FINCH & FINCH (No.3)
[2020] FCCA 72
•31 January 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FINCH & FINCH (No.3) | [2020] FCCA 72 |
| Catchwords: FAMILY LAW – COSTS – Costs applications by the husband following final property hearing – Wife’s unreasonable conduct – findings that she had wasted significant time on various unsuccessful issues in the trial – unsubstantiated propositions advanced without any expert evidence to validate such an approach – makes false claims of husband misappropriating $500,000.00 – wife’s dishonesty – Costs relating to application for injunction to secure a lump sum for costs – costs for defending wife’s unsuccessful stay application – costs of the costs application. |
| Legislation: Family Law Act 1975 (Cth), s.117 |
| Cases cited: Collins and Collins (1985) FLC 91-603 |
| Applicant: | MR FINCH |
| Respondent: | MS FINCH |
| File Number: | BRC 11625 of 2015 |
| Judgment of: | Judge Willis |
| Hearing date: | 29 May 2019 |
| Date of Last Submission: | 28 June 2019 |
| Delivered at: | Cairns |
| Delivered on: | 31 January 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Linklater-Steele |
| Solicitors for the Applicant: | Ritt Law |
| Counsel for the Respondent: | Mr Page Q.C. |
| Solicitors for the Respondent: | Porta Lawyers |
ORDERS
Pursuant to section 117 (2) of the Family Law Act 1975 and the husband’s Amended Application in a Case filed on 28 June 2019, the wife is to pay the husband’s costs, including reserved, of and incidental to the following applications, such sums totalling $218,332.88:
(a)Costs of and incidental to the substantive proceedings fixed at $146,523.76;
(b)Costs of and incidental to the Costs Application fixed at $42,000.00;
(c)Costs of and incidental to the Stay Application fixed at $17,301.80;
(d)Costs of and incidental to the Application to preserve funds fixed at $10,507.32;
(e)Costs of perfecting the Orders fixed at $2,000.00.
Total Costs: $218,332.88
Such sums as ordered to be paid under these orders shall at first instance be paid from the preserved funds held in the trust account of the husband’s solicitors pursuant to Orders of 28 May 2019 (“the trust account”) within seven (7) days from the date of these Orders. These Orders shall be sufficient authority for the husband’s solicitors to disburse the preserved funds in accordance with the terms of this Order.
That upon payment to the husband of all money payable under the costs Orders made herein (totalling $218,332.88) that the remainder of the preserved funds held in the trust account shall be paid to the wife, and this Order shall be sufficient authority for the husband’s solicitors to disburse the preserved funds in accordance with the terms of this Order.
In the event the preserved sum is insufficient to pay out all of the amounts to be paid to the husband (totalling $218,332.88), the wife shall pay any outstanding amount to the husband within twenty-one (21) days from the date of this Order.
That in the event the wife neglects, refuses or fails to pay the total of the costs of $218,332.88 as ordered herein within twenty-one (21) days from the date of this Order, the wife shall pay interest on any outstanding balance with such interest to accrue and be calculated in accordance with the provision of the Family Law Act to date of final payment.
That from the date of this Order:
(a)The total costs ordered to be paid to the husband including any unpaid portion of it, together with any interest accrued, is declared to be a debt owed by the wife to the husband; and
(b)In any proceedings including any actions for enforcement, the outstanding balance of the debt at any relevant time, shall be conclusively proved by the solicitor for the husband providing a signed memorandum as to the calculation of total debt balance including any interest component.
IT IS NOTED that publication of this judgment under the pseudonym Finch & Finch (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CAIRNS |
BRC 11625 of 2015
| MR FINCH |
Applicant
And
| MS FINCH |
Respondent
REASONS FOR JUDGMENT
This is an application for costs arising from final contested property litigation. There are three separate costs applications.
The first is for the costs of and incidental to the contested trial by the husband. The husband seeks indemnity costs or alternatively costs fixed according to the Family Law Scale.
The second costs application arising from the husband’s successful interim application to secure and hold in trust funds to cover his costs application heard on 23 May 2019. Orders were made in the husband’s favour on 28 May 2019. The husband seeks costs incurred as a result of the wife’s failed Stay application heard on 23 May 2019 and delivered on 28 May 2019.
I note the husband also asks for costs arising from the costs application and costs perfecting the orders.
Background
At the contested property hearing held on 12 and 13 March and 1 June 2018 the applicant husband was represented by Mr Linklater-Steel of Counsel, the respondent wife was represented by Mr Mould of Counsel.
The final judgment was handed down on 16 April 2019.
The costs hearing was to have occurred on 23 May 2019, however, the wife was not ready to do so. On that day only, the wife was represented by Queen’s Counsel Mr Page. Mr Page QC was not prepared to proceed with the costs submissions and would not do so. All suggestions of standing the matter down were refused or contacting the wife by phone were refused. The wife had not even attended the hearing. The costs application was adjourned. Ultimately on 28 May 2019 following the judgment issuing refusing the wife’s stay application, each of the solicitors agreed to written submissions on the husband’s costs application, to save yet another Court appearance.
On 28 June 2019, after receipt of written submissions my Chambers received email confirmation from the solicitors on behalf of each of the parties that they were content for the matter to proceed in Chambers and on the papers.
The husband’s application
In his written submissions [1] the husband sets out his material relied upon and his primary position which is that he seeks costs of the property litigation on an indemnity basis or alternatively as fixed under the Family Court Scale of costs. The indemnity costs amount to $159,859.51 calculated by reference to the Costs Agreement and $21,523.76 in payment of outlays,[2] a total of $181,382.27.
[1] E-filed 28 June 2019 – submissions as to costs and reply submissions.
[2] Amended Application in a case e-filed 28 June 2019.
The costs assessed on the Family Law Scale amount to $107,090.01 plus the outlays of $21,523.76, a total of $128,613.77.
Whatever scale is used, the husband seeks reimbursement on an indemnity basis of his outlays figure of $21,523.76.
In response to the husband’s application for costs, the solicitor for wife in his written submissions[3] is opposed to the husband’s application. He submits that the appropriate Order for the Court to make is that each party pay their own costs pursuant to section 117(1).
[3] E-filed on 10 June 2019 – document 67
I have had regard to the wife’s submissions of two and half pages and the affidavit of the wife.[4] Given her Counsel’s submissions that he needed to get the transcript and have a reply affidavit prepared, the brevity of the two and half pages are mostly unhelpful and the transcript was never obtained or relied upon. The wife’s affidavit in response to the costs application largely consists of argumentative opinions, her comments about the trial and further unjustified criticisms of the husband.
[4] Wife’s affidavit efiled on 6 June 2019, written submissions e filed 10 June 2019.
The submissions seem only to relate to the trial costs and make no specific mention of the wife’s stay application the costs of which are sought by the husband, nor the husband’s cost application for preservation of funds which the wife sought to be stayed in her Response to an Application in a case filed on 16 May 2019. Nor do they specifically address the costs application for perfecting the Orders or the cost of the Cost applications by the husband. I am satisfied that there has been sufficient time and opportunity for the wife to do so.
Further application to adjourn the costs application
In the written submissions for the wife at paragraph 2[5] an application is made to adjourn the husband’s costs application until after the appeal.
[5] Paragraph 2.
This application had been made by Mr Page QC back on 23 May 2019. It was heard and determined on 23 May 2019. Mr Page QC on 23 May 2019 made submissions, Mr Linklater-Steele of Counsel opposed the application, the Court gave reasons for rejecting the proposal of Mr Page QC and then the Court stated that the costs application would proceed. It was however, only then that Mr Page QC stated he was not prepared to proceed with the costs hearing on that day and he refused to do so.
Back on 23 May 2019 Mr Page QC submitted that:
a)if the appeal is successful, the parties financial positions may have changed and that the Court would at that stage, pursuant to section 117 (2), consider elements relevant in that section and they may be a need to reassess their financial positions and take into account the cost of a rehearing and the subsequent financial circumstances of each party;
b)whether there was a rehearing of the property trial or even where the Full Court substituted its decision, it is inappropriate for the Court to turn its mind now to costs and the particular financial loss relevant now.
c)to make an order for costs now would set off an appeal from that order, and that it would not be until the Appeal is heard that that the costs would be determined;
At that hearing Mr Page QC had no material to rely upon in relation to either of the husband’s applications listed (costs and injunction) because the wife had filed no affidavit material in contravention of the Orders of 16 April 2019 [6] to file written submissions by 21 May 2019. Neither did the wife attend the hearing on 23 May 2019, nor did she seek to be excused.[7] Mr Linklater-Steele of Counsel for the husband made submissions opposing the wife’s application to adjourn the husband’s cost application to an unknown date in the future. I rely upon but do not repeat all of the submissions by Counsel for the husband which I accepted. For the reasons stated I was satisfied that the delay proposed by the wife for an indefinite period would result in a serious miscarriage of justice to the husband in all of the circumstances and the proposal was rejected.
[6] Orders of 16 April 2019.
[7] It was only when the Court inquired as to the wife’s whereabouts that the Court was advised she was “at work”.
I stated that I was aware of the parties financial positions, I was aware that when the appeal judgment was delivered, if a retrial was ordered, it may mean that at the future time of another trial the parties financial circumstances maybe different. However, I was aware of their respective financial positions (which are effectively equal) and that possible issue did not release the husband from carrying the burden of his substantial legal costs for an unknown period into the future. The husband was the successful party at trial wishing to pursue some or all of his legal costs. In addition, his legal costs were now likely to continue and increase in in view of the wife’s decision to appeal.
I also stated that there are many other issues which were ventilated during the trial, other than which party retained the former matrimonial home, which the husband had also succeeded in. The husband stated through his Counsel during the trial, and at the time of judgment, that he intended to pursue a costs application regardless of the outcome of the appeal given the manner in which the wife has conducted the proceedings, the additional time the wife’s unsuccessful arguments had consumed and other aspects of the wife’s conduct at trial, that has caused him to incur significant extra legal costs far greater than ought to have been so. I had regard to the husband’s affidavit filed on 15 April 2019[8] which comprehensively canvassed relevant issues from paragraphs 4 onwards. Paragraphs 4 to 11 inclusive set out the further basis for the husband seeking costs.
[8] This affidavit was e-filed, and seems to have 16/4/19 on the foot of the document, but it was filed according to the solicitor on 15 April 2019 and that is what the Court was informed back on 16 April 2019. It can be seen within the affidavit at paragraph 4, that the husband says “I am yet to receive the reasons for judgment.” Judgment was handed down on 16 April 2019, at which time the husband’s application in a case and supporting affidavit had been filed the day prior, in accordance with indications from Counsel in his closing submissions on the final day of trial.
Notwithstanding those oral reasons given on 23 May 2019, Mr Armfield solicitor for the wife now re-agitates what has already been determined. Mr Armfield submits that the adjournment request arises entirely from section 117. “Primarily the Court not only has to take into account the result of the appeal, but also the changes likely in the financial circumstances of the parties. Refer to section 117(2A) (a) (e) and (f). In the event the application is not adjourned and an order for costs is made, an appeal from that order must be foreseen based on the Court’s failure to take into account changes that emanate from a retrial or from other orders made by the Full Court.”
If I needed to, I have for a second time, considered the prospect of adjourning the costs application. I consider that this is fraught with difficulties. The delay involved is a significant factor in my view. The Court made inquiries regarding the likely time for the appeal to occur back when the appeal was lodged and the date of early 2020 was foreshadowed. After the hearing of the appeal, a decision needs to issue from a very busy Full Court. It is not beyond the realms of possibility that appeal judgment might not issue until into the second half of 2020 or even later. To adjourn the costs application hearing until after the Appeal and then after a possible re-trial would mean that the first instance judge would then have to re-visit all of the issues and facts surrounding a trial which occurred in 2018 and judgment in 2019, at some indefinite time in 2020 or later. If as suggested by Mr Page QC for the wife, the husband’s costs issue was put over until after any rehearing, that would inevitably be upwards of 2 years. I am aware that these parties separated in 2013, now six years ago. Their difficulties and financial stresses have been explained in the judgment. I consider that the parties need finality of their outstanding applications as to costs and that it is not practicable or just, to delay in making these findings. The percentage split between the parties of 50/50 is not contested, nor was it done so seriously by the wife during the trial.
Moreover, given the wife’s time wasting conduct pursuing unsuccessfully a variety of issues, the costs are sought by the husband regardless of the outcome of the wife’s appeal given his concerns regarding her conduct which unnecessarily extended the trial.
Despite the wife’s 39 or 40 Appeal points, importantly the only orders sought to be appealed by the wife are the orders requiring the wife to transfer her interest in the former matrimonial home to the husband and the husband to paying a lump sum to the wife in return. Those are Orders 1 (a) and 2(a) and 2(b). The remainder of the Orders (the balance of Order 1, and 2, then Orders 3 to 15 inclusive and sub orders) are not being appealed. The decision being appealed is an exercise of discretion by the first instance judge. The appeal points are extensive, though it is not apparent as to how they impact on the ultimate consideration of the exercise of the trial judge’s discretion in determining which party is to retain the former matrimonial home, which is the only issue referred to Orders appealed.[9]
[9] See appeal. Despite the myriad of reasons for the appeal, the only orders actually appealed are Orders 1 (a) Wife transfer the home to the husband, 2 (a) and 2 (b) – husband to refinance mortgage and pay sum of money to wife.
I am in the all of the circumstances satisfied that justice will not be served by just putting off the cost applications which flow from the litigation as proposed by the wife to some future unknown time. It is a course designed to drag out the proceedings indefinitely.
To the extent that I need to do so, I therefore again decline to accede to the application/submission that the costs application be adjourned. I rely upon all of the reasons stated on 23 May 2019 and the reasons referred to in this judgment.
The Relevant Law
Section 117(1) of the Family Law Act 1975 states the usual position which is that each party pay their own costs. Section 117(2) states that when the Court considers that there are circumstances that justify it doing so, the Court may make such Order for costs as it considers just. The Court is required to have regard to the considerations set out in section 117(2A).
In Collins and Collins (1985) FLC 91-603 at page 79,877 the Full Court referred to the broad discretion the Court has when deciding if the circumstances justify an Order for costs and that the circumstances are not to be read in a restrictive way.
In the High Court matter of Penfold v Penfold[10] referred to by the Full Court, their Honours in a joint judgment, Stephen, Mason, Aickin and Wilson JJ, at p 216 stated that it needs to be firmly understood that section 117(1) must yield to section 117 (2) when a judge determines that there are circumstances justifying an Order for costs and beyond that, there is nothing in the interrelationship between the two provisions, that imposes a special onus on an applicant for costs.
[10] (1980) HCA 4; (1980) 28 ALR 213.
Section 117(2) states that the Court may make such order for payment of costs as the Court considers just, which includes the Court making an Order for payment of Indemnity Costs although such orders are exceptional. Kohan and Kohan (1992) FamCA 116, (1993) FLC 92-340.
In the Full Court decision of Sfakianakis & Sfakianakis [2019] FamCAFC 54 (28 March 2019) their Honours Aldridge, Watts and Austin JJ stated,
“It is however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs… as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well known example is an assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience in these reasons we shall refer to such orders as “special costs order.”
Section 117 (1) and (2A)
I will now deal with each of the relevant factors under section 117 (1) and 117 (2A) in dealing with the costs of the property application by the husband. Some of these issues will be relevant to the other costs applications by the husband. I note at the outset that each of the parties were privately represented throughout the proceedings and represented by Counsel. The wife engaged Queens Counsel to conduct the applications listed for 23 May 2019.
Financial circumstances
I have had regard to the parties’ respective financial positions as set out in their costs affidavits, and as referred to in the final reasons for judgment including their current incomes and respective capacity to earn and to the division of assets and their respective costs affidavits. The assets of the parties are set out in the judgment. I have determined that the total asset pool of $731,615.00 (which includes $239,019.00 of Superannuation) is to be divided on a 50/50 basis and that is not under challenge by appeal. There was no serious contest between the parties as to a 50/50 division and on that division, they are in the same position financially in terms of assets and Superannuation. As to their income, the wife has a slightly higher income earning capacity than the husband, as set out in the judgment but overall not enough that warranted adjustment.
I have had regard to and considered the wife’s costs affidavit[11] wherein she describes her current financial circumstances at paragraph 3. I note the wife continues to make reference to costs she chooses to pay in relation to the parties’ adult son aged in his twenties who lives independently.
[11] E filed 6 June 2019.
I am aware that the wife’s position in suggesting she does not have funds to pay the costs. I note that the wife has omitted in her current affidavit failed to make reference to the $228,697.50, which was paid by the husband to the wife into the nominated trust account such payment being in exchange for the transfer of her interest in the former matrimonial home and other entities as set out in the final Orders. The funds are held on trust pursuant to a preservation Order issued on 28 May 2019.
Mr Mould of Counsel for the wife at trial submitted that the wife was entitled to 50/50 or that the figure should be tipped slightly in favour of his client.
Section 117 (2A)(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, direction to answer questions, admissions of facts, production of documents and similar matters.
Mr Linklater-Steele of Counsel for the applicant husband submits that Court should place significant weight on the wife’s conduct as a litigant throughout this litigation and that the obstructive and turgid manner in which the wife has conducted this litigation, is directly relative to significant unnecessary costs incurred by the husband, and has directly been responsible for time wasting and the trial being longer that should have ever been the case. This is a strong criticism however, given all of the many issues raised by the wife during the trial to which the husband was forced to respond and which the Court had to consider, as mentioned in my judgment, overall, I accept the force of this submission.
When determining the asset pool[12] at the beginning of the trial and sounding out the issues which were in contest about the asset pool. I was informed by Counsel for the husband that the wife disputed the extent of the husband’s indebtedness under a joint mortgage he held with his de facto current partner. The wife and those representing her put forth the position that as the husband owned only 40% of a property with his partner who held 60% (held as tenants in common), this meant that the husband’s liability on the joint mortgage was 40% and not 50% as shown by the husband. This approach by the wife was taken to reduce (as far as the wife was concerned) the husband’s debt level and thus boost the value of his post separation acquired asset. Only when directed to do so by the Court did those representing the wife, and pursuing this position, then make the relevant inquiries as to whether this was legally correct. Only then did the wife’s Counsel indicate they needed to read the terms of the mortgage which up to that point they had not done. Only on day 2, was the concession made that the husband and his partner were jointly and severally liable for the entire mortgage debt. This was the first of many issues pursued by the wife, which took up unnecessary time, was without factual or legal foundation and which ought never have been raised.
[12] Paragraph 251.
The wife’s suspicions that the husband had sold assets post separation but not put the money towards tax debts, were also without foundation. The tenor of the argument was that unless the wife or those representing her could identify a tax payment specifically matching the precise amount of dollars equivalent to the sale proceeds (of motor bike/machinery/cars) axiomatically it was demonstrated that the funds obtained from the sale were not put towards the tax debt. As I noted in the judgment[13] “this line of questioning descended into minute scrutiny of bank statements and tax records searching for equivalent amounts, whilst at the same time ignoring lump sum payments made by the husband before or after the relevant dates of sale.” This exercise was futile and ignored the facts.
[13] Paragraph 189 onwards.
As I stated in the judgment the questions asked of the husband on this issue were at times confusing and misleading.[14] I indicated the Court’s frustration and the painstakingly slow manner of the cross-examination by Counsel on behalf of the wife, relying on bank statements and throwing up figures and dates to the husband seemingly expecting that he would have a photographic memory and know figures and bank statements on immediate recall.[15]
[14] Paragraph 191 though to 195.
[15] Paragraph 196, referring to Transcript pages 62 to 82, and in particular pages 68 and 69 (for general confusion).
Even worse, given that the wife had not herself directly paid any of her income towards the tax debt, I stated in my judgment that “the challenge to the husband’s evidence was inexplicable. If the husband hadn’t paid the tax debt, and the wife said she didn’t, who else did?” The whole basis of this challenge clearly had not been well considered by the wife or those representing her.
As to the wife’s allegations of undervalue sales by the husband, findings were made that there was no evidence to substantiate the allegations of the wife of “undervalue sale” by the husband in respect to any asset sold by him. The wife’s allegations that the proceeds of sale were not paid towards the tax debts were unfounded. There was no evidence to support the allegations that the husband sold the assets and retained the proceeds for his own use. All of the wife’s challenges on this issue were based on her “suspicions” which at no stage were supported by an evidentiary foundation. I stated in the judgment, “This fundamental flaw in her case however, did not stop her from proceeding with her suspicions.” Considerable time was wasted on this issue. I rejected the notion that any sum should be “added back” for these items as argued by the wife. The wife was wholly unsuccessful in pressing and pursuing this issue. The wife was also unsuccessful in arguing that the Court should “add back” funds earned by the husband post separation and which he used for a holiday to Tasmania.[16] To make her position all the more untenable, the wife’s financial statement showed she allocated funds of $35.00 each week towards her own holidays from her post separation income, along with a myriad of other discretionary expenditure such as $200.00 per week on clothes and shoes.[17]
[16] Paragraph 182.
[17] Paragraph 183.
The wife proceeded to have her Counsel prepare a document at the conclusion of the trial used in submissions allegedly showing her post separation contributions of some $228,723.11. On that document, the wife referred to a single figure of $58,000.00 and described it as “proceeds of sale of matrimonial assets retained by the husband” referring to the earlier items the husband sold. I did not accept that these funds were retained by the husband for his sole use and I did not accept that the figures on the document were correct.[18] The submission on behalf of the wife that this figure (allegedly representing assets sold by the husband) would constitute a contribution by the wife, is regrettably one out of several submissions which were without legal foundation.
[18] Paragraph 202.
I was at a loss to understand why issues were pursued just based on the wife’s suspicions. If there had been any evidence on which the allegation was based, there are forensic tools available such as Notices to Admit Fact of specific questions which could have been used well prior to the trial. The wife was determined take up Court time to test all of her theories and grievances, despite an absence of evidence to support them.
Another issue pursued by the wife, without any success, was that there was a balance of $30,000.00 in the company account which ought to have been used for payment of the tax debt. This allegation did not survive challenge under cross examination. The wife said she didn’t personally insert the figures in her affidavit, albeit she had sworn to the truth of the affidavit. This figure was however, referred to by the wife in the wife’s case outline and relied upon by her to make allegations of misuse by the husband. As with other issues, the wife refused to make an admission contrary to her own interest. I determined that the allegations were untrue and baseless.[19]
[19] Paragraph 203 of the judgment.
The wife also failed in her seeking an Order that she be entitled to one half of the tax credit currently owed to the husband, which arose from his payments derived from his earnings in the five years post separation. The case presented to the Court to support the wife’s position did not do so. As stated in the judgment, the circumstances of the authority (Monroe & Monroe [2009] FamCAFC 221)[20] were readily distinguishable. I concluded after taking account of all of the circumstances, that the wife had not made a contribution to the credit and that her submission was without merit.[21]
[20] Paragraph 208 of the judgment.
[21] Paragraph 218 of the judgment.
The wife also failed in her stance as pressed by her Counsel that the debt incurred by the business (Company B Pty Ltd) during the five years post separation for purchase of new machinery, which Counsel identified as $79,040.00,[22] should be added into the property pool as an asset. As stated in the judgment, this amount was never properly explained to me.[23] I found that the husband had solely performed the labour and all aspects of the business post separation, and this business was the source of the husband’s income which the husband paid to reduce their joint tax debt along with other debts. The argument put forth by the wife failed to take account of the facts, namely that machinery in earth moving business wears out. The wife’s position was described in the judgment as being unrealistic. I stated, “There has been a long period of 5 years between separation and this trial and I reject as being unrealistic that the husband ought to have pressed on working with machinery that had served out its time, as suggested by the wife. The irony of the wife’s position being of course, that the wife was happy to have the income earned by the machinery directed to post separation debts”[24] referring to the husband reducing their joint debts. Reference was made to the wife’s approach to this issue as being “another example of her selective nit-picking as to what will or will not go into the property pool.”
[22] Said to be a different $79,040.00 from the total of the depreciation as determined by Counsel for the wife. Transcript 13/3/18, p. 141.
[23] Paragraph 221 Judgment.
[24] Paragraphs 221 though to 225.
The wife also failed in her argument that, whilst the husband ought to have kept working post separation and paid off the joint tax debts and other debt, the husband ought to have no longer utilised the credit facility of the line of credit. That facility was operated during the marriage to facilitate the ebb and flow of money in and money out. The wife’s position was the facility should just be kept in a frozen state, until the trial. This position was entirely out of step with the commercial reality of running the business. It was also raised in the complete absence of any evidence that the husband had misused the line of credit, or made business decisions that were reckless or irregular. There was no evidence of the wife as to how he was to continue earning an income and run the business with worn out machinery, no borrowings for new machinery but be unable to use the credit facility which had been relied upon during the marriage. The Court made findings that it was satisfied with the business decisions of the husband, with the purchases of machinery which were entirely in line with his previous business practices and that these decisions were the kind ordinarily made over years of running the business. This stance of the wife, when seen together with her opposition to accepting the basic reality of having to trade in and replace worn out machinery was entirely unreasonable. I determined that there was no basis for this challenge.[25] This issue was another time wasting exercise by the wife.
[25] Paragraph 228.
The wife has engaged in pressing issues which ought never have been raised and continued to contest issues in wilful disregard of known facts. As seen in the judgment, the wife refused to concede and only did so when pressed under cross examination that she knew the business credit card had been used to purchase the car and she knew that the business credit card had been used for the purchase of equipment as was therefore legitimate expenditure by the husband. Up to that point the wife had maintained her position that she did not know about the debts and therefore they should not be include in the balance sheet. This is another demonstration of the wife stonewalling and being dishonest in the lead up to and during the trial, until under cross examination she was proven to be untruthful.
Only at the trial and only under cross examination did the wife also finally accept that the husband used his credit card (which had a zero balance) for the purchase of plant and equipment and which is part of the equipment valued by All Assets. Only then was the balance on that credit card of $4,895.07 accepted by the wife as being the figure to include for this card.[26] Up to that point, this issue remained one about which the wife would not make a concession and which was in contest. I find it is deplorable that the husband had to go to these lengths to have included in the asset pool, a debt about which the wife had knowledge of yet blatantly and dishonestly refused to agree with the husband. The wife deliberately put the husband and his lawyers to the expense and time of having to prove what the wife already knew but would not admit. The wife deliberately wasted the Court’s time and caused the husband more expense in having to rebut her false assertion. This resistance and obstructive attitude was seen by the wife throughout the trial on a myriad of issues. The wife’s conduct caused the trial to be considerably longer than would have otherwise been the case.
[26] Paragraph 229 of the Judgment.
The wife was wholly unsuccessful in convincing the Court to adopt her strongly held but erroneous position regarding depreciation as seen on a balance sheet, and how the Court would classify and use this business expense. Effectively the wife and those representing her disagree with the Australian Taxation Office allowing depreciation as an expense and being regarded as an expense in relation to the ownership of the machinery owned by Company B Pty Ltd and or the Finch Family Trust. The wife and her Counsel spent significant time in pressing their notion that the Court ought to add back to the matrimonial asset pool the amount of depreciation claimable by the husband. Having added it back in, (their theory continues) then it is to be added to the assets available for division. In the wife’s asset pool, a figure of $79,040.00 represents depreciation.
The second notion pressed strongly by the wife and those representing her, is that the future projected depreciation figure for the five years after the trial (until 2023) relating to the machinery ought to be calculated by reference to each year, then totalled. The wife’s theory goes that the total is then to be added to the future (or past) income of the husband. This exercise was undertaken by Mr Mould of Counsel who prepared calculations set out in an aide memoire setting out his schedules based on his figure of 30% per year applied to his formula which multiplied the figure by 5 years and handed these up to the bench during final submissions. I asked and it was confirmed, that the wife asked Mr Mould to raise this issue in this fashion. She has raised it again in her affidavit filed 6 June 2019 and she still holds strongly to the view that because she cannot claim this expense in the future, it affects her future needs.
The Court was urged to total the depreciation estimated at 30% over each of 5 years, and add it to the income of the husband. This calculation was then relied upon to make the submission that the wife’s formula was the only true reflection of the husband’s actual earning capacity, not his tax returns.
It was clear that all of these calculations and baseless misleading submissions were made to the Court to support and satisfy the wife’s desire to express her annoyance, and irritation at what she perceived as the unfairness between what the husband could claim as a tax deduction when she could not avail herself of that deduction. The wife stated in her evidence in her affidavit and through her Counsel that the husband through his business income, could claim depreciation and she in her two occupations could not. This novel position as to the use of depreciation as an asset, and the appropriateness of adding to the husband’s actual income each year five years into the future, was put forth to the husband and the Court by the wife and those supporting her, whilst being unsupported by any, let alone expert evidence.
I noted in the judgment that this approach to depreciation,” suggests the figure representing an expense is to be received as cash. It is not explained to me as to whether in doing this exercise, the husband is then subject to a re-assessment of his income tax.” As can be seen from the judgment, the issue occupies paragraphs 230 to 243, pages 50 to 54. Significant time was wasted during the trial on this issue. As can be seen in the judgment, the explanations and submissions as to why the Court would adopt this approach were without evidentiary basis and at times incoherent.[27]
[27] Paragraph 235.
Counsel for the husband submitted in relation to the approach of the wife, Counsel’s submissions, quite properly in my view, that:
“You will see 2013/14 this is what he’s trying to convince Your Honour is an appropriate determination of income. He’s saying effectively that the husband’s taxable income is not in fact his income. That indeed what Your Honour does is you add back, a tax expense, not one of his, but one of the trust’s, that is the $13,633.00. Now, why just stop at depreciation, why not just add back any of the other taxable expenses that my client can claim and call that income and why should we not add back some of the tax deductions that the wife has been able to claim and call that income?[28]
[28] Paragraph 234 of the Judgment. Transcript 1/6/18, p. 26, line 5.
In final submissions, Counsel for the wife put forth a third use of the depreciation, not previously raised. This time it was to be used as a section 75(2) factor. Mr Mould of Counsel for the wife explained the use of the devised formula and why the Court should adopt it as a section 75 (2) factor. He adopted the wife’s complaints and irritation at the unfairness of the wife not being able to make a claim for deprecation. Mr Mould stated it is “Simply because if my client doesn’t have that capacity.”[29]
[29] Paragraph 240, Judgment.
Counsel for the husband submitted, “that the wife’s accountant who was called, had not advanced any of this. This is all a construction beyond the evidence, not examined upon, thrust upon Your Honour to somehow deal with.” I accept the force of the submissions by Mr Linklater-Steele on this issue.
I expressed my deep concern in relation to the accuracy of Mr Mould’s submissions on this topic during the trial and in the judgment.[30] I was most troubled that Counsel for the wife at the time, put forth such bizarre propositions and schedules without any authority let alone any Full Court or High Court authority or any expert evidence attesting to the appropriateness of this approach. I queried whether Counsel was leading the Court into error. I reminded Counsel of their obligation to the Court as an Officer of the Court notwithstanding his instructions. These words of caution did not in any way deter Counsel or the wife from continuing with the wife’s theories.
[30] Paragraph 237. Transcript 13/3/18, pp. 141-145.
This entire approach resulted in wasted and additional Court time, wasted cross examination time, significant wasted time in submissions and a waste of the Court’s time and the husband’s time in having to hear and then address the submissions. This insistence of the wife (and those representing her) to press for the Court to adopt the wife’s methodology, without any evidentiary basis to do so, has not only been unhelpful, confusing, alarming and time wasting, it has created significant additional cost to the husband to have to respond to the wife’s highly unsuccessful case.
The Court expressed concerns with the wife’s conduct as a litigant throughout the judgment for the variety of reasons stated. During the trial on several occasions, Counsel for the wife was cautioned by the Court as to time wasting on issues, the failure to run the trial expediently, the apparent disregard for time consuming but futile cross examination which if it was necessary, could have been reduced by using Notices to Admit well before the trial, and for raising issues which ought never to have been raised. This matter had already been listed for trial once, and not reached. Twelve months passed waiting for a trial date. I made the observation[31] “that the wife had combed through the figures in the asset pool and tried to create arguments to suit her case, without considering whether the arguments had any factual or legal basis.”
[31] Paragraph 248.
Repeatedly I queried with Counsel for the wife the relevance of issues, commented on the time wasting, expressed the Court’s frustration at sustained and unsubstantiated questions and submissions about the wife’s subjective theories and spurious issues, including the use of deprecation which continued to the last word of Mr Mould’s submissions.[32]
[32] Transcript 12 March 2019 page 31, Transcript 13 March 2019 page 55, page 56, page 57, page 79, page 82, page 122, page 137 and page 159.
For example, in relation to the erroneous and sustained argument put up by Counsel for the wife as to the husband’s mortgage liability referred to earlier in this judgment, the Court requested Counsel for the wife to cease putting up “everything your client says because it will be utterly time wasting and I hope the other arguments are not based just on what your client told you because you’re more than an advocate, you’re an officer of the Court.” The Court stated that, “if the issues put forth by the wife are not upheld and they don’t even have a legal basis, the wife will likely end up paying the costs wasted.”[33]
[33] Transcript 13 March 2019, page 57.
I was also critical of the time wasting style of canvassing issues to do with non-financial contributions in the Wife’ s case, particularly given that after this long marriage, the wife’s position as explained by her Counsel was ultimately that the division should be 50/50 or “tipped slightly in favour of the wife.”
In a 26 year marriage, starting with questions going back to their first year of marriage in 1991 and putting to the husband, “did the husband agree that the wife planted the grass seeds” was time wasting, beyond anything that Court could have considered helpful.[34] This was a long marriage and the husband sought 50% and the wife sought 50% or slightly more. I explained to Mr Mould of Counsel, “if you want to go through the grass seeds, we’re only up to year 4. We’ve got another 22 years of grass seeds and painting to go. We will be here for weeks.[35]
[34] Transcript 12 March 2918, page 31.
[35] Transcript page 31.
Given that there was agreement as to the value of the house, photographs and questioning directed to the husband regarding removal of piles of dirt were unnecessary. One photo was shown to the husband, and on the Court observing that this whole issue seemed time wasting and inquiring how many more photos were to come, Mr Mould of Counsel replied, “About 30 your Honour.”[36] It is to be remembered that this trial was listed but not reached a previous occasion and had been set down for trial for over a year and there were forensic tools available to get admissions of facts well before the trial, if they were relevant.
[36] Transcript page 56.
The wife pressed ahead with her deluded belief that the husband must have misappropriated over $500,000.00 of sale proceeds (referring to the sum being unaccounted for) despite her being in possession of a settlement statement setting out specifically where the funds had been banked. It was clear that the settlement statement made “it perfectly clear that the balance of the proceeds were paid to the CBA to the credit of the mortgagor thus extinguishing the mortgage debt.”[37] When asked why then the wife continued to make the allegation that the husband had not accounted for the proceeds, the wife replied, “That I can’t be sure of. I’m sorry Your Honour.”[38] Somewhat remarkably, the wife has chosen to re-agitate this issue in her response affidavit to the costs application concluding she “can only rely on what the applicant alleged as to the destination of the sale proceeds.”[39]
[37] Judgment paragraph 175.
[38] Paragraph 175.
[39] Paragraph 27. Wife’s Affidavit e-filed 6/6/19.
There is no specific submission made in the wife’s written submissions as to the conduct provision under section 117(2A). In general response, it is submitted on behalf of the wife that “the application has no basis. Nothing has been suggested that takes the matter out of the ordinary run of cases that relate to the property of parties. This wish of one applicant to retain the home is out of the ordinary.” The wife’s case went so far beyond just seeking to retain the former matrimonial home. It is troubling to read these inaccurate unhelpful submissions given all the findings referred to in the judgment and the submissions of the husband, based on the findings in the judgment.
As is clear from these reasons, I accept the submissions of Counsel for the husband that the wife’s conduct is a significant factor in determining the costs application. I also accept that the behaviour of the wife as described in the affidavit of Miss Ritt, Solicitor for the husband (paragraphs 16 to 18) well illustrates the obstructive conduct that the wife has adopted right from the commencement of these proceedings. I am satisfied that the wife’s conduct has directly caused the husband to incur significant additional legal fees in dealing with such conduct responding to such conduct including the false allegations made by the wife, and misconceived submissions.
(d) Whether the proceedings were necessitated by the failure of a party to the proceeding to comply with the previous orders of the Court.
The substantive proceedings initiated in this matter were not initiated due to the failure of either party to comply with an order however, the wife has failed to comply with Orders in a timely fashion in relation to the valuation issues, as set out in the submissions for the husband.
The wife has failed to comply with Orders to exchange Offers as was ordered by Her Honour Judge Purdon-Sully on 20 June 2016 at Order 2, that within 28 days of the orders the parties exchange formal offers of settlement with such offers to include a schedule of assets and liabilities of the marriage.
The wife chose not to provide her offer of settlement until 25 July 2016, seven days after the compliance date of the Order. I note the wife’s solicitor’s letter referring to needing to find out the husband’s tax liability which was said to have been provided on 11 July 2016. The figure was included in the wife’s earlier offer of 18 July. Nonetheless it took the wife until 25 July 2016.
The wife also failed to follow Order 3 of the Orders of 20 June 2016, which relevantly stated that within 14 days the parties do all acts and things and sign all documents necessary to obtain a joint valuation for the former matrimonial home from V Company.[40]
[40] Paragraph 85 onwards, Affidavit of Pamela Ritt, filed 21 May 2019.
The wife’s failure to comply with this Order caused the husband to incur unnecessary legal fees in having solicitors write and attempt to secure compliance with the Order and have the wife pay her one half of the fees in a situation where the valuer will not do the work until the fees are secured.
The wife also was uncooperative in securing an updated valuation in a sufficient time frame to fit in with the necessity of the parties to comply with the case management directions for the husband to file his evidence in chief by 10 January 2017. Further letters were written and alternate urgent arrangements had to be made by the wife’s solicitor to secure the availability of the updated valuation in time for the husband to have the access to by the deadline for his evidence in chief to be filed. This situation arose because of the wife’s decision not to allow the valuer to attend at the former matrimonial home until a date nominated by her, the 9 January 2017.[41]
[41] Paragraph 95 onwards, Affidavit of Pamela Ritt filed 21 May 2019.
In circumstances where the wife wished to retain the home, (and in fact where her desire to do so resulted in her advising the husband she would not attend a mediation in November 2015)[42] I consider that the wife’s conduct is all the more obstructive and concerning. If the wife wished to retain the home, it was incumbent upon her to do all acts and things to secure the valuation. Her decisions and inaction have led to delays with the valuer, and caused the husband to unnecessarily incur legal expense.
[42] “Our client is not agreeable to attending mediation particularly given the major outstanding issue is which party retains the matrimonial property and both parties remain set in their position” Paragraph 31, Affidavit of Pamela Ritt filed 21 May 2019.
(e) Whether any part to the proceedings has been wholly unsuccessful in the proceedings
In her affidavit[43] the wife states under this heading, “not applicable”.
[43] Paragraph 36.
The wife’s written submissions state, “it is not possible to suggest that the wife was wholly unsuccessful in the proceedings.”[44]
[44] Written submissions e-filed 10/6/19 (document 67) paragraph 9.
The wife’s solicitor also submitted that the wife “not has not been wholly unsuccessful in the proceedings”, and “nothing in this matter falls within the categories of circumstances said to justify an order for [indemnity] costs and the affidavits show no basis for departure from section 117(1).”[45] Clearly this submissions is inaccurate and inconsistent with the findings in the judgment.
[45] Wife’s written submissions filed 10/6/19 paragraphs 3, 8 and 9. Paragraphs 151 through to 177 of the Judgment.
On any reading of the final judgment, the wife has been wholly unsuccessful in pursuing her property claim for retention of the former matrimonial home and has also been wholly unsuccessful in a myriad of issues that were found to be without merit. As can be seen in the judgment and elsewhere in these reasons.
Her pursuit of issues, other than who is to retain the former matrimonial home, took up the bulk of the trial time created significant expense for the husband. The wife has failed in:
a)Failed in her false allegation that the husband had sold the investment house without notice.
b)Failed to prove the husband had misappropriated over $500,000.00 from the proceeds of the investment home.[46] This is despite the fact that, as noted in the judgment the wife herself had the settlement statement indicating precisely where the credit of $549,862.84 had been banked.[47]
c)Pursing her false allegation that the husband had sold machinery assets under value.
d)Failed in her argument that the husband[48] failed to properly use funds to pay the parties tax debts. On the issue of the husband’s payment of the tax debts, I commented in the judgment about the time was wasted through confusing, disorganised and misleading cross examination of this issue.[49] The questioning was prolonged and revealed an inability of the wife and those representing her to grasp the fact that the husband solely paid the tax debts. I commented that “the exercise of the wife and her lawyers trying to match precise amounts of payments with precise debts was time wasting and pointless given the husband had been making the repayments to the Tax Office. This was how the wife conducted her case, ignoring the big picture whilst spending lengthy time zeroing on irrelevant and distorted detail.”[50]
e)Failed in her position to retain the former matrimonial home.
f)Failed in her strongly held views as to how the Court should regard depreciation. The wife through her Counsel put forth various ill-conceived theories which were without legal or evidentiary foundation. As she said at the trial and still says in her affidavit[51] she instructed her lawyers to take this approach as “I did not have a similar benefit and my future needs were thereby disproportionate.”
g)Failed with her dogged belief that the jet ski must be included in the asset pool as it was owned by the husband, admitting under cross examination the reason she insisted for 5 years that it be included in the property pool was because the husband had used it.[52] I concluded in the judgment that “as with many issues in this matter, the wife has adopted an oppositional position and maintained it without any genuine basis for doing so.” I noted the disproportionate amount of time and the sheer waste of time taken up because of the wife’s obstinate refusal to make the concession that her allegation was false.[53] I concluded that it was dishonest of the wife to have raised and pressed this issue.
h)Failed in trying to persuade the Court that the husband should be solely liable for the cost of new machinery purchased over the five years post separation, but the value of the assets should be included in the asset pool.[54] Properly advised, this issue ought not have been raised.
i)There was no evidence that the husband had engaged in any reckless expenditure or any evidence at all to support the wife’s position that effectively the business assets should be included in the asset pool, but the debt on new machinery ought not.
j)Failed in her argument that the husband ought not to have continued to use the line of credit in the five years post separation during which time he continued to work, operate the business and pay down the tax and other debts. There was simply no evidence produced by the wife to support her position
[46] Paragraph 151 onwards of the Judgment.
[47] Paragraph 164 to 175.
[48] Paragraphs 189 to 204 of the judgment.
[49] Paragraph 191 through to 197.
[50] Paragraph 194 of the Judgment and Transcript p. 82.
[51] Paragraph 25 affidavit of 6 June 2019
[52] Judgment para 137 and para 140.
[53] Paragraph 144 of the Judgment.
[54] Paragraph para 222 of the judgment. And judgment para 226 onwards.
Despite continuous objections from the husband’s Counsel and various warnings by the Court, the wife’s case went from one failed issue to another. I cautioned Mr Mould of Counsel for the wife that as an officer of the Court he ought not put to the Court propositions that are known to be wrong at law.[55] Submissions were made by Counsel for the wife which ignored the evidence. I observed submissions were “illogical and time wasting.” Propositions involving add backs and then suggesting it would be the husband’s contribution were confusing and ill conceived.
[55] Page 57 of the transcript, but s tarting at page 55. Issue of his indebtedness on mortgage with his new partner.
While the issue of who retained the house was a genuine issue in dispute, the wife’s position of either she retains the house or it is sold, necessarily meant that the husband had to go to trial to be able to retain the former matrimonial home. I consider the wife’s stonewalling position of either she retains the home or it is sold, knowing that the husband also sought the house, was without merit. The Court found the husband had valid reasons to wish to retain the home, he was successful in seeking orders to retain the home.
The wife’s continued refusal to accept that the husband had an entitlement to argue his position in terms of retaining the house, is well illustrated in the wife’s affidavit responding to the costs application in which she states that the “husband’s conduct in seeking retention of Property A was spiteful, controlling and domestically violent because I did not consider the Applicant had any legitimate need to request the retention of the property.[56]
[56] Paragraph 29, wife’s affidavit e-filed 6 June 2019. Document 66.
Mr Linklater-Steele of Counsel stated, “the Court upon reading the affidavits filed by the wife in support of this Application would see that the trial only revealed a glimmer of the turgid manner in which the Wife has conducted this litigation; wantonly incurring costs which are truly horrific given the size of the property pool and the matters lack of complexity.[57]
[57] Written submissions e filed 28 June 2019 point3 (document 71).
I accept the submission by Counsel for the husband that the wife demonstrated over three days of trial her intractable desire that the matter be litigated in accordance with her whim. The submission by the husband that he has had to defend vexatious claims is strongly supported.
There are a multitude of other unfounded allegations by the wife referred to in the judgment. This is how the wife chose to run her litigation. It has caused the husband to incur vastly increased legal fees than would have otherwise occurred.
Overall I am satisfied that the wife has been wholly unsuccessful in these proceedings. I am also satisfied that her insistence on running unsuccessful issues as referred to in the judgment, has taken up most of the time in these 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
The submission for the wife consists of two sentences saying offers were made by each party and no suggestion can be made that those made by either party were unreasonable.
The husband has placed evidence before the Court of offers he has made and which have been rejected. His offers go back as far as 2016[58] when he offered to sell the home and divide the proceeds and matrimonial property on a 50/50 basis. This was a reasonable position and offer not accepted, particularly in light of the fact that his asset and liabilities proposed for the balance sheet, were in accord with the findings of the judgment, unlike the wife’s.
[58] F 09, Affidavit of the husband 21 May 2019.
Significantly the husband made a formal offer in writing on 2 February 2018 which was that he retain the former matrimonial home, keep Company B Pty Ltd and its debts, that the debts as set out be deducted from the value of all of the assets, and that he pay to the wife a sum equivalent to 50% of the overall property pool. Importantly the husband’s asset pool was the correct asset pool, as determined by the Court. The Offer is comprehensive and in line with the final Orders issued by the Court.
The wife has refused two written offers. The Offer of 2 February 2018 matches the Orders made. A compromise could have been made going back as far as 2016, as set out in the reasons. Importantly all of the issues regarding add backs, missing funds, assets under sold, tax payments not being made, the line of credit balance not being accepted, and the other issues agitated by the wife, were unsuccessful. The approach taken to the asset pool was wholly unreasonable but it was in line with the wife’s determination to proceed to a judicial determination, despite not having evidence to support most of her case.
The wife did not make any offers to the husband which included him being able to live in and retain the former matrimonial home. Her offer of 20 February 2018[59] states the husband is to transfer to the wife, his right title and interest in the former matrimonial home.
[59] F 15, husband’s affidavit of 21 May 2019.
The offer forwarded by Mr Armfield solicitor for the wife on 25 July 2016[60] referred to the Orders of 20 June 2016 and stated:
“Please find enclosed the wife’s Assets and Liabilities schedule A. The Wife’s offer of Settlement proposes that the Assets less Liabilities by [sic] split equally with the corresponding Assets and Liabilities to be retained by each party in accordance with Schedule B.”
[60] Annexure C to the affidavit of the husband, 21 May 2019, p. 39 of 95.
This failure of the wife to properly comply with the Orders of 20 June 2016 resulted in the matter heading to trial on 7 February 2017.
The wife’s affidavit says she made a clear offer back in 25 July 2016 [61] however I do not accept this. I accept the submission of the solicitor for the husband Miss Ritt, that the offer was “extremely difficult to assess and not capable of quantifying.”[62] The offer was not properly articulated, there was no meaningful narrative provided in the letter, nor was the offer formulated in a proposal embodied in an Order, that was capable of acceptance. The offer left all the work of calculating the various permutations and percentages to the husband. The offer proposed no cash payment in return for retaining the former matrimonial home, and no superannuation split in the husband’s favour and excluded a Queensland Health debt from the asset pool. No commentary was provided explaining any of these issues.[63]
[61]Wife’s affidavit paragraph 38, (a) F 11, affidavit of the husband 21 May 2019
[62] Paragraph 46 of Affidavit of Pamela Ritt filed 21 May 2019.
[63] Paragraphs 42 and 45 Affidavit of Pamela Ritt, filed 21 May 2019.
Had the wife accepted the husband’s first offer back in 2016 and or the second written offer in 2018 that he retain the house the property be divided equally, the husband would not have incurred the significant legal fees referred to in his material.
The wife also failed to abandon issues prior to trial or make compromises, rather she pressed ahead at the trial. It was therefore impossible for the husband to have the matter resolved despite many reasonable offers to do so.
Having considered all of the relevant issues set out in this judgment, I am satisfied, that circumstances exist which justify the Court departing from the position that each party bear their own costs. I intend to Order therefore that the wife pay the husband’s costs of and incidental to the hearing.
The Quantum – Which scale?
In turning the appropriate level or scale of costs to be awarded, I am mindful of the various authorities helpfully referred to in the written submissions for the husband. Counsel for the husband through these authorities reminds the Court that:
a)The purpose of the costs order is compensate the other party for costs incurred but not to overcompensate them or impose a sanction upon a de faulting party and in fixing the amount for costs fix an amount that is “logical, fair and reasonable.”[64]
b)The exercise of the discretion of the Court must be exercised judicially and the Court needs to be satisfied that the amount to be paid is appropriate.[65]
c)The award of costs ought to bear some relation to the conduct of the proceedings by the parties or to their relative circumstance at the time of the application and hearing of the matter.[66]
[64] Beach Petroleum NL and Johnson (No.2) (1995) 57 FCR 119; Nine Films & Television Pty. Ltd v Ninox Television Limited [2006] FCA 1046.
[65] Hughes v Western Australian Cricket Association Inc (1986) ATPR 40,748 at 48,136 per Toohey J. Also Ruddock v Vadaris [2001] FCA 1865 at (9) per Black CJ and French J. In the Marriage of Mundy and Bowman (1997) 22 Fam LR 321 at 323; FLC 92-784 at 84,661 and Frederick & Frederick [2009] FamCAFC 156 (28 August 2009).
[66] Marriage of Greedy (1982) FLC 91-250 at 77,381.
The husband has given evidence of his Costs Agreement in his affidavit filed 16 April 2019.[67] The Amended Application in a Case at Order 1, seeks costs calculated by reference to his client costs agreement, relating to the final hearing totalling $181,385.51[68] which consists of $159,859.51 in legal fees and $21,523.76 in outlays.
[67] Husband’s affidavit 16 April 2019, annexure F 4.
[68] The fees of $159,859.51 + $21,523.76 outlays total $181,383.27 appears to be incorrectly totalled in the Amended Application in a Case e-filed 27 June 2019, a difference of $2.24.
The outlays of $21,523.76 are sought on an indemnity basis regardless of the Scale which is ultimately applied by the Court, given the wife’s conduct.[69]
[69] Paragraph 31(b) affidavit of the husband filed 16 April 2019.
In the alternative the applicant seeks costs in accordance with the Family Court scale for the final hearing fixed in the sum of $107,090.01 plus the outlays of $21,523.76.
I am aware that the Court should not depart lightly from the ordinary rules relating to costs between party and party and that the circumstances justifying the departure should be of an exceptional kind as stated in Kohan & Kohan (1993) FLC 92-340. In that matter, their Honours referred to Sheppard J in Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225. His Honour stated that it was useful to list some of the circumstances in which it was thought to warrant the exercise of the discretion. Those instances included:
a) Making allegations of fraud and knowing them to be false and the making of irrelevant allegations of fraud;
b) Evidence of particular misconduct that causes loss of time to the Court and to the parties:
c) The fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law:
d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: and
e) An imprudent refusal of an offer to compromise.
Most if not all of the criteria referred to for consideration of indemnity costs, are present in this matter at some level. The wife has overwhelmingly wasted Court time and prolonged the trial. She has pressed issues in wilful disregard of known facts and the law. The wife has made groundless contentions and allegations that ought never to have been made. The wife has accused the husband of misappropriating significant funds whilst fully appraised of evidence showing the funds were banked. Other allegations of misusing funds from sales of assets and the husband retaining the cash at bank were baseless, all designed to discredit the husband.
I am satisfied that the wife’s conduct has resulted in prolonging this litigation needlessly. If the trial had been confined to issues relevant, the time taken would not have exceeded one day. The wife has caused the husband to incur excessive and unnecessary legal fees in his efforts to prosecute his own reasonable position and deal with all of her baseless or ill-conceived issues.
The wife has could have resolved the matter by accepting the reasonable offers of the husband, but chose not to.
In looking at the husband’s costs, I am satisfied that the Federal Circuit Court Scale does not accommodate the extensive legal work required by the husband’s lawyers to defend and deal with the appalling conduct of the wife and her overall approach to this litigation. The wife has created unnecessary complexity and confusion and significantly greater legal work and costs for the husband than could have ever been contemplated in the Federal Circuit Court scale for conducting typical day 3 day trial. The asset pool should have been agreed, instead of contested as set out in the judgment.
Even allowing the costs on the Family Law Scale does not in my view take account of the wife’s overall conduct and time wasting. I consider that if the wife had made early concessions and abandoned all of her issues raised unsuccessfully, and not persisted with her groundless contentions and theories, the only issue for genuine contest was who would retain the former matrimonial home. Properly conducted, only a short cross examination would have been required on both sides if the issues had been limited.
There has been no real contest as to the percentages of 50/50. I am satisfied that the trial could have been conducted in this fashion it would have taken half a day to a day at most, including submissions. Had that occurred, the chances of a costs order being made against the unsuccessful party would on balance have been reasonably unlikely.
The indemnity costs sought by the husband amount to $159,859.51 in legal fees and $21,523.76 in outlays. Assessed on the Family Law Scale fees the amount is $107,090.01 plus the outlays of $21,523.76. This still leaves the husband significantly carrying legal costs due to the wife’s deplorable conduct throughout.
I am satisfied that in the circumstances set out herein, that the wife should pay the husband’s outlays of $21,523.76 in full.
I am satisfied that a special costs Order[70] would be appropriate, fixing the legal fees higher than the Family Law Scale and lower than indemnity. This will allow for some reduction to acknowledge that each party could have reasonably expected to pay their own costs of a properly run trial, as described by me, limited issues and no groundless contentions or theories, for half a day to a day at most.
[70] Sfakianakis & Sfakianakis (2019)
Having considered the matter carefully, I intend to fix a figure for the legal fees for the final hearing[71] at $125,000.00. Adding to that figure, the outlays of $21,523.76, brings the total to $146,523.76 that the wife is to pay the husband for the costs related to the property hearing.
[71] Excluding the costs of costs application.
Costs of the Cost application
The husband incurred significant costs pursuing his costs application. He appropriately briefed Counsel to appear on the three applications listed to be heard on 23 May 2019 being the husband’s two applications (being costs and quarantining a lump sum payment) and defending the wife’s Stay application.
The 23 May 2019 saw an abject failure by the wife to comply with Orders and file material or even attend her hearing. Her Counsel refused to proceed with the costs hearing, saying he didn’t even have the transcript and he needed to get his clients material on to deal with the application. This was despite the wife having since 16 April 2019 to do so and thus comply with the Orders. The husband’s costs on that day were completely wasted for the first hour, thanks to the wife’s conduct. The wife only prepared for her own application being the Stay.
The written submissions on costs were ordered ultimately as a result of the wife not being ready to proceed on 23 May 2019. The adjournment of the Costs application was not granted. This left her Counsel Mr Page QC subsequently refusing to proceed as set out in the judgement of 28 May 2019.
Mr Page QC said he did not even have the transcript. It is clear from the wife’s submissions as to costs, the transcript was never referred to. If there had not been written submissions finally agreed upon by the solicitors, yet another Court date would have needed to be allocated.
The wife has been entirely unsuccessful in her opposition to the costs application.
The husband and his solicitor and Counsel were ready to proceed. Given the wife’s scatter gun approach in running any and every issue she could contemplate in the litigation, regardless of its merit, the husband has been left to address her unmeritorious propositions and contentions in his own costs application. The task of preparing and conducting the costs application was unnecessarily prolonged, and extensive as a direct result to the manner in which the wife conducted the property hearing. The costs application needed to correspondingly deal with the myriad of unsuccessful issues pressed by the wife, her dishonesty, her false claims and allegations.
The submissions on behalf of the wife were noticeably inadequate, failing to properly address the relevant sections of 117(2). I would go so far as to say the responses at times were completely out of line and inconsistent with the findings in the judgment. The wife has just used the opportunity to file an affidavit to once again agitate her unsuccessful trial issues. The affidavit is carelessly put together to include comment and opinions, and rehashing issues about which findings have been made. The annexures do not always support the claims made in the affidavit and leave the Court to wade through poor copies of statements and figures and the various permutations of the figures.
There is no evidence of any written offer of compromise from the wife.
Having considered the all of the relevant matters, I am satisfied that there are circumstances that exist, that justify the Court departing from the provisions of section 117(1).
The husband claims indemnity costs or alternately costs in accordance with the Family Law Scale.
I am satisfied that the Federal Circuit Court Scale is inadequate to address the legal fees caused to the husband who has had to prepare twice for the costs argument, and to traverse the relevant issues and findings in the judgment and conduct the costs hearing.
I consider that the Family Court scale is closer to addressing the husband’s costs, but that it is still inadequate. The husband’s costs as per his costs agreement amount to $52,702.11. The amount allowable under the Family Law Scale is $38,552.48. I consider that it is appropriate to make a “special costs” Order which is more than the Family Law Scale, but less than indemnity in accordance with the Full Court authority in Sfakianakis & Sfakianakis.[72]
[72] [2019] FamCAFC 54.
I intend to fix the amount therefore to properly address the husband’s costs, in the sum of $42,000.00 which the wife is to pay the husband in relation to this application.
Stay application
As is clear from these reasons, the wife was wholly unsuccessful in seeking a Stay.
The Court was not satisfied with the wife’s bona fides in bringing the application for a Stay or the Appeal. In the judgment on the Stay [73] (the judgment) the Court noted the wife’s time wasting and dishonest conduct throughout the hearing. The Court had regard to the wife being untruthful and unreasonable making false challenges and her insistence that the Court adopt her novel arguments about the treatment of depreciation without any authority to do so, only abandoning her fixed positions when challenged with the truth, which the wife knew all along.
[73] Issued on 28 May 2019, paragraph 77.
The Court noted that the findings in the judgment being challenged in the appeal were based largely on the wife’s own evidence, that the appeal points misquoted evidence and the challenges to the findings and challenges to the precise amounts of debts were not supported by the exhibits. The Court noted in the judgment that the 39 appeal points raised as being errors related to findings which largely based on the wife’s own evidence which was quoted and referred to in the judgment. As to the appeal based on there being insufficient reasons, the Court considered that the 69 page judgment provided sufficient reasons[74]. The judgment concluded that most of the issues raised in the appeal are taken out of context and rely upon misquoted and misconstrued words or passages without reference to all that was included in the judgment on the subject.[75] The Court referred to the judgment making reference to the wife’s own evidence throughout the judgment.
[74] Paragraph 78.
[75] Paragraph 78.
The Court also did not accept that a failure to grant the stay would render the appeal nugatory, as was submitted for the wife. The house was not being sold to a third party and if necessary could be transferred back from the husband to the wife, contrary to the wife’s submissions.
I was also satisfied that the Stay would perpetrate an injustice to the husband. The husband being the successful party would be deprived of the opportunity to obtain funding to pay out the wife, if there was a delay in the transfer to the husband of the former matrimonial home through a Stay as sought by the wife.
As can be seen, the wife’s application was not only wholly unsuccessful it was an unmeritorious application which caused the husband significant expense to defend. The motives of the wife in bringing the application were not accepted as genuine.
I am satisfied that there are circumstances which justify a departure from the general position under section 117(1). The husband has incurred costs pursuant to his Costs Agreement in the sum of $23,348.88 (including reserve costs orders made on 23, 26 and 29 May 2019).
I am not satisfied that the Federal Circuit Court scale is adequate in the circumstances. I intend to order that the wife pay to the husband the costs of and incidental to the Stay application based on the Family Law Scale fixed in the sum of $17,301.80.[76]
[76] Husband’s amended application in a case, e-filed 28/06/2019. Point 4.
Preservation of funds application
The husband also has an application for costs arising from his successful applications after the trial for an order quarantining his lump sum payment to the wife heard and determined on the 23 May 2019 and determined on 23 May 2019.
In relation to the husband’s application to quarantine funds, during the hearing Mr Page QC first sought for an adjournment of the application until after the Appeal which was not granted. Thereafter Mr Page QC conceded that if the costs argument was not to be adjourned off until after the Appeal, it was appropriate to quarantine the funds. This concession could have been made well before the date listed for hearing and obviated the necessity for the husband to brief Counsel and prepare for and run the case for preservation and taking up unnecessary Court time. The husband’s application had been foreshadowed in final submissions of the trial, followed up by the filing of his application in a case on the 15 April 2019, the day prior to the judgment being handed down.
The wife sought in her Application in a Case,[77] that the application be adjourned until after the Appeal. She was wholly unsuccessful. As to her conduct, the wife again failed to comply with Orders to file submissions to defend the husband’s application. Neither the wife nor her solicitor filed material to support the orders sought for a stay of the husband’s quarantine application save for asking for an adjournment after the appeal as set out in the Application in a Case. I have had regard to the wife’s and the husband’s financial circumstances.
[77] Filed 16 May 2019.
I am satisfied that there are circumstances which exist which justify departing from the position in s.117(1). I intend to order that the wife pay the costs of and incidental to the husband’s preservation of funds application filed on 15 April 2019 application.
The costs the husband incurred pursuit to his costs Agreement total $15,944.25 inclusive of Counsels fees. I do not consider that the Federal Circuit Court Scale accommodates the work required for this application.
I intend to order that the costs be fixed in accordance with the Family Law Scale, in the sum of $10,507.32.[78]
[78] Husband’s amended application in a case e-filed 28/06/2019, point 5.
Costs of perfecting the Orders
The husband has set out evidence in his affidavit[79] filed on 23 May 2019, the wife’ conduct post trial. The wife has had the opportunity to respond and the husband’s evidence remains unchallenged. The issues concern the wife’s conduct in causing the husband to incur additional and unnecessary legal costs due to the wife’s continuing obstructive conduct.
[79] Filed 23 May 2019. Paragraphs 14 to 26.
The husband refers to the wife being uncooperative in allowing access to the former matrimonial home for the husband and his valuer. The valuation was required by the husband’s financer in order for the husband to be advanced funds to pay out the wife in exchange for the transfer of the wife’s interest in the former matrimonial home, pursuant to the final Orders. As can be seen from the written requests for access, the wife’s stipulation of conditions as to who could attend, limited times available and restrictions caused delay, distress for the husband and the necessity of multiple requests and arrangements and letters all to accommodate the wife’s wishes whilst she continued to hinder access.
The other issue is involves the wife holding over the transfer that had been provided to her as part of the conveyancing process necessary to perfect the Court’s final Orders. Miss Ritt set out in her affidavit[80] evidence of the original letter sent[81] on 30 April 2019 to the wife care of her solicitors attaching the property transfer and Form 24 Information Form for execution by the wife. The letter explained the necessity to execute the documents as soon as possible and in time to enable settlement to take place on or before Friday 31 May 2019. Without any explanation the wife just did not comply with the request in a timely fashion. Weeks went by with the wife doing nothing to return the transfers. The document was not returned by 23 May 2019, the hearing date of the wife’s Stay application, and the husband’s applications.
[80] Affidavit filed 21 June 2019, paragraphs 46 to 48 and annexure PR-04
[81] Emailed.
The solicitor for the husband fearing the wife, who remained holding the transfer document and therefore the husband captive, was not going to return the document in time for the husband to obtain his finance to retain the home which he was entitled to do so pursuant to the final orders was forced to raise the matter through her Counsel Mr Linklater Steel on that day. Mr Page QC gave the Court assurances that he would definitely make sure that the document was returned signed without delay. Had the wife been at the hearing on 23 May 2019, the transfer document could have been handed to the husband’s solicitor on that day. The wife decided to stay at work instead of coming to Court, without making any request to be excused from attending Court. By this time with only days left before the husband’s deadline, it was necessary for a flurry of calls and requests by the husband’s solicitor to the husband’s financier to expedite the settlement within four days following the urgent collection of transfer documents signed by the wife from W Lawyers at Town X by Ritt Law Monday 27 May 2019.
Without any further explanation it is an inescapable conclusion that the wife’s conduct, both in preventing access to the valuer and delaying in signing the transfer form for weeks, was designed to cause delay and the possibility of the husband losing out on his finance approval.
I am satisfied that the wife’s conduct caused the husband to incur additional legal fees over and above the fees which would have been ordinarily payable by the husband in relation to having the house transferred.
The initial costs were estimated by the solicitor for the wife as being around $500.00 to $1,500.00 depending on the complexity of the arrangements. Her fee estimate back in December 2017 was between $1,500.00 and $3,500.00. The husband legal fees on this aspect totalled $5,405.20.
The husband’s costs assessed on the Family Court Scale amount to $2,501.39.
I am satisfied that such costs were caused solely by the wife’s conduct.
All the husband was attempting to do, was have the terms of the Orders effected. I have had regard to the financial position of the husband and wife. There is no material filed by the wife in relation to this issue, and no submissions made. In all of the circumstances I am satisfied that circumstances exist to justify departing from the position of section 117(1). I am satisfied that the wife should pay the additional costs incurred by the husband. Having regard to his actual costs and the estimate of the general cost, I intend to fix the amount of $2,000.00 as payable by the wife to the husband in relation to this issue.
In Summary
I have been through each of the costs applications. I have determined that the wife should pay the following costs, as set out in this judgment, to the husband.
Costs of hearing
$146,523.76
Costs of the Costs application
$42,000.00
Costs of the Stay Application
$17,301.80
Costs of the Application to preserve funds
$10,507.32
Costs of perfecting the Orders
$2,000.00
TOTAL COSTS:
$218,332.88
I will also Order that such total sum shall at first instance be paid from the preserved funds held in the trust account of the Husband’s solicitors within 7 days of the date of these Orders, together with the other ancillary orders sought by the husband as set out in his Amended Application in a case e-filed on 28 June 2019 at points 6 through to Order 10 inclusive.
I certify that the preceding one hundred and fifty-three (153) paragraphs are a true copy of the reasons for judgment of Judge Willis
Associate:
Date: 31 January 2020
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