Dougal and Dougal (No 2)

[2013] FamCA 1152

FAMILY COURT OF AUSTRALIA

DOUGAL & DOUGAL (NO. 2) [2013] FamCA 1152

FAMILY LAW – CONTRAVENTION – Sanctions – where the husband was found to have contravened the orders – consideration of whether the husband had a reasonable excuse – orders made for husband to pay interest in a fixed sum – orders made for discovery and disclosure.

FAMILY LAW – COSTS – Indemnity costs considered – husband to pay wife’s costs as agreed or in default of agreement as assessed on a party/party basis.

Family Law Act 1975 (Cth) ss 112AB, 117

APPLICANT: Ms Dougal

RESPONDENT: Mr Dougal

FILE NUMBER: MLC 9600 of 2009

DATE DELIVERED: 22 May 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 22 May 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hutchins

SOLICITOR FOR THE APPLICANT: Peter Falconer & Associates

THE RESPONDENT: In person

ORDERS

THAT UPON FINDING THAT THE HUSBAND HAS INTENTIONALLY FAILED WITHOUT REASONABLE EXCUSE TO COMPLY WITH PARAGRAPHS 1, 3 AND 4 OF THE ORDERS MADE BY JUSTICE MACMILLAN ON 12 SEPTEMBER 2012

IT IS ORDERED THAT

1. Within 14 days of the date of this order the husband file and serve an up-to-date statement of financial circumstances.

2. Within 45 days of the date of this order the husband produce to the wife’s solicitors:

   a)     the documents required in paragraph 3 of the orders of 12 September 2012 and including for the financial year ending 30 June 2012;

   b)     all statements for all bank and like accounts operated by the husband personally or with any other person for the periods from 17 January 2008 to the present date;

   c)     all tax returns of the husband for the financial years ending 30 June 2008 to 30 June 2012;

   d)     in his capacity as a director all bank statements, credit card statements, operating accounts, cash books and cheque accounts from 17 January 2008 to present date; and

   e)     any financial agreement entered into by the husband with Ms D or any other person including any loan agreements since 17 January 2008.

3. The husband pay the wife’s costs of and incidental to the Contravention Application filed 22 October 2012, those costs to be assessed on a party-party basis.

4. The husband pay interest fixed in the sum of $1,575.00 for the period of 12 September 2012 ending 22 May 2013 on or before 4.00 pm on 22 June 2013.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Dougal & Dougal ( No 2) 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: MLC 9600 of 2009

Ms Dougal

Applicant

And

Mr Dougal

Respondent

REASONS

1. On 24 January 2013 I found that the husband had intentionally failed without reasonable excuse to comply with paragraphs 3 and 4 of my orders made 12 September 2012.  I adjourned the matter for further hearing before me on 15 March 2013. That was a hearing of both the alleged contravention of paragraph 1 of the order of 12 September 2012 and the determination of the sanctions, if any, to be imposed with respect to the husband’s contraventions of paragraphs 3 and 4 of that order.

2. Section 112AB of the Family Law Act 1975 (Cth) provides that a person is taken to have contravened orders when that person being bound by the order has intentionally failed to comply with the order or made no reasonable attempt to comply with the order. The circumstances in which a person is considered to have had a reasonable excuse for contravening an order include but are not limited to the following:

   a)    the respondent contravened the order because, or substantially because, he or she did not, at the time of the contravention, understand the obligations imposed by the order on the person who was bound by it, and;

   b)    the Court is satisfied that the respondent ought to be excused in respect of that contravention.

3. The standard of proof in contravention proceedings is in accordance with s 140 of the Evidence Act 1995 (Cth), which is on the balance of probabilities. The onus of proof is on the applicant in relation to the alleged breach and on the respondent with respect to proving that he or she had a reasonable excuse to contravene the order. I turn first to the alleged contravention of paragraph 1 of the order made 12 September 2012.

4. The husband was, and is again on this occasion, representing himself.  On 24 January 2013 the husband admitted he had not paid the sum of $25,526.50.  However, it was my view, based upon his affidavit filed 27 November 2012 and his submissions to me, although not as clearly articulated as might have been the case if he had been legally represented, that he had made that admission on the basis that he had said he had not had the financial resources to make the payment as ordered. 

5. On that basis, I adjourned the matter to allow the husband the opportunity to produce evidence and file further affidavits in support of his assertion that he did not have the financial resources to meet his obligation pursuant to the order.  There is no question that the husband has not or had not paid the sum owing.  The question, then, is whether or not he had a reasonable excuse for not having done so.  The husband filed a further affidavit on 15 February 2013 in which he deposed:  

   (a)not only that he had not had the financial resources to meet the payment but that the orders made by consent on 12 September 2012 were signed on his behalf but in his absence;

   (b)that he had sought an adjournment of the hearing of 12 September 2012 due to the state of his health at the time;

   (c)that he had sought that adjournment because, as a result of his substantial internal bleeding, his haemoglobin levels had fallen from around 155 to 107, but that this information had not been provided to the solicitor for the wife when the husband sought the adjournment of the matter;

   (d)that the effects of the blood loss had been lethargy, fainting, inability to lift certain objects, falling asleep and severe headaches;

   (e)that he was unaware that Mr Edmunds would be appearing on his behalf and, although he spoke to his solicitor on the day of the hearing, he did not, at that time, speak to Mr Edmunds;

   (f)that he was heavily sedated with Panadeine Forte when he spoke to his solicitor and does not recall any mention being made of the punitive element for breaches of consent orders in the Family Court; and

   (g)finally, that had he been aware of the ramifications of consenting to orders in circumstances where, he says, he was not then and is not now in a position to pay the amount ordered, he would not have consented to the orders.

6. The husband annexed copies of blood test results dated 6 August 2012 to his affidavit.  However, there is no evidence as to any treatment that may have taken place between August 2012 and the hearing on 12 September 2012 or what his stated health may have been as at the date of the hearing.  There is also no evidence in support of his assertion that he was heavily sedated with Panadeine Forte on the date the orders were made.  I have previously found that I am satisfied that the husband was aware of the orders that were to be made, that he consented to the orders and that he understood the obligations they imposed upon him.  Nothing in the further recent affidavit filed by the husband would cause me to conclude that was not the case.

7. The husband’s answers in cross-examination were evasive and equivocal.  On the one hand he acknowledged that he never had the capacity to pay the amount the order required but, when it was put to him that therefore he had never intended to pay, he said that was not necessarily the case. However, he ultimately conceded that it could be inferred that if he had never had the capacity to pay then it followed that he had never intended to pay.  He finally said that he would have preferred to pay and had done a bit of a run-around, albeit unsuccessfully, to see if he could borrow the money he needed to comply with the order.  The husband in his affidavit filed 15 February 2013 deposed that his current financial position is that:

   … my only assets are a car that is off the road and may cost as much to repair it as it is worth, and a twenty-five percent share in the possible end value of a company set up as estate planning, subject to there being value in it at the time it is wound up, which, according to Justice Cronin in his reasons for [judgment dated 17] January 2008 [at paragraphs] 77, 78 [and] 82, is beyond my control.

8. He further deposed that he had liabilities which he said have carried over from the earlier proceedings including debts to Westpac, Visa, GE Money, MasterCard and the ATO, together with several smaller creditors that may amount to a further $10,000.  He annexed documents to that affidavit with respect to these liabilities.  The husband also deposed that insofar as had been suggested by counsel for the wife that he owned a boat, he no longer had an interest in that boat and had transferred it to settle amounts owing. He annexed a copy of the VicRoads Certificate of Registration of a Vessel to his affidavit. 

9. The husband bears the onus of establishing that he has a reasonable excuse for not complying with paragraph 1 of the orders made 12 September 2012.  It was submitted by Mr Sweeney on behalf of the wife that he has not discharged that onus.  Mr Sweeney submitted that the husband has not produced any tax returns from which it might be possible to ascertain his current financial circumstances and the documents that he has produced with respect to his alleged liabilities are historical. 

10. The documents that have been annexed to his affidavit in relation to the Westpac Visa card are a final notice from ACM Group Proprietary Limited dated 3 April 2012 and statement for the account for the period 13 July 2011 to 14 August 2011.  The documents in relation to the MasterCard debt are a statement for the period 19 July till 18 August 2011 and a letter from Lime Finance Proprietary Limited date 31 May 2012. The evidence in relation to the alleged tax debt is a statement issued 2 August 2012. 

11. The husband was also cross-examined in relation to the disposal of his interest in the boat to which he refers in his affidavit.  The husband annexed to his affidavit a copy of the certificate of registration for the vessel.  According to that document the registered owner of the vessel is Ms D, with whom the husband now lives.  On the day of the hearing the husband produced a copy of the vessel sale and purchase agreement dated 15 January 2011 which provides for the sale of the vessel for $65,000.  When he was asked about what, if any, money had changed hands he said as follows:

    (a)That the vessel had been purchased for $90,000;

    (b)He had contributed $70,000 and his partner had contributed $20,000;

    (c)It had not been valued for the purposes of sale;

    (d)That, notwithstanding that the sale agreement provided for a sale price of $65,000, no money had changed hands because he owed his partner in the order of $45,000 and was continuing to borrow money from his partner, hence the level of that debt was increasing; and

    (e)The vessel was transferred to his partner in lieu of payment.

12. The husband later said that the debt to his partner was in the vicinity of $30,000 and rising.  Although he said he could not recall exactly how much his partner said he owed her, they had entered into an agreement in early 2011 which dealt with the general running of the house on which it required him to participate and he had not produced that agreement but he did not believe that the agreement referred to any liability he might have to his partner.

13. I am left with little confidence on the basis of the husband’s evidence and in particular, having heard the cross-examination of the husband, that he owed his partner $30,000, $40,000, $45,000 or, in fact, any amount at all, or that he transferred the vessel to her to meet any obligation he might have to her.  The husband relied upon the fact that the transfer of the vessel occurred prior to the making of the orders and, to that extent, could not be said to have been intended to frustrate those orders.  However, this ignores the fact that the orders made on 12 September 2012 were made in response to the wife’s application to enforce the orders made 17 January 2008 and 7 December 2009, well before the transfer of the vessel.

14. The husband’s evidence is that he did not have the capacity to pay the sum of $25,526.50 either at the time the orders were made or, for that matter, now.  It follows, logically, in my view, that having consented to the orders that he said he did not have the capacity to pay, that he did not intend to make the payments required by those orders.  I am satisfied on the balance of the probabilities on the basis of the evidence before me that the husband has intentionally failed to comply with paragraph 1 of the orders of 12 September 2012.  I am not satisfied on the balance of probabilities, on the basis of the husband’s evidence, that he has a reasonable excuse of contravening the orders.  Accordingly, I find that the husband has intentionally failed, without reasonable excuse, to comply with paragraph 1 of the orders made 12 September 2012.

15. A contravention of an order is a serious matter.  In this case I have found that the husband has contravened paragraphs 1, 3 and 4 of the order made 12 September 2012 as follows:   

    1.That on or before 12 October 2012 (“the Date”) the Respondent pay to the Applicant’s solicitor, Peter Falconer & Associates the sum of $25,526.50 (“the Payment”) being all monies due and payable to the Applicant pursuant to paragraph 1 of the Orders of the Court made on 7 December 2009, interest thereon to date and the Applicant’s costs of this Application.

    2.That on or before the Date pursuant to paragraph 3(c) of the Orders of the Court made on 17 January 2008, the Respondent, in his capacity as Director of V Pty Ltd (“the Company”) provide to the Applicant a copy of the financial documents of the Company for the financial years ending 30 June 2010 and 30 June 2011 and in each year thereafter such financial documents in each year be provided by the Respondent to the Applicant on or before 31 December commencing on 31 December 2012.

    3.That on or before the Date, pursuant to paragraph 6 of the Orders of the Court made on 17 December 2008, the Respondent provide to the Applicant a copy of the Respondent’s income Taxation Return for the financial year ending 30 June 2009.

16. The other feature of this case is that, at least with respect to the payment of the sum of $25,526 that order was made to enforce a payment that was required pursuant to earlier orders.  However, I am mindful of the fact that the underlying purpose of proceedings with respect to the contravention of an order is to secure compliance with that order and the question, in this case, is how any penalty I might impose might achieve the husband’s compliance with that order.

17. The sanctions that are available to me include sentencing the husband to a term of imprisonment, requiring him to enter into a bond to be of good behaviour, or a fine, or it is open to me to make other orders that I consider appropriate in these circumstances.  Counsel for the wife has submitted that I should impose a three month term of imprisonment, that it should be suspended for 30 days to allow the husband to comply with the orders, and he has also sought that the husband produce various documents which, I assume, are for the purposes of pursuing the payment of the amount that is owed. 

18. I am not satisfied in all of the circumstances of this case, where there are other sanctions available, that it would be appropriate to impose a term of imprisonment.  I take into account the fact that there are other ways in which this order might have been enforced other than by way of the contravention but that that was not the course that was adopted.  I am not satisfied that the imposition of the fine would be likely to ensure the husband’s compliance with the order and, to the contrary, it might only serve to delay payment of the sum owing to the wife pursuant to the others.

19. I have also given serious consideration to the imposition of a community service order and considered requiring the husband to enter into a bond for a period of 12 months, giving him the opportunity to meet his obligations pursuant to the order and the opportunity to be released from the obligations of that bond, having done so.  However, I am not satisfied that any of these options are likely to ensure his compliance with the order and this really highlights what I have already mentioned, the fact that although I found that the husband has contravened the order, that contravention proceedings may not be the most effective way for the wife to secure payment of what she is owed pursuant to the orders.

20. Counsel for the wife at the hearing foreshadowed that the wife intends to institute enforcement proceedings to enforce the monies owing to her pursuant to the order and submitted that I should make an order requiring the husband to produce the agreement he said he and his partner Ms D entered into in early 2011.  Mr Hutchins has now submitted that I should make further orders for the provision of financial documents which, as I have indicated, are obviously intended for the purposes of those enforcement proceedings.

21. In all of the circumstances, I do propose to make orders for the production of those documents.  I do consider that the appropriate course is for the wife to take enforcement proceedings.  However, I also make the point, with some force, and have done so already to the husband, that this is a slippery slope and if he does not comply with orders he has already been found to have contravened, ultimately the sanctions will arguably become increasingly punitive, from his point of view, if he does fail to comply.

22. I would urge him to comply with the orders that I propose to make this day and any further orders that are ultimately made as a result of these proceedings.  So in all of the circumstances, I propose to make the orders with respect to the provision of documents sought by Mr Hutchins. I do not propose however, to impose any other penalty in relation to the contraventions before me today. 

RECORDED  :  NOT TRANSCRIBED

1. The wife in this case makes an application for costs on an indemnity basis.  Those costs are made up of solicitors’ fees to 24 January 2013 which are said to be $13,812, professional fees from 21 January 2013 to 15 March 2013 which are calculated at $2,350.40 and disbursements to 15 March 2013 which are $5,710.96, counsel’s fee for the hearing before me today is $2,500, making the total of $24,372.  The only evidence I have before me of the solicitors’ fees to 24 January 2013 is a schedule to the interim account as at 24 January 2013.  I have not been provided with a copy of any costs agreement and that schedule of fees is not itemised. 

2. The general rule is that each party to proceedings in this Court shall bear his or her own costs of the proceedings. That general rule is subject to s 117(2) of the Family Law Act 1975 (Cth) which provides that if the Court is of the opinion that there are circumstances that justify doing so, it may make such order as to the costs as it considers just. Section 117(2A) sets out the matters the Court must have regard to in determining what, if any, orders should be made for costs insofar as they are relevant. The weight to be given to those matters is a matter for the Court’s discretion.

3. In this case neither party was in receipt of Legal Aid.  Submissions have not been made to me with respect to the wife’s financial circumstances and in relation to these proceedings, I have found on the evidence that I am not satisfied on the balance of probabilities  that the husband did not have the funds necessary to enable him to comply with the order.  In those circumstances, I certainly do not have evidence from which I can be satisfied that the husband would not be able to meet an order for costs in this case. 

1. The conduct of the husband in relation to these proceedings is relied upon by the wife in support of her application that not only should the husband pay costs, but they should be indemnity costs.  It is true that there have been a number of hearings, two of which arise directly from the husband’s contravention of the orders and the hearing before me today is for the purposes of giving judgment and dealing with the penalty phase of the proceedings.

2. The husband is self-represented and I am not satisfied, as submitted on behalf of the wife, that, insofar as the way in which he has conducted these proceedings, there has been a deliberate attempt on his part to delay and obfuscate.  He has not satisfied me on the balance of probabilities on the basis of the evidence he adduced that he had a reasonable excuse for not complying with the order, however, that is a different matter. Clearly these proceedings were necessitated by his failure to comply with the previous orders and I have found that he has contravened those orders.  That speaks for itself.

3. He has also been wholly unsuccessful and the wife has been wholly successful, however I am conscious of the fact that in terms of enforcement, whilst the wife is entitled to bring contravention proceedings and one might have hoped that contravention proceedings may have led to payment of the moneys that are outstanding, there are also other proceedings which she could take in order to enforce that payment. 

4. There is no evidence of any offers made in writing by either party, although the husband now refers to the possibility of entering into negotiations to make the payments he is required to make.  I have to say, given the history of the matter to date, I am not greatly confident that that will occur.

5. In relation to the question of indemnity costs it is clear, and I think conceded by counsel for the wife, that for the Court to make an order for indemnity costs, there needs to be exceptional circumstances.  It is submitted that these are exceptional circumstances.  I am not satisfied that that is the case.  The husband has been found to have contravened an order, but that of itself is not an exceptional circumstance and the whole nature of those circumstances being exceptional is that they must be something beyond what is commonly seen in applications perhaps, of this kind, and I do not find that to be so in this particular application.

6. The husband has failed to comply with the initial orders, he has now failed to comply with the orders made in September last year, however, in my view that does not take the matter to the point of being exceptional. I am also not satisfied particularly in circumstances where I have not been provided with details with respect to either a costs agreement or the costs that have been incurred, that it would be appropriate to make an order in the terms sought by the wife.  I am however, satisfied that I should exercise my discretion in favour of the wife and make an order for costs, and there are circumstances in this case that would certainly justify me doing so.

7. Given the situation with respect to the details of those costs, although I could, if I were provided with those details, make an order for a specific amount of costs, it is submitted on behalf of the wife that in the absence of that detailed information with respect to the costs, that there is no alternative but to order that those costs be assessed and I propose to do that. 

RECORDED:  NOT TRANSCRIBED

ORDERS DELIVERED

1. Further application has been made that pursuant to paragraph 2 of the order made 12 September 2009 the husband should be required to pay interest calculated as from 12 September 2012 to date in the sum of $1,575, that being interest owing on the principal sum of $25,526.50.  The husband has not challenged the calculation of that interest, however he objects to the payment of that interest on the basis that that interest has accrued on the basis that payment has been delayed because of these proceedings.  There is no evidence that the husband has paid any of the principal sum of $25,526.50 to date and in those circumstances it cannot be said that the delay in the payment is caused by these proceedings.  The interest has accrued, as I have found, as a result of the husband’s failure to comply with paragraph 1 of the orders of 12 September 2012, and on that basis I propose to order that the husband pay interest fixed in the sum of $1,575 for the period 12 September 2012 to 22 May 2013.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 22 May 2013.

Associate: 

Date:  31 October 2014