DESCAS & DESCAS (NO.2)
[2013] FMCAfam 205
•14 March 2013
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DESCAS & DESCAS (NO.2) | [2013] FMCAfam 205 |
| FAMILY LAW – COSTS – Application for costs – where wife claims costs as a result of husband's non-disclosure of superannuation entitlements – where proceedings re-opened. |
| Family Law Act 1975, s.117 |
| Browne v Greene (2002) 29 Fam LR 428; FLC 93-115 Descas & Descas [2013] FMCAfam 69 Gould & Gould (2007) FLC 93-333 K & K [2002] FamCA 1150; (2002) 30 Fam LR 83; (2003) FLC 93-135 Marinko and Marinko (1983) 8 Fam LR 849; FLC 91-307 Patching and Patching (1995) 18 Fam LR 675; FLC 92-333 Robinson and Higginbotham (1991) FLC 92-209 (also reported as In the Marriage of Higginbotham and Robinson ((1991) 14 Fam LR 559) |
| Applicant: | MS DESCAS |
| Respondent: | MR DESCAS |
| File Number: | SYC 6968 of 2009 |
| Judgment of: | Scarlett FM |
| Hearing date: | Submissions considered in Chambers |
| Date of Last Submission: | 28 February 2013 |
| Delivered at: | Sydney |
| Delivered on: | 14 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Jackson |
| Solicitors for the Applicant: | Doolan Wagner & Callaghan |
| Counsel for the Respondent: | Mr Livingstone |
| Solicitors for the Respondent: | Alidenes & Company |
ORDERS
The Husband is to pay the Wife’s costs of this Application fixed in the amount of $5,500.00.
The Husband is to pay the sum specified in Order (1) by 30 May 2013.
IT IS NOTED that publication of this judgment under the pseudonym Descas & Descas (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 6968 of 2009
| MS DESCAS |
Applicant
And
| MR DESCAS |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the Wife for costs arising out of the decision of this Court made on 30th January 2013 resolving property issues between the parties (Descas & Descas[1]). The Wife seeks costs arising from the Husband’s failure to disclose several of his superannuation interests, resulting in the proceedings being reopened and further evidence taken.
[1] [2013] FMCAfam 69
The Husband opposes the Application for costs, pointing to the critical comments made by the Court about the credibility of the Wife’s evidence. He seeks an order dismissing the Wife’s Application and an order for costs in his favour in the sum of $600.00.
It is not in issues that the wife applied to the Court on 25th May 2011, after the evidence had otherwise been completed, to re-open the proceedings because it had come to her attention that the Husband had not disclosed some further superannuation interests. The circumstances are described in some detail in paragraphs [72]-[88] of the decision. There was a further hearing on 19th December 2011 in which the husband gave oral evidence.
Submissions and Evidence
The parties have each filed written submissions. The Husband also relies on an affidavit sworn by his solicitor, Amanda Jane Alidenes, on 21st February 2013 annexing copies of correspondence between her firm and the firm of solicitors acting for the Wife.
The applications have been considered in Chambers.
In a submission filed on 14th February 2013 Mr Jackson of counsel, for the Wife, submitted that the Court should depart from the principle in subsection 117(1) of the Family Law Act that parties should pay their own costs by considering the relevant factors set out in subsection 117(2A).
Mr Jackson relied on the decision of Nygh J in Robinson and Higginbotham[2] in support of the proposition that paragraph (f) of subsection 117(2A), which deals with written offers of settlement, does not have any particular priority.
[2] (1991) FLC 92-209 (also reported as In the Marriage of Higginbotham and Robinson (1991) 14 Fam LR 559)
As to the Wife’s financial circumstances, relevant under s.117(2A)(a), it was submitted that her future needs and resources comparable with the Husband’s were reflected by the 10% adjustment made in her favour by the Court in the substantive proceedings under s.75(2). The Court was referred to the decision of the Full Court of the Family Court in Marinko and Marinko[3] in support of the proposition that it may be appropriate to look at the end result of the actual property order in deciding whether to award costs.
[3] (1983) 8 Fam LR 849; FLC 91-307
Mr Jackson submitted that the wife’s application for costs is primarily reflected in s.117(2A)(c), which deals with the conduct of the parties to the proceedings in relation to the proceedings generally. The Husband had gone to trial with a serious failure to provide a full and frank disclosure of his financial affairs relating to his superannuation entitlements. When the Husband gave evidence on 19th December 2011, his evidence was described as “vague and highly unsatisfactory”[4] although there was no finding that he was deliberately lying or that he deliberately sought to withhold information about his financial situation.
[4] Descas & Descas [2013] FMCAfam 69 at [87]
There was a finding that there was a non-disclosure by the Husband of his superannuation entitlements. “Whether it was wilful or accidental is irrelevant”.[5] This statement is supported by the decisions of Patching and Patching[6] and Gould & Gould[7], where this statement appears:
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute.[8]
[5] [2013] FMCAfam 69 at [94]
[6] (1995) 18 Fam LR 675; FLC 92-585
[7] (2007) FLC 93-333
[8] The origin of this statement is at first difficult to follow. As is explained by the Full Court (Bryant CJ, Finn and Boland JJ) at [25], the reference is to the decision of the Full Court (Nicholson CJ, Buckley and Kay JJ) in the unedited version of K & K [2002] FamCA 1150 at [51]. This passage does not appear in the edited version published as K & K (2002) 30 Fam LR 83; (2003) FLC 93-135.
Counsel for the Wife submits that s.117(2A) supports the Wife’s claims for costs against the Husband at least for the period May to December 2011.
In his submission filed on 28th February 2013, Mr Livingstone of counsel submitted on behalf of the Husband that counsel for the Wife’s statement that Robinson and Higginbotham[9] is authority for the proposition that paragraph (f) 117(2A) does not have any particular priority is “something of an over simplification” and referred to the decision of the Full Court of the Family Court in Browne v Greene[10], where Kay, Coleman and Warnick JJ held at [54]:
Had the failure of the husband to make discovery meant that the parties had wasted money in the proceedings on issues which did not have to be fought, or had the failure to make discovery had the real potential of avoiding the proceedings or somehow minimising the costs involved in the proceedings, then it would have been appropriate to give it significant weight. But in these circumstances, where the failure to make the disclosure happened after the trial and ultimately had little or no consequence for the outcome of the proceedings, it is difficult to say that it merits the removal of what might have otherwise be seen to be an appropriate costs order in favour of the husband.
[9] supra
[10] (2002) 29 Fam LR 428; FLC 93-115
It was submitted that the Husband’s shortcomings regarding discovery were not such as to outweigh his offer of settlement which the Wife ought to have accepted. Her own offers of settlement were “well wide of the ultimate orders”.
Mr Livingstone noted the Court’s adverse findings about the Wife’s lack of truthfulness, especially I respect of her spurious claim that the house was haunted.
It was submitted that the Husband’s inadvertent non-disclosure of his updated superannuation statements does not pas the “but for” test, which appears to mean:
But for the husband’s inadvertent non disclosure the wife would not have been put to the trouble and expense of a third day’s hearing several months after closing addresses.
Counsel for the Husband submitted that the Wife’s application also fails the “but for” test because the non-disclosure had been discovered during the hearing, the Wife’s lawyers did not seek to recall the Husband for cross-examination on that point.
Further, Mr Livingstone submitted that the Wife entirely failed in her initial response in that she sought a transfer of the former matrimonial home to herself in her own name with no payment to the Husband.
The Husband’s offer of settlement was to accept $250,000.00 less a superannuation split of 50%, which would have effectively have given him $225,337.25. Counsel submitted that his offer was $36,049.25 wide of the order actually made, or 5% of the total pool. Given the high costs of litigation the Wife would have saved around $36,000.00 in legal fees had she accepted the Husband’s offer of settlement.
Mr Livingstone submitted that the Wife’s manner of conducting the proceedings, including suggesting to the valuer that the former matrimonial home was haunted, affected by termites or subject railway noise was merely an attempt to bring about a revision of the value of the home which, had she succeeded, was likely to have been more significant than the Husband’s inadvertent misstatement of his superannuation balance which would have been, at most, in the order of $10,000.00.
Thus, it was submitted that the Court should dismiss the Wife’s application for costs and make an order that she should pay the Husband’s costs in the sum of $600.00 or such other sum as the Court deems fit.
Conclusions
Whilst it is provided by s.117(1) of the Act that subject to subsection (2) and other matters, each party to proceedings should bear their own costs, subsection 117(2) permits the Court to make an order for costs as the Court considers just, if the Court is of the opinion that there are circumstances that justify it in doing so.
In considering what order it should make, if any, the Court is requir3ed to have regard to the ,matters set out in paragraphs (a) to (g) of subsection 117(2A).
The financial circumstances of the parties are set out in the substantive judgment.
Neither party is in receipt of legal aid.
The conduct of the parties to the proceedings, as referred to in paragraph (c), is of particular relevance.
There is no failure by a party to comply with previous orders of the Court.
I am not satisfied that either party can be said to have been wholly unsuccessful in the proceedings, even neither party received an order that was identical to what was sought in the Application or Response.
The fact that the parties made offers in writing to settle the proceedings, as referred to in paragraph (f), is of particular relevance.
The other matter that is relevant is the serious finding about the Wife’s credit made in the substantive decision.
The original proceedings were the subject of evidence before this Court on 19th and 20th May 2011. The Husband gave evidence on Thursday 19 May. It is the Wife’s evidence that she discovered a superannuation statement from [A] Super relating to the Husband amongst her papers that evening. The matter was brought to the attention of the Husband’s solicitors the following day, but nothing further was done about this non-disclosure.
It may well be asked why the Husband was not sought to be recalled for cross-examination at some time on Friday 20th May. It is certainly the case that the Wife was under cross-examination on the morning of 20th May. Her cross-examination had commenced the afternoon before and continued on the morning of 20th May. Given the restrictions placed on parties under cross-examination, it is accepted that the Wife would not have had opportunity to discuss this matter with her legal advisers until after her own evidence had been completed. The Statement was tendered by her counsel during submissions.
It is the case that the Wife’s solicitors applied to the Court to re-open the proceedings on 25th May 2011, which was the following Wednesday. The Wife’s solicitors had proceeded to make inquiries from [A] Super, [H] Superannuation and [C] Superannuation as a result of instructions they had received from their client on Monday 23rd May.
The Wife’s affidavit of 22nd July 2011 describes these circumstances in some detail.
In my view, it did not become clear as to what had or had not been disclosed by the Husband as to his superannuation until approximately the middle of July. In the circumstances, there appears to have been no alternative to re-opening the proceedings. It is certainly true that the Husband’s solicitors had made an offer in their letter of 21st June 2011 to the Wife’s solicitors:
We have been instructed by our client that it has come to his attention that there is a third superannuation fund held by [H] membership number [omitted].
Our client instructs us the balance of such fund is $1,080.00. In the circumstances and bearing in mind the costs that will be brought about by any argument surrounding this issue, our client is prepared to allocate these funds to your client in their entirety.
This offer was apparently not accepted.
Paragraph (f) of s.117(2A) requires the Court to have regard to:
whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer;
Ms Alidenes’ affidavit of 21st February 2013 annexes copies of various offers of settlement made by the parties’ solicitors.
A letter dated 2nd December 2009 from the Wife’s solicitors offers to the Husband a cash payment of $25,000.00 in return for his transferring to her his interest in the former matrimonial home.
On 31st August 2010 the Wife made an offer of settlement on the basis that the assets be divided as to 75% to the Wife and 25% to the Husband. The Husband did not accept this offer and it was held in substantive decision that, after an adjustment under s.75(2) of the Act, that the Wife was entitled to 65% of the assets and the Husband to 35%.
On 19th April 2011 the Husband made an offer through his solicitors to transfer to the Wife his interest in the former matrimonial home in return for a payment of $250,000.00 and that there should be a splitting order for superannuation so that each party would receive the sum of $50,000.00. Counsel for the Husband submitted that this offer was “$36,049.25 wide of the order ultimately made of 5% of the total pool”. He submitted that the Wife would have saved around $36,000.00 in legal fees had she accepted this offer.
In my view, the Husband’s offer of 19th April 2011 was the most realistic offer of settlement made but it does not come close enough to what was actually awarded to have a deciding effect on the question of costs.
That leaves the question of the Wife’s lack of credibility as a witness, put forward as a factor for consideration under paragraph (g) of subsection 117(2A). Whilst the Wife’s untruthfulness in pursuit of her aim to retain the former matrimonial home for herself and the parties’ daughter has already been the subject of criticism, it appears to have been entirely unsuccessful. Her attempts to “talk down” the valuation by putting to the valuer various negative factors about the house, including the ghost, were firmly rebuffed by the valuer, Mr P. His valuation was accepted by the Court.
The unreliability of the Wife’s evidence does not appear to have had any appreciable effect on the conduct of the proceedings.
Costs orders are discretionary, but this discretion must be exercised judicially and in accordance with the statutory requirement of s.117.
In my view, the one factor that justifies an order for costs is the Husband’s non-disclosure of his superannuation interests. Although I am satisfied that it was inadvertent and not made with any dishonest intent, as I set out in the substantive decision, the fact remains that the wife discovered that certain items of superannuation had not been disclosed. This caused both parties’ solicitors to make further inquiries and led to a further day in Court.
The Husband should pay the Wife’s costs necessitated by his non-disclosure. I note that the matter was mentioned before the Court on 4th July and 3rd August 2011. The matter was eventually heard on 19th December 2011, where counsel appeared for both parties and the Husband gave oral evidence.
Costs will be assessed on a party and party basis according to Part 1 of Schedule 1 of the Rules. I will allow two short mentions, a daily hearing fee plus advocacy loading, and attendance at Court to take this judgment. This is not a matter where a full lump sum for a final hearing applies, but a lump sum for a hearing as a discrete event is appropriate.
I propose to fix the costs at $5,500.00. I will allow until 30th May 2013 for those costs to be paid, noting that the Wife is required to pay to the Husband the amount specified in Order (1)(c) made on 30th January 2013 within four months.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate:
Date: 11 March 2013
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