Fadley and Southwell
[2016] FamCA 513
•24 June 2016
FAMILY COURT OF AUSTRALIA
| FADLEY & SOUTHWELL | [2016] FamCA 513 |
| FAMILY LAW – PRELIMINARY COSTS – Where the husband seeks that a preliminary costs order be made to enable him to meet his litigation costs –Where the wife seeks that the husband’s application be dismissed – Where the husband submits that he has an arguable case for substantive relief – Where the husband submits that the Court need not consider what the husband is likely to receive in substantive property proceedings and whether that will be sufficient to cover a preliminary costs order – Where the wife submits there must be a finding of justifying circumstances for making an order and that any order made is just – Where the wife submits that the husband has been in a de facto relationship with another woman for much of the duration of the de facto relationship between the husband and the wife – Where the wife submits that the husband has hidden joint company assets – Where the wife suspects that the husband provided funds to his current de facto spouse towards the purchase of her property – Where the contributions of the parties appear to fall heavily in favour of the wife – Where the Court is not persuaded that there are circumstances justifying the making of a preliminary costs order – Where the husband has not established circumstances justifying departure from the position that each party bear his or her own costs – Application dismissed. |
| Family Law Act 1975 (Cth) – s 117 |
| Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Zschokke & Zschokke (1996) FLC 92-693 |
| APPLICANT: | Mr Fadley |
| RESPONDENT: | Ms Southwell |
| FILE NUMBER: | SYC | 2196 | of | 2014 |
| DATE DELIVERED: | 24 June 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston J |
| HEARING DATE: | 2 June 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr White |
| SOLICITOR FOR THE APPLICANT: | Hudson Law |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson, SC |
| SOLICITOR FOR THE RESPONDENT: | Swaab Attorneys |
Orders
That the Application in a Case filed by Mr Fadley on 18 November 2015 is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fadley & Southwell 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 SYDNEY |
FILE NUMBER: SYC 2196 of 2014
| Mr Fadley |
Applicant
And
| Ms Southwell |
Respondent
REASONS FOR JUDGMENT
These are proceedings about preliminary costs.
Mr Fadley and Ms Southwell were parties to a de facto relationship between approximately 2002 and 2012. They are referred to in their affidavits as the “de facto husband” and “de facto wife” respectively. But for convenience I shall refer to them as the “husband” and the “wife”. I shall refer to them collectively as “the parties”.
The husband seeks the following orders:
1. The wife pay to the husband the sum of $256,914.13 by way of interim distribution; or
2. That by way of an interim costs order pursuant to s 117 of the Family Law Act 1975, the solicitor for the wife pay the sum of $256,914.13 into a controlled monies account that the solicitor for the husband holds for the husband and wife (ANZ account …) (the Controlled Monies Account);
3. The solicitor for the husband be at liberty to access funds in the Controlled Monies Account for the purpose of paying costs and disbursements of the husband in prosecuting his claim in these proceedings, including the costs and disbursements of the husband in prosecuting or defending any interlocutory applications in these proceedings; OR
4.In the alternative, the wife pay to the husband the amount of $69,364.13 in respect of his outstanding legal fees as at 13 November 2015 and that going forward the wife pay such sum as the wife pays for legal costs and fees in these proceedings on a “dollar by dollar” basis with payments to be paid each month.
5. The wife pay the husband’s costs of the husband’s Application in a Case dated 13 November 2015
The orders sought in that Application are opposed. The wife seeks that the application be dismissed and that the husband pay her costs of the application.
There is a third respondent in the parties’ substantive property proceedings namely Ms I and for convenience I shall refer to her as “Ms I”. She is the husband’s de facto spouse.
Background
The background matters are as follows.
The wife was born in 1953 in the United States of America (“the US”). The husband was born in 1958 in Australia. The parties met in March 1999 at an exhibition in Melbourne. From the time of their meeting the parties would visit one another for periods of time. They commenced to cohabit in early 2000. They separated on 4 October 2012.
At the commencement of cohabitation the husband was employed as a public servant. At this time his property consisted of various collections, a motor vehicle, some personal effects and an interest in the Commonwealth Superannuation Scheme. The husband had also recently received $60 000 by way of property settlement from his former wife. The wife asserts that these collections had a value at the time of approximately $90 000. The husband asserts that their value was $500 000. This is clearly an issue for trial.
At this time the wife was a senior vice president of J Inc., an American company.
At the commencement of cohabitation the wife owned assets with a value of approximately $15 million. Her income during 2000 was US$300 000 plus bonus and stock options. She said that her income for the US financial year ending 2000 was a total of US$7 986 445.
Upon the parties commencing cohabitation they lived at times at the husband’s rented unit at Suburb K and at times at the wife’s home in the US. They travelled extensively together including to visit some collectables exhibitions including Europe and Asia. The husband had taken leave, including long service leave, from his employment with the public service.
In 2002 the wife purchased a new motor vehicle and gave this to the husband.
In 2002 the parties opened a joint personal bank account with the National Australia Bank. At this time also an account was opened in the husband’s name with the Wells Fargo Bank in the US. The wife regularly deposited funds to that account for the husband’s personal use.
In July 2002 the husband resigned from the public service and later in 2002 the wife resigned from her employment with J Inc.. They had purchased an business, Business B, and a aligned business Business C. They registered a business name Business E for this business.
This business had been based in Melbourne and the parties relocated its operation and head office to Sydney in early 2002.
In August 2002 the wife purchased an apartment in the joint names of her and the husband at Property F, G Street, Sydney. The purchase price of $4 000 000 plus costs was funded by the wife from a deposit from her own funds and a loan of approximately $2.8 million. The husband gave a guarantee in respect of the loan.
Initially the business was purchased in partnership with Mr G, the parties interest costing $250 000 which the wife paid. In March 2004 the wife purchased Mr G’s interest in the business for $300 000. The effect was that from that time the wife owned 75 percent of the shares and the husband owned 25 percent thereof.
In May 2004 the wife established a $200 000 line of credit with the National Australia Bank to facilitate the purchase of stock. A few months later she increased the line of credit to $900 000 by depositing approximately $700 000 to the account. In June 2007 the wife increased the line of credit to $1 450 000.
In 2005 the husband and the wife established a company W Pty Limited (“W”) and subsequently operated the business through this company.
In late 2006 the wife discovered that the husband was in what she asserted was a de facto relationship with Ms I. I shall refer to this matter again below.
In December 2009 the husband was diagnosed with prostate cancer and in early 2010 he underwent surgery.
In October 2012 the parties separated.
In July 2013 the husband appears to have abandoned the business.
By December 2013 the balance of the business working accounts was insufficient to pay the business rent. So the wife relocated the business office to the premises of an employee Mr K. Then the wife discovered that boxes which had been kept at the Property F apartment contained approximately $2 000 000 worth of business material. The wife said that she had no idea that the husband had accumulated such a substantial amount of material. The wife said that she was particularly concerned to discover this because in June 2011, on the advice of the parties’ accountant, she had forgiven a debt owed to her by the business of $1 368 657. She said that she did this because she understood, given the state of the business assets, that she could not be repaid this debt.
In August 2013 the husband withdrew almost $12 000 from his superannuation.
In April 2014 the husband withdrew $393 703 from his superannuation.
On 11 April 2014 the husband commenced these proceedings and obtained orders ex parte which placed the wife’s details on the airport watch list. On 13 April 2014 the wife was prevented from boarding an aircraft about to fly to the US.
On 14 April 2014 various orders were made by consent. These were replaced by consent orders made on 22 April 2014 which restrained each of the parties from taking any business material out of Australia, required certain material to be secured, required proceeds of sale of material to be deposited to the trust account of the husband’s solicitor and made provision for matters of disclosure, and other matters.
On 30 June 2014 the husband took the unexpected and somewhat unusual course of also commencing proceedings in the Supreme Court of New South Wales in relation to property of the business. The wife subsequently filed an application in this Court to restrain the prosecution of those proceedings and on 17 October 2014 Stevenson J made orders to this effect.
On 5 December 2014 the wife filed an Amended Response in which she joined Ms I as a party to the proceedings.
In September 2015 orders were made which appointed the wife as managing director and financial controller of W, and which restrained the husband from being involved in the business.
On 9 September 2015 an application by Ms I to be removed as a party to proceedings was dismissed.
In June 2016, at the time of this hearing, apparently the husband was on holiday in the US accompanied by Ms I.
The Husband’s Case
The submissions on behalf of the husband were as follows.
The husband is seeking that a costs order be made pursuant to s 117(2) of the Family Law Act 1975 (Cth) (“the Act”). He seeks sufficient funds to enable him to meet his litigation costs including for the final hearing. His solicitor estimates such costs to be approximately $170 500 and he has unpaid legal costs of $69 364. This would be a total of $239 864, although he is seeking $256 914.
The relevant principles are set out in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 and Zschokke & Zschokke (1996) FLC 92-693. In Zschokke at 83,217 the Full Court said three matters are relevant:
-a position of relative financial strength on the part of the respondent;
-a capacity on the part of the respondent to meet his/her own litigation costs; and
-an inability on the part of the applicant to meet his/her own litigation costs.
(The first two of the above matters were conceded on behalf of the respondent)
The Court is to consider whether in the circumstances it will be possible to take into account in the final property proceedings any sum that might be payable under the order.
In Paris King Investments Pty Limited v Rayhill [2006] NSWSC 578 Brereton J said that in addition to the above three matters the following matters are relevant at [30] to [32]:
-an applicant should have “at least an arguable case for substantive relief which deserves to be heard”;
-there should be evidence of the applicant’s likely costs of the litigation;
-it is not essential that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis;
-an order may make provision for litigation expenses at a rate that appears reasonable in all the circumstances;
-an order can be for costs already incurred as well as for future costs and such matters as well as the question of whether the applicant’s lawyers will continue to act in the absence of a litigation costs order may be relevant to the discretion to make an order and the quantum thereof;
-any such order should be framed to protect the parties from risk of injustice which could be done by requiring the funds to be administered by the applicant’s solicitors and applied only to meet the expenses referred to in the order.
The husband is unable to meet his litigation costs. His weekly income is $997. His weekly personal expenditure is $1049. He uses savings to pay the deficiency. His assets consist of the business to which the husband attributes a value of $406 064 (the ownership and value of this business is in issue), the collections which the husband says have a value of $1 952 000, more than $203 000 in the controlled monies account and amounts he estimates of $35 737 and $50 550 which he says he is owed by the business. But none of these assets is available to him at present. The husband did have some superannuation but he drew this down to pay expenses and debts.
Therefore, he is unable to pay his legal representatives and needs to be provided with funds to do so.
In terms of having an arguable case, the husband came into the relationship with a valuable collection. He used his expertise and experience as an as a public servant to grow the parties’ business. There are the valuable collections referred to above and by virtue of his expertise and contributions he has an arguable case that he is entitled at least to a significant portion of these collections. This leaves aside all his contributions, both direct financial contributions and non-financial contributions, including contributions to the relationship which enabled the wife to fulfil her senior role in J Inc.. In all these circumstances the husband can establish an arguable case for substantive relief.
The court does not have to enter into an exercise of considering what the husband is likely to receive in the substantive proceedings and whether this will be sufficient to cover the amount the court ordered in his favour by way of preliminary costs.
The husband’s solicitor has deposed to not being able to continue to act for the husband if his fees are not paid.
The Wife’s Case
The submissions on behalf of the wife were as follows.
The husband’s claim is entirely reliant on s 117 and therefore the Court must find firstly that there are justifying circumstances for making an order and secondly, that any order made is just. The husband carries the onus of proving each and if he is unable to do so the matter ends there. The term “just” means just on the facts of the case not merely just to the husband.
In relation to the husband’s assertion that he “grew” a 90 000 collection into collections with a value of approximately $2.3 million this is controversial. The husband does not put any evidence which even put this as a contention let alone which demonstrates the underlying facts. He has not filed any evidence of what materials he had at the outset and how any such materials were traded to produce something else.
Some facts are not in dispute. For instance, the wife has used $7.5 million of her own money brought from the US which was used towards the purchase of the Property F apartment and which went into the business.
The wife raises very serious issues about the husband’s role in the business. She says that he did things which amounted to taking money which should have been used for the business or which should have been for the wife, and putting such money into his own name. Given these allegations and the much more substantial contributions made by the wife, the wife says that the husband ought not receive any substantive order for any of the property associated with him and the wife. And she says that in all these circumstances, it is most important for the husband to disclose his own financial circumstances. But he has not done so. He last filed a Financial Statement in February 2015. And his solicitor, Peter Raymond Hudson, swore an affidavit on 18 November 2015 which purports to provide information about the husband’s financial circumstances. Amongst other things his solicitor asserts that the husband has average gross weekly income of $997 and weekly personal expenditure of $1049. This would be a deficiency of $52 per week. But the solicitor also said that the husband has been paying off a debt to the Australian Taxation Office at the rate of $1000 per week. Therefore this would be weekly personal expenditure of $2049. So the deficiency is $1052 per week ($997 - $2049 = -$1052) not $52 per week. Yet neither the solicitor nor the husband have explained how the husband meets the deficiency.
In all these circumstances, where the wife has raised very serious questions concerning the husband’s management of her money and money which was supposed to be used for company purposes, and where the husband’s financial circumstances are far from clear, it would be most important for the husband to explain how his present visit to the US apparently accompanied by Ms I, is being funded and why such funds could not have been available to pay towards his legal costs.
The wife has suffered the loss of some millions of dollars in supporting the business, the Property F apartment and the relationship and it would not be just for her to have to suffer those losses without the husband being required to share in the losses. In the case of Browne & Green (1999) FLC 92-873 the Full Court overturned the trial judge who had found that substantial losses in a business venture of the husband would have to be absorbed by him thereby absolving the wife from any responsibility therefor. In the present case the wife has in effect lost all of the money she has brought to Australia over the years which is approximately $5 million and it would be unjust for her to be required to bear this loss on her own.
The wife contends that she was duped by the husband. She contends that Ms I, the husband’s de facto spouse, was in a relationship with him such that they were living together for much of the duration of the more than 12 years that he and the wife cohabited. That is, at the times when the wife returned to the US, namely, month about, the husband was living with Ms I.
The husband has denied this and has deposed in his affidavit that he was not in a de facto relationship with Ms I at any time during his de facto relationship with the wife. He said that during periods when the wife was in the US and he was in Australia he “always” lived at the Property F or L apartments. He acknowledged that he spent many weeknight hours and many weekend days and nights at the business premises working.
Yet as can be seen from the wife’s exhibits, the incoming passenger cards lodged with the Department of Immigration for both the husband and Ms I for entry to Australia on 12 April 2006 showed the intended address in Australia for each of them as being Ms I’s Suburb M apartment and showed each as having been on the same flight. This challenges, at least to some extent, the husband’s denial.
If the wife was able to persuade the Court about the alleged relationship between the husband and Ms I, the Court would have serious reservations about the husband’s credibility. This would invite for careful scrutiny, the serious issues the wife raises about his financial conduct and the reasons why the husband might have carried out the transactions of which she accuses him.
There is a very real issue for trial and the wife has gone to considerable trouble to provide evidence supportive of her allegations as distinct from simply making the allegation. For example, she refers to acquisition by the company of a valuable collection from a particular person, a Dr N. I shall refer to this again below. Learned counsel also gave another example.
In relation to the “clawback” or reversibility of any s 117(2) order made by the Court, the Full Court said in Zschokke (at page 83,221) that while this consideration “may be fatal to an application under s 80(1)(h), it is not necessarily so to an application under s 117(2). It is just one of the matters to be balanced in the exercise of the discretion under the latter sub-section”. Accordingly, in an appropriate case, reversibility might be a significant factor.
The requirement of establishing an arguable case is really the same issue. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 the High Court explained at paragraph 65 in the context of observing the principles relevant to considering an application for an interlocutory injunction, the phrase “prima facie case” meant that “it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”. Accordingly, the husband has the obligation to demonstrate that there is a sufficient likelihood of success, balancing all other relevant considerations, for the Court to make an order which might have the consequence of leaving the wife to suffer a very substantial injustice.
So lack of reversibility of a litigation funding order under s 117(2) of the Act must always be a significant factor.
The final submission on behalf of the wife related to the circumstances of the retainer between the husband and his solicitor, what was described as “the doctrine of entire contract”. In summary, this submission is that the husband’s solicitor having been engaged to act for the husband in the substantive proceedings, is bound by contract to complete the work for which he is retained and is not free to cease representing the husband if the husband cannot or does not continue to pay as various stages of the work are completed.
Discussion
Section 117 of the Act provides relevantly as follows:
117(1)Subject to subsection (2), … each party to proceedings under this Act shall bear his or her own costs.
117(2)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 subsections (2A) … and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(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;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)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; and
(g) such other matters as the court considers relevant.
I accept that if the Court is to make an order for preliminary costs, as sought by the husband, the Court must be satisfied that there are circumstances that justify it in doing so. I also accept, as was submitted by Mr Richardson, that any costs order made must be considered by the Court to be just.
Turning to the above matters in s 117(2A) of the Act. It is the case that the husband has not made a full and frank disclosure of his financial circumstances. I shall refer to this again. But I accept that the wife commenced her relationship with the husband in much stronger financial circumstances than him and that this appears to continue to be the case.
I accept that the conduct of the parties in relation to the proceedings is relevant. Firstly, as I have said, the husband has not filed an updated Financial Statement. As I have also said, nor has he explained, in circumstances where he asserts that he is unable to pay his legal costs, how it is that he is able to afford to be in the US on holiday. Secondly, there have been several occasions when court events have had to be adjourned because the husband said that he was not prepared. I accept as a consequence of this that the wife has had the burden of additional cost including cost and inconvenience of travelling from the US to Australia for events which have not been able to be productive.
I referred above to the three principles set out in Zschokke at 83,217. Learned senior counsel for the wife indicated that the wife would concede the first two of these namely:
- A position of relative financial strength on the part of the respondent; and
- A capacity on the part of the respondent to meet her own litigation costs.
In relation to the third such principle:
- An inability on the part of the applicant to meet his own litigation costs,
in my view this is not entirely clear because of the applicant’s failure to make a full and frank disclosure of his financial circumstances.
As I have also said, learned counsel for the husband submitted that the husband was able to demonstrate an arguable case for substantive relief. In my view, it is this requirement of an arguable case for substantive relief and the requirement of being able to justify the making of an order, which present the most difficulty for the husband.
In many cases, the mere facts that there was a relevant de facto relationship, a pool of property available for division between the parties, evidence of contributions and of the other relevant matters would be sufficient to enable the court to be satisfied that there existed an arguable case for relief. But the present case is quite complex and as learned counsel for the husband indicated, there is disputation between the parties about most of the important factual matters.
The wife asserted that if in the substantive proceedings she is able to establish on the evidence the various very serious criticisms she makes about the husband’s behaviour and the financial consequences thereof and/or that she is able to establish that the company owes her a substantial debt, these matters, together with the overwhelming financial contributions made by her over all the relevant years, would have the consequence that the husband would not be successful in achieving any order for payment of money or transfer of property to him.
The wife says that although there is more than $200 000 in the controlled monies account and collections with a value in the vicinity of $2 000 000 which arguably belong to the business, the business owes her more than $1 243 000.
The wife makes various complaints about the manner in which the husband operated the business. Amongst her complaints is that the husband used the line of credit for purposes other than to purchase collections and to repay the line of credit after the collections had been sold. She says that the husband used the line of credit to pay vendor debts, general bills of the business and to purchase unnecessary stock, whereas there should have been sufficient funds in the business accounts to pay such expenses.
The wife alleges that the husband purchased valuable materials using company funds and kept these for himself.
The wife said that the husband asked her to purchase a collection from a Dr N for $200 000. She said that the husband subsequently informed her that the asking price was $240 000 which she paid. The wife said that she subsequently discovered from documents that the cost of the collection was $200 000 and apparently she does not know what happened to the balance of $40 000, but suspects that the husband has had the use of such funds. The wife said she has copies of the relevant bank cheques.
The wife says that the husband had hidden company assets with a value estimated at approximately $2 million.
The wife says the husband has had the benefit of vast amounts of funds the greater part of which have come from her. In this regard she asserts the following:
- Between May 2002 and May 2012 the husband transferred a total of $421 589 from the parties’ joint National Australia Bank (“NAB”) account to his own Westpac accounts without her consent:
- Over the period from June 2003 to May 2012 the husband used a total of $220 883 from the parties’ joint NAB account to pay his Westpac credit cards;
- Over the period from March 2003 to May 2012 the husband used a total of $770 761 from the parties’ same joint NAB account to pay his Citibank credit cards;
- Over the period from June 2003 to July 2010 the husband used a total of $12 600 from the parties’ joint NAB account to pay his Diners Club credit card.
This is a total of $1 425 833.
The wife also says that over the period from September 2003 to June 2011 the husband reimbursed himself to his Westpac account from the parties’ joint NAB account a total of $339 069 as his expenses.
The wife asserts that the husband has been in a de facto relationship with Ms I during the entirety of their relationship. The wife also asserts that the husband and Ms I had at least five overseas holidays together during the period of the parties’ cohabitation. The husband concedes that Ms I accompanied him on these overseas visits but said that they were business trips and that she assisted him in bringing business material to Australia.
The wife says that during the parties’ cohabitation, the husband paid substantial sums of money to or on behalf of Ms I. She says that:
- Over the period from February 2002 to July 2010 the husband transferred direct payments from his Westpac account to Ms I’s ANZ credit cards account to a total of $56 616;
- Over the period from September 2000 to 17 August 2012 the husband made direct deposits from his Westpac account to Ms I’s bank accounts to a total of $29 550;
- As indicated above, in November 2001 the husband withdrew $80 000 from his Westpac account and provided this to Ms I the wife suspects as part of a deposit towards the purchase of her Suburb M townhouse. In fact the wife suspects the husband gave Ms I $130 000 not $80 000;
- Over the period from November 2001 to October 2012 the husband made payments from his Westpac accounts, Citibank Mastercard, Westpac Visa account, Diners Club card and Macquarie Visa card on behalf of Ms I for utility costs, rates, strata, renovations and furnishings to a total of $56 103.
This is a total of $222 269. The husband appears to dispute the quantum of these advances. With respect to advancing $80 000 to Ms I, the husband said that this cheque was written with the approval of the wife.
The wife says further that her analysis of the relevant statements of accounts will demonstrate that in addition to the above, the husband has spent a substantial amount of money entertaining and otherwise supporting Ms I including substantial expenditure on restaurants and holidays, the inference being that such money would otherwise have been available for the use of the husband and the wife. Again the husband appears to dispute the extent of such expenditure.
Not only does the wife make these very serious assertions but she has gathered together a considerable body of evidence to support her assertions, even at this relatively early stage. So it would appear that the husband has a very serious case to meet.
If the wife was to succeed in establishing her assertions at the required standard of proof it might be possible for her to persuade the Court that ultimately, it would not be just and equitable for a substantive money or property order to be made in favour of the husband.
So much is in issue between the parties that it is far from clear to me at this stage of the proceedings what the actual pool of assets available for division between the parties is likely to be. It would appear to include the following:
1. Real estate, bank accounts, shares and superannuation of the wife (say 11 235 000), less liabilities of say 700 000
10 535 0002. Hudson Law controlled money account, approximately
200 000
3. Business E and Business C
?4. Collections, approximately
2 000 000
5. Husband’s savings, shares and motor vehicle
?
The wife says that the money in the Hudson Law controlled money account came from the sale of her personal collections.
Each of the parties would appear to be in the position where they now have considerably fewer assets than at the time they commenced their relationship. How this might be reflected in the substantive outcome is far from clear.
If the Court was to make a preliminary costs order in favour of the husband and upon completion of the Court’s substantive determination the Court declined to make an order in favour of the husband, in my view, this would be quite unjust to the wife. This is because it is not clear that she would be able to point to any money or property of the husband which would be available to reimburse her for any funds advanced to him by way of preliminary costs.
As indicated above, this principle of “clawing back” or reversibility does not carry the day, as it were, on its own. It is one of the matters which demands consideration. But in my view, where the contributions of the parties overall appear to be so heavily in favour of the wife, where the wife appears to have conducted her case in an open and cooperative manner whereas there are some proper concerns about the husband’s conduct of the proceedings, where the wife appears to have made a full and frank financial disclosure but the husband has not and where the wife has put a very considerable body of evidence before the Court to support her assertions, whereas the husband has not, in my view, the question of “clawback” or reversibility assumes considerable significance in determining whether the husband has satisfied the Court that there are circumstances which would justify the making of a preliminary costs order in his favour. I am not persuaded that the husband has satisfied this requirement.
In relation to the submission on behalf of the husband about “the doctrine of entire contract”, because I am satisfied that the husband has not made out a case for relief, it is unnecessary for me to deal with this submission.
Conclusion
As indicated above, the usual position is that each party to proceedings shall bear his or her own costs. The husband is seeking to depart from this position and bears the onus of establishing that there are circumstances which would justify departure from this position by way of making a costs order in his favour.
In my view, for the above reasons, the husband has not discharged this onus and therefore his application shall be dismissed.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 24 June 2016.
Associate:
Date: 24 June 2016
Key Legal Topics
Areas of Law
-
Civil Procedure
0