Gordon and Gordon (No.2)

[2018] FCCA 1617

FEDERAL CIRCUIT COURT OF AUSTRALIA

GORDON & GORDON (No.2) [2018] FCCA 1617

Catchwords:
FAMILY LAW – Property – respondent failing to do as he was ordered – applicant seeking increased amount – application granted with indemnity costs.

Legislation:

Family Law Act 1975, ss.79A(1)(c), 117(2A)

Family Law Rules 2004, r.17.03

Cases cited:

Gordon & Gordon [2017] FCCA 2899

In the marriage of Jones (1990) 14 Fam LR 19

Applicant: MS GORDON

Respondent: MR GORDON

File Number: MLC 6075 of 2016

Judgment of: His Honour Judge Wilson

Hearing date: 11 April 2018

Date of Last Submission: 4 May 2018

Delivered at: Melbourne

Delivered on: 19 June 2018

REPRESENTATION

Counsel for the Applicant: Mr P Crofts

Solicitors for the Applicant: Juliana Smith

Respondent: In person

Solicitors for the Respondent: None

ORDERS

1. Order 3 of the orders made on 4 October 2017 is varied to read as follows –

   The applicant and the respondent shall do all acts and things and sign all necessary documents to effect the sale of the property known as Property A in the State of Victoria (“the property”) and more particularly described in Certificate of Title volume folio and for that purpose the following shall apply –

   a.the property shall be listed for sale with Real Estate Town A, Victoria (the agent);

   b.the list price of the property shall be such amount as is agreed between the parties and failing agreement within 14 days of the date of these orders the list price will be as nominated by the agent;

   c.the sale price of the property shall be such amount as is agreed between the parties and failing agreement any offer to buy the property that is at least 90% of the list price shall be accepted by the parties as the sale price;

   d.the parties are to co-operate in every way with the real estate agent in relation to the marketing of the property for sale including making the key readily available, allowing inspection of the property at all times reasonably requested by the agent and ensuring that the property is clean, neat and in good order at the time of inspection by any prospective buyer;

   e.the parties shall appoint Conveyancing to act as conveyancer for the sale of the property and the parties shall execute the contract of sale and all other documents necessary to complete the sale of the property including all transfer documentation forthwith upon its submission to them by the agent;

   f.the contract of sale shall provide for completion within 30 days after the date of the contract or as agreed in writing between the parties (the settlement date);

   g.the proceeds of sale of the property shall be paid in the following manner and priority –

   i.payment of the agent’s commission and advertising or other expenses, if any, payable on the sale;

   ii.payment of the legal costs and outlays relating to the sale;

   iii.paying the applicant the sum of $14,493.32 by way of the applicant’s anticipated tax obligations on the transfer to the respondent of certain farming stock and plan pursuant to order 4 hereof;

   iv.paying to the respondent a sum equal to any amount paid to the wife pursuant to order 2(c) hereof;

   v.paying to the applicant one half of any amount remaining;

   vi.paying from the remaining funds $34,000 to the applicant in respect of property retained by the respondent pursuant to order 4 hereof;

   vii.any balance to the respondent; and

   viii.nothing in these orders shall prevent the applicant from seeking to recover from the respondent any shortfall between the amounts then remaining and the sum payable to her pursuant to order 3(g)(vi) hereof.

2. Order 4 of the orders made on 4 October 2017 is varied to read as follows –

   Following the sale of the property known as Property A the applicant transfer to the respondent at his expense all her right, title and interest in the stock, plant and equipment including but not limited to cattle and John Deere tractor and the respondent indemnify the applicant and keep her indemnified in respect of any cost, impost, levy, tax, penalty or charge that may arise from such transfer or any dealing with the stock, plant and equipment by him.

3. The respondent pay to the applicant out of the proceeds of sale of the property known as Property A in the State of Victoria, the amount of $16 635.76, comprising –

   (a)the fixed amount of $1 050.02 in interest on the amount of $34 000 (being the value of stock and plant retained by the respondent) calculated from 16 February 2018 until 26 July 2018;

   (b)the fixed amount of $3 000 pursuant to order 3 of the orders made on 11 April 2018; and

   (c)the fixed amount of $12 585.74 being the applicant’s costs of the proceeding on an indemnity basis.

4. All extant applications are otherwise dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Gordon & Gordon (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 6075 of 2016

MS GORDON

Applicant

And

MR GORDON

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 4 October 2017 I made final orders for the division of property in this case.  On an application for indemnity costs, on 24 November 2017 I published reasons for judgment on the question of costs, ordering the respondent to pay them but not on an indemnity basis.

2. It was common ground in this application that the respondent did not pay the costs he had previously been ordered to pay.

3. As a consequence, the applicant has applied on 21 March 2018 for orders the effect of which is to vary the orders I made on 4 October 2017. Counsel for the applicant contended in written submissions that the respondent’s failure to do the things he was ordered to do on 4 October 2017 constituted a contempt of court. However, he submitted that s 79A(1)(c) of the Family Law Act (“Act”) enables orders previously made to be increased in circumstances where a respondent has defaulted and it is otherwise just and equitable to so increase the orders previously made.  On this application the applicant also sought indemnity costs.

Synopsis

1. For the reasons that follow, I will make orders in the terms the applicant has sought.  For his dereliction in complying with the orders previously made, there being no offer of explanation, I order the respondent to pay the applicant’s costs on an indemnity basis.

Procedural issues

1. On 11 April 2018 this application was heard.  Mr Crofts of counsel appeared for the applicant and the respondent attended in person without legal representation.  Mr Crofts handed me a five-page submission together with a copy of affidavits from –

   a)Ms C, an accountant and tax agent;

   b)Heidi Keighran the applicant’s solicitor;

   c)Mr B, a livestock and real estate manager and legally qualified licensed real estate agent and livestock auctioneer; and

   d)the applicant.

2. Mr Crofts produced a draft form of order with precise details of the way he urged me to vary the orders made on 4 October 2017.

3. Being concerned that the respondent had not obtained legal advice at any stage of this litigation and he appeared before me unrepresented, I took the view that it was necessary to give the respondent some time to explain his situation, to file whatever material he wanted to file and to otherwise not be disadvantaged on the hearing of this application.  I gave him 14 days within which to file and serve any submissions and affidavits in opposition to the applicant’s application in a case filed 21 March 2018.

4. He did not do any of the things which I gave him time to do, whether within the period ordered or at all.  Accordingly, I have decided this application on the papers as I foreshadowed on 11 April 2018.  I am satisfied that the respondent was properly served with this application.

Relevant factual narration

1. At the trial of the previous proceeding heard on 4 October 2017, the parties were 73 and 75 respectively.  They married in 1967, then separated in October 1981 and divided their property.  They resumed cohabitation in 1991 and separated again under the one roof in March 2014.

2. On 4 October 2017, after a contested trial in which the husband was unrepresented, I made final orders that divided the parties’ property so that each party retained 50% of the total.

3. The final orders divided certain sums of money equally[1] but otherwise provided for the sale of property and, after the payment of selling costs, for the proceeds to be divided equally.  This process ensured that taxation obligations from the sale of farming stock and obligations under the Natural Livestock Identification scheme would be met.

   [1] Order 2 of the orders made on 4 October 2017

4. Relevantly, order 4 of the final orders made on 4 October 2017 provided that –

   Following sale of the property known as Property A and prior to settlement date of the property the parties do all things required to sell stock, plant and equipment including but not limited to cattle and John Deere Tractor at a time and price to be agreed between the parties with net proceeds of sales to be divided equally between the parties.

5. The respondent has –

   a)refused to make available for sale the stock, John Deere tractor and a ride on mower (“items”) despite three requests between 19 December 2017 and 1 February 2018; and

   b)informed an employee solicitor of the wife’s solicitors that he “was choosing not to comply” with the final orders.[2]

   [2] Affidavit affirmed by Ms R on 22 March 2018 and filed on 22 March 2018, [4]-[5]

6. Following the respondent informing the applicant that he was “choosing not to comply” with the final orders made on 4 October 2017 the applicant made arrangements for the items to be valued.  The values were for –

   a)cattle  $52,100 to $55,000;

   b)the tractor                   $10,000;

   c)a ride on mower     $3,000; and

   d)the total sum of     $66,100 to $69,000.

7. Had the respondent complied with order 4 of the final orders made on 4 October 2018 any costs of sale would have been met from the proceeds of sale and the balance divided 50-50.  However, as the respondent has chosen to retain the items in breach of orders, and there is no evidence of any costs of sale, the applicant sought a variation of the final property orders such that she receives $34,000 and for the respondent to legally retain the items and be responsible for them.

8. Of the proceeds of sale of the property known as Property A and situated at Property A in the State of Victoria,[3] $150,000 has not been disbursed to the parties.  The applicant sought to retain $34,000 of the proceeds, plus interest on this sum, the cost of this application and taxes as provided for by the final orders made on 4 October 2017, before the balance was disbursed equally.

   [3] More particularly described in Certificate of Title volume folio

9. Had the items been sold as envisaged by the final orders any proceeds of sale would have been available for distribution to the parties prior to the settlement of Property A.  Property A settled on 16 February 2018.  The applicant sought interest on the sum she was entitled to from that date[4] at the rate prescribed in the Family Law Rules[5] of 7.05% (being a sum of $6.5626 per day).

   [4] In the marriage of Jones (1990) 14 Fam LR 19

   [5] See Family Law Rules 2004, r 17.03

This application to vary the orders previously made

1. Section 79A(1)(c) of the Act provides that where the court is satisfied that –

   a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order … the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

2. The applicant submitted that –

   a)I should be satisfied on the evidence outlined above that the respondent defaulted in carrying out the obligation imposed by order 4 of the final orders made on 4 October 2017;

   b)the effect of the respondent’s default is that the applicant has not received 50% of the value of the items; and

   c)it is accordingly just and equitable to vary the order such that the respondent makes a payment to the applicant of this amount by enabling her to received more of the proceeds of sale of Property A and the respondent otherwise retains the items and responsibility for them.

3. The sum of $150,077.26 was held as at 10 April 2018 by JS Law in a controlled monies account on behalf of the parties.  These funds are the remaining proceeds of sale of Property A.[6]

   [6] Affidavit affirmed by Heidi Lee Keighran affirmed on 10 April 2018 and filed on 10 April 2018, [6], [9]

4. Pursuant to order 3(g)(iii) and 3(g)(v) the payment of any income or capital gains tax assessable by reason of the sale of the property, stock, plant and equipment is to be paid from the proceeds of sale of the Property A property before the balance is divided equally between the parties.

5. The expert evidence of the applicant’s accountant was that as the stock and some plant were assets of the applicant’s farming business and income tax was payable in the applicant’s hands of $14,493.32 on the disposal of that stock and plant, even if disposal is to the respondent.[7]

   [7] Affidavit affirmed by Ms C on 10 April 2018 and filed on 16 April 2018

6. By reason of the matters canvassed at paragraphs 21 and 22 above, the applicant is entitled to retain $14,493.32 and the balance of the funds held by JS Law in the controlled monies account on behalf of the parties should be divided equally.

7. The respondent has retained certain stock and plant, the details and circumstances of which were set out in the affidavit sworn by the applicant on 14 March 2018 and filed on 21 March 2018 and the affidavit affirmed by Ms R on 22 March 2018 and flied on 22 March 2018.

8. The stock had a value of $52,100 to $55,000.[8]

   [8] Affidavit sworn by Ms Gordon on 14 March 2018 and filed on 21 March 2018, annexure G-4; affidavit affirmed by Mr B on 9 April 2018 and filed on 10 April 2018

9. The plant had a value of $13,000.[9]

   [9] Affidavit sworn by the applicant on 14 March 2018 and filed on 21 March 2018, annexures G-6 and G-7

10. Had the stock and plant been solid as required by order 4 of the final orders made on 4 October 2017 the proceeds of sale of the stock and plant would have been divided equally between the parties.  The applicant seeks to retain from the respondent’s entitlement (being the monies held in the JS Law controlled monies account) the amount of $34,000 (being one half of the value of stock and plant, valued at between $65,100 and $68,000, pursuant to paragraphs 25 and 26 above).  This would be compensation for the value of stock and plant retained by the respondent in breach of the final orders.

11. The interest on $34,000 that the applicant seeks is $6.5626.[10]  The applicant sought interest from 16 February 2018 until a date seven days after the making of orders pursuant to these reasons so as to allow for receipt of funds and disbursement of funds.

    [10] Applicant’s submissions filed 10 April 2018, [10]

12. The applicant sought that the final property orders made on 4 October 2017 be varied[11] and submitted a draft of the orders showing the variations sought.

    [11] Ibid, [15]

The form of orders

1. In supplementary submissions dated 4 May 2018 the precise form of orders on which the applicant wished to proceed differed from the form that Mr Crofts handed to me in court on 11 April 2018.  The orders in their supplementary form appear at the commencement of these reasons.

Costs

1. Once again the applicant applied for costs on an indemnity basis.  In my previous decision in this case,[12] I extensively reviewed the law relating to indemnity costs. I do not repeat what I there said for present purposes. However, that learning applies with full force and effect. In reaching a conclusion in respect of costs, I have taken into account the specific provisions of s 117 of the Act, including the provisions of s 117(2A) of the Act.

   [12] Gordon & Gordon [2017] FCCA 2899

2. It seemed to me that by reason of the respondent’s want of co-operation in giving effect to the orders made on 4 October 2017, this application has been required.  The respondent should have co-operated yet he failed to do so.  In those circumstances, it seemed to me that it was no valid reason for the respondent to refuse to do that which he was ordered to do and for him to so refuse with impunity based only on the fact that he was not legally represented.  I do not accept such a contention.

3. It seemed to me there was real merit in Mr Crofts’ submissions in respect of the imposition of indemnity costs and I so order.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson

Date:     19 June 2018

CORRECTION NOTICE

Order 3(c) amended to read as follows –

the fixed amount of $12 585.74 being the applicant’s costs of the proceeding on an indemnity basis.