an order for costs if it is of the opinion that there are circumstances that justify that course and it would be just to do so.

14. The DCT and the husband are each content for the question of costs to be reserved to the adjourned date.  

15. In considering whether to make an order for costs I have regard to the matters set out in s 117(2A) or so many of them as are submitted are relevant.  Mr Bartfeld for the wife submits that the relevant considerations are subsections (a), (c) and (g) of s 117(2), being:

    (a)the financial circumstances of each of the parties to the proceedings;

    (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

    (g)such other matters as the court considers relevant.

16. Mr Bartfeld submits that the more significant of each of those factors is (c), which relates to the conduct of the parties. 

17. Dealing with the factors in turn, I consider the financial circumstances of each of the parties to the proceedings.  The respondent to the application at this point is the DCT.  The applicant is the wife.  The financial information sworn to by the wife is somewhat old now, it having been filed in 2003.  Of more probative value is the fact that, as recently as the middle of this year, the husband and the wife put the assets which were divisible between the parties at something in the vicinity of $13 million to $15 million.  By community standards that is a significant asset pool.  However, as I think I have commented in an earlier judgment in this matter, it is not so much money that the wife (or the husband for that matter) can afford to incur legal costs unnecessarily.  Furthermore, that in the event the DCT is successful in recovering its alleged entitlement of about $28 million, the wife will be very much worse off.  It was not urged on me that the DCT does not have the means to pay the costs or that the costs are of no consequence to the wife.  

18. The next matter which I consider is the conduct of the parties.  The husband’s complaint was that the DCT filed material late, being the affidavit of

    
    30 November 2007

    .  In the context of the adjournment application, counsel for the wife advised that the wife was ready to proceed but that he accepted that if the application of the DCT as against the husband was to be adjourned, the application of the DCT that the same orders be made against the wife should also be adjourned. 

19. In opposing the costs application it was submitted by senior counsel for the DCT that the husband’s adjournment application was determined before she had sought or obtained leave to rely on the late filed affidavit.  Ms Strong submitted that the husband’s application for an adjournment must have been sought, argued and granted without regard to her client’s late filed material and, she submitted, that the DCT should not be made liable for the costs of the wife which are wasted by reason of the adjournment. 

20. My recollection is that when senior counsel for the DCT rose to make her submissions in relation to the adjournment application she did not, either at that point nor subsequently until addressing me in relation to costs, submit that it was of no moment that the husband had not had an adequate opportunity to answer the DCT’s late filed material.  In fact, in the context of the adjournment being granted, senior counsel for the DCT referred to the late filed affidavit as evidence in support of the DCT’s application for the parties to file a financial statement.  Subsequently, and part way through discussion with me, senior counsel for the DCT said that application about financial statements would not be pressed today but would be in the future. 

21. I account for different styles of presentation of cases in different jurisdictions but I have difficulty in accepting Ms Strong's submission and, in particular, her contention that the DCT’s late filed material had not been relevant on the question of the adjournment of proceedings and is not relevant as to costs. 

22. It is correct that I had not been asked for, nor formally, granted leave to the DCT to rely on the late filed material.  As I recall, it was at the point of me making enquiries about documents to be relied upon that all counsel alerted me to the preliminary application of the husband for an adjournment.  Clearly, at that point senior counsel could have informed the court (and the husband) that she did not rely on the affidavit filed on 30 November 2007.  However, she did not do so.  Had senior counsel for the DCT told Mr North (for the husband) and the court that her client did not rely on the late filed material, Mr North’s application for an adjournment would have been much weaker if it had been made at all.  

23. It may just be Ms Strong’s vigour in opposing an application that her client pay costs.  It may be a matter of enthusiasm on the part of counsel, even senior counsel.  In any event and however based, I do not accept that the affidavit of 30 November 2007 was not a document that they relied upon by the DCT or that the proceedings were not adjourned on the basis (at least as to part) because late filing deprived the husband of an opportunity to frame a response.  

24. It is clear in my mind that the husband’s application for an adjournment was predicated on the DCT placing reliance on the late filed affidavit.  At no point (prior to opposing the costs application) did senior counsel for the DCT disabuse the court or the parties that reliance would be placed on the affidavit and, I am satisfied, that it is not open to her to do so now.

25. In any event, it is now 3:45pm.  So, even if the proceedings were to commence now (with no reliance by the DCT on the late filed affidavit), the DCT’s application could not be concluded today.  Unfortunately, I have no other time until April 2008 in which to hear the matter.

1. I do not ignore here the fact that the wife put on her own application in relation to a stay of the proceedings in this court and that it had some bearing on the adjournment.  Indeed, Mr North specifically referred to his need for time to consider the wife’s recent application including whether his client would be best advised to apply for an anti suit injunction against the DCT in relation to the writ which the DCT has issued out of the Supreme Court of New South Wales.  It is apparent that any application for a stay and an anti suit injunction ought to be heard together.  It was also agreed by counsel for all parties that, in the presentation of the case, those applications should precede the DCT’s application for a Mareva injunction.  However, the re-ordering of presentation of each party’s case was at my initiative and in the context of all parties seeking to proceed, and having their existing and proposed applications adjourned to, the same date. 

2. I also note that at all times counsel for the wife said that the wife was ready and prepared to proceed.  The wife was the only party who did not seek an adjournment. 

3. The next matter to which it has been submitted that I should have regard is subsection (g).  Mr Bartfeld submits that the wife proffered an undertaking in a reasonably timely manner during the hearing today.  The undertaking was given before the luncheon adjournment.  However, I do not think, much can be read into the timing with which the undertaking as proffered. 

4. The weight that I attach to any of the relevant considerations is wholly discretionary.  Whilst no single factor outranks any other there is nothing to prevent one of them being the sole foundation for a costs order.  As Kay J observed in the matter of Brown & Brown (1998) FLC 92-822:

   In many cases there will be an outstanding feature ... that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other section 117(2A) considerations.

5. I take each of the relevant factors into account.  The most significant factor in relation to costs is that it was the DCT who filed material out of time which necessitated that the husband get the adjournment he sought.  

6. The wife’s primary application is for an order for costs against the DCT.  Only if that application fails does she seek those costs against the husband on the basis that it was the husband who applied for and succeeded in obtaining the adjournment.  I do not need to hear further from Mr North on the question of his client’s liability for payment of the wife’s costs because I have determined that the DCT should be responsible for the wife’s costs thrown away this day.  

7. I have considered whether, now having heard argument on the wife’s costs application, the costs should be reserved pending the outcome of the proceedings on the adjourned date.  That is what the DCT seeks and the husband both sought.  It seems to me that there will be enough to decide on the adjourned date.  I have now heard the submissions.  I accept the submission of Mr Bartfeld that these are stand-alone costs in respect of which the salient facts are matters which have occurred today and that there is no reason to wait until another day to examine them in the context of s 117. 

8. In all of the circumstances, I am satisfied that there are circumstances which justify an order that the DCT pay the wife’s costs thrown away this day.  As there is no issue in relation to quantum I will order costs in the sum sought. 

DISCUSSION

1. Otherwise, Mr North says that his client’s costs of today are an issue but my determination of them can await the hearing on the adjourned date, being

   
   22 April 2008

   . 

2. The submission on behalf of the DCT was that consideration of costs of the DCT consequent on the proceedings being adjourned today should also await 22 April 2008. 

3. There is no disagreement about the balance of the costs applications being reserved to the next date but I will require written submissions from any party who proposes on the adjourned date to press an application for costs of today. 

I certify that the preceding thirty six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett

Associate 

Date: 18 January 2008