Eastmond and Halden (No 2)

[2020] FamCA 71

FAMILY COURT OF AUSTRALIA

EASTMOND & HALDEN (NO. 2) [2020] FamCA 71

FAMILY LAW – COSTS – Where, on the first day of trial, the Applicant made an application for an adjournment to produce an amended application – Where the application was refused – Where the Applicant withdrew and discontinued his application – Where the Respondent sought costs  arising from the period between trial directions and trial – Where the Applicant opposes a costs order – Where the Applicant is wholly unsuccessful – Where the Applicant was given opportunity to amend his application and did not do so – Where the Respondent made an offer of settlement to which the Applicant did not accept, and did not make an offer himself – Where the Applicant is retired, is in frail health and has minimal assets – Where there are no funds in the estate to cover costs – Application refused

Family Law Act 1975 (Cth) s 117

APPLICANT: Mr Eastmond

RESPONDENT: Mr Halden as executor of the estate of the late Ms Eastmond

FILE NUMBER: LEC 2 of 2017

DATE DELIVERED: 12 February 2020

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 30 January 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Apelbaum

SOLICITOR FOR THE APPLICANT: Glaser Lawyers

COUNSEL FOR THE RESPONDENT: Mr Rugendyke

SOLICITOR FOR THE RESPONDENT: Harris Kelly & Associates Lawyers

Orders

1. The oral application of the Respondent made on 30 January 2020 for costs is dismissed.

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 Eastmond & Halden 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 NEWCASTLE

FILE NUMBER: LEC 2 of 2017

Mr Eastmond

Applicant

And

Mr Halden as executor of the estate of the late Ms Eastmond

Respondent

REASONS FOR JUDGMENT

Introduction  

1. This is an oral application for costs made by Mr Halden (“the Respondent”) against the Applicant husband (“the Husband”) on 30 January 2020.

2. The application arose during the course of a trial. The trial, allocated for three days, commenced on Wednesday 29 January 2020.

3. On that first day, an oral application was made by the Husband for an adjournment of the trial. The purpose of the adjournment was to enable an Amended Application to be prepared. The application was refused for the reasons given.

4. The Husband thereafter sought, and was granted leave, to discontinue his application.

5. The Respondent sought costs in the sum of $37,000.

6. Submissions were made orally. 

7. The matter was stood over for orders and ex-tempore reasons to be given.

8. These are those orders and reasons which should be read in conjunction with the orders and reasons of 29 January 2020.

The Law

1. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) states:

   Subject to subsection (1) [and other sections irrelevant here] each party to proceedings under this Act shall bear his or her own costs.

2. That is the general principle on costs.

3. Subsection (2) states:

   If in proceedings under this Act, the Court is of opinion that there are circumstances that justify it in doing so, the Court may subject to certain sections (2A), (4), (4A), (5) and (6) [of which only 2A is relevant here] and the applicable Rules of the Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise as the Court considers just.

4. In the circumstances of the application of the Husband being withdrawn, the Court is of the opinion that the discretion of the Court as to whether there should be a departure from the general principle is enlivened.

5. Accordingly, there are seven considerations s 117(2A) (a-g) of the Act to which the Court much have regard if relevant.

6. I do so now:

(a) The financial circumstances of each of the parties

The Applicant Husband

1. The Husband is a tradesman, long retired. He is aged 76.

2. In his Financial Statement filed in these proceedings on 5 January 2017, the Husband disclosed income of $516/week from combined pensions – Australian and Country M.

3. He was paying rent of $260 which left $256 for all other bills and expenses.

4. He had a term deposit of $100,000 and $12,000 in a personal account, a 13 year old car and household contents.

5. The Husband did not file an updated Financial Statement but in his trial affidavit he disclosed a decline in his finances. He has a total of $35,948 in three accounts, two vehicles with a combined worth of $6,000 and furniture worth $1000.

6. The Husband again confirmed having no superannuation interests and denied having funds in his solicitors trust account.

The Respondent - Mr Halden

1. The late Ms Eastmond (the wife) was, until she died, the First Respondent.  She had a case guardian from the outset of proceedings.

2. The Respondent, Mr Halden, is the executor of the estate of the wife (his late mother).

3. Until his mother died Mr Halden was the Second Respondent.

4. After his mother’s death he became the sole Respondent.

5. The minimal assets of the estate of the wife were disclosed in his affidavit.[1]  The net total was $6981. Even this small residual amount had been agreed by the beneficiaries of the Will of the wife to be applied to the interment of their mother’s ashes.

   [1] Affidavit of Mr Halden filed 8/11/2019, pars 45-53.

(b) Whether any party to the proceedings is in receipt of assistance by way of Legal Aid

1. Neither party had a grant of Legal Aid.

(c) The conduct of the parties to the proceedings

1. The proceedings took three years to come to trial.

2. The death of the wife and the transfer of the matter from the Federal Circuit Court to the Family Court of Australia and between registries within this Court were the main causes of the time taken.

3. The original application of the Husband, that the matrimonial asset pool be divided equally was not amended, not after the death of the wife, not at all.

4. In order to run the arguments ultimately raised about trusts and setting aside of dispositions (s 106B of the Act) an amended document was essential.

5. The last opportunity arose in May 2019 when this Court directed the Husband to file any amended application he wished to rely on, by 3 July 2019.

6. No amended application was filed.  Further, despite requests, the Husband failed to articulate his claim by points of claim or in any other way.

7. The situation was a complex one for the Husband to understand no doubt. He had for the last 12 years of his marriage received the benefit of trust income from the Halden Eastmond trust, amply providing for his needs and those of his late wife (1998 - 2010). After separation in 2010 he no longer received that benefit.

8. The Husband is 76 and in frail health.

9. In 1998 when he sat, as he said he did, in the office of Mr V, the chartered accountant who set up the original Halden Eastmond trust, it must have been clear to the Husband that he was not a trustee nor an office holder nor a beneficiary of the trust in the formal sense.

10. He was however the beneficiary of the wife’s decision to fund joint living expenses from the trust.

11. Over the past almost 10 years since separation he may have come to believe that he did have a legal right to income from the trust and that it should have continued. The untested evidence very strongly suggested that the Husband did not have a right to trust income and that he must have known that at the relevant time.

(d) A failure to comply with previous Court Orders

1. Not Applicable.

(e) Whether any party has been wholly unsuccessful

1. The Husband, it is properly conceded, has been wholly unsuccessful.

(f) Whether either party has made an offer in writing to the other party to settle the proceedings

1. There was an offer in writing made by the Respondent on 1 October 2019.[2] The offer was for the sum of $10,000 to be paid by the Respondent. All outstanding applications be dismissed. Each party to pay their own costs. Open for 21 days.

   [2] Exhibit 1.

2. Self-evidently the offer was not accepted.

3. There was said to be a response but it was not tendered into evidence.

4. No offer to settle was apparently made by the Husband.

5. The costs incurred to date of trial by the Husband are $71,767.50 of which $44,968 has been paid. The balance of $26,799 is outstanding. Projected costs for the trial were estimated to be $28,500 plus GST.[3]

   [3] Exhibit 4.

6. The costs sought by the Respondent were confined to the period between trial directions in May 2019:

   $20,438         Solicitor’s costs at scale

   $  1,630         Disbursements

   $15,000         Counsel – 3 days

   $37,068

7. It is modest in the context of costs paid to date $71,246[4] with a further $30,000 anticipated to cover trial costs.

(g) Other relevant matters

[4] Exhibit 3.

Capacity of Husband

1. The Husband ceased work in 1994 due to gradual aggravation of a back injury incurred in 1967.

2. Within his trial affidavit is an extensive list of medical conditions[5] and restriction on physical capacity.

   [5] Affidavit of the Mr Eastmond filed 21/11/2019, pars 37(a)-(r).

3. There are references by the Husband to medical records H19 and H20 but those documents, two Aged Care Assessments from 2013, were not in fact annexed. The Court was able to extract the relevant annexures from the material subpoenaed.

4. Likewise, there was a list of eight medications the Applicant Husband was taking but a doctor’s Patient Summary apparently undertaken on 8 May 2019 said to be annexed, was not in fact annexed.

5. There was no relevant medical evidence other than a confirmation by pathology report of high lead levels in the Husband’s blood.

6. There is evidence from the husband himself of serious memory problems.  A note in his Financial Questionnaire to that effect:[6]

   Due to cancer, its treatment, and exposure to lead poisoning, I am very unwell and have a very poor recollection of my past assets and liabilities.

   [6] Financial Questionnaire of the Mr Eastmond filed 3/01/2019, par 4.

7. The Respondent through his lawyers raised memory problems and capacity of the Husband more than once.

8. The solicitor for the Husband confirmed to the Court that his client had capacity to participate in the trial although he was foreshadowed to need breaks during cross-examination.

9. Accordingly, the Court is entitled to rely on that information and hold the Husband to the decision he made to continue.

Timing of adjournment and advice

1. Affidavits were filed and served on 8 November 2019. 

2. Having read that material, the Husband and his advisers must have known that the application as it stood had to fail and should have been amended. The remaining assets in the estate were $7000.

3. There was real complexity in the history of sequential trust funds established after 1998 and a very substantial risk associated with claiming that trusts had been established for the Husband or that any actions had been taken to avoid orders of this Court.

4. However there was an arguable case although not a strong one.

5. An application to vacate dates and amend even at that stage had some prospects of success, certainly better than on the first day of trial.

6. The advice of Counsel for the Husband, so recently sought, could have been sought earlier to good effect.

7. To the extent that the Husband and his solicitor hoped that somehow a suitable remedy would emerge from the trial that hope must surely have expired when all the evidence including that of Mr V had been read by them.

Timing of Application

1. The Husband made his application in January 2017. By that time the wife had been in an aged care facility for almost two years. Her health had deteriorated and she was no longer able to manage her own financial affairs.

2. The significance of that was that there could be no conciliation conference or mediation between the parties themselves. There was no reality testing about how the inherited funds of the wife had been vested in a trust and used.

3. A Case Guardian was appointed and so the matter proceeded.

CONCLUSION

1. Taking all those factors into account there is a strong case for the Husband to pay costs.

2. It is inequitable for the Respondent to pay the costs of the estate, and of himself as Respondent, from his own resources where the estate has no funds.

3. Despite that unfairness I do not propose to make an order for costs. After a thirty year marriage, with the last 12 years being financially secure and comfortable the Husband not unreasonably took the view that he was entitled to something.

4. He has minimal funds and failing health. He is much worse of for having pursued the litigation.

5. His own costs will be a matter for discussion between himself and his solicitor but the Husband has no capacity to pay even limited party/party costs.

6. A costs order is made to rectify not punish.

7. Accordingly the oral application for costs is dismissed. An order is made accordingly.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 12 February 2020.

Associate: 

Date:  12 February 2020