Graham and Callen and Anor

[2014] FamCA 299

FAMILY COURT OF AUSTRALIA

GRAHAM & CALLEN AND ANOR [2014] FamCA 299

FAMILY LAW – COSTS – Cross-applications for costs filed on behalf of the applicant, the respondent and the intervener – where the basis of the costs applications was primarily the conduct of the parties in the proceedings – where none of the parties had been wholly unsuccessful – the husband’s stronger financial position considered – where it is appropriate that each party bear their own costs – applications dismissed.

Family Law Act 1975 (Cth) s 117

Greedy and Greedy (1982) FLC 91-250
I and I (No 2) (1995) FLC 92-625

APPLICANT: Mr Graham

RESPONDENT: Ms Callen

INTERVENER: B Pty Ltd

FILE NUMBER: MLC 7912 of 2010

DATE DELIVERED: 9 May 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: In person

SOLICITOR FOR THE RESPONDENT: Sam Holt

SOLICITOR FOR THE INTERVENER: Neil Ogge Lawyers

ORDERS

IT IS ORDERED THAT

1. All extant applications for costs be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Graham & Callen and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7912 of 2010

Mr Graham

Applicant

And

Ms Callen

Respondent

And

B Pty Ltd

Intervener

REASONS FOR JUDGMENT

1. On 26 August 2013 I delivered my reasons for judgment and made final orders for property settlement. On 10 September 2013 I made the following orders in Chambers:

   (1)  On or before 4.00 pm on 1 October 2013 the parties file and serve upon the other parties any applications for costs and written submissions in support of such applications.

   (2)  By 4.00 pm on 15 October 2013 the parties file and serve any responses to any submissions filed in support of any applications for costs.

2. On 3 October 2013 I made further orders in Chambers extending the time for the parties to file and serve any responses to any submissions filed in support of any application for costs to 4.00 pm on 18 October 2013.

3. The husband has filed written submissions in support of his application that the wife pay 30 per cent of his costs.

4. Written submissions have been filed on behalf of the wife seeking an order that the husband pay her costs from a certain date, or 80 per cent or such other percentage as the Court determines, calculated on a solicitor/client costs basis or, in the alternative, party/party costs to be agreed or, in the absence of agreement, as taxed.  The wife has also filed a reply to the husband’s costs submissions opposing the husband’s application for costs as against her.

5. The intervener, B Pty Ltd, has filed written submissions in support of its application that the husband be ordered to pay the totality of its costs of the proceedings or, in the alternative, that the wife pay a percentage of those costs to be agreed or, failing agreement, to be taxed.

6. Where the written submissions of the wife and B Pty Ltd seek costs as or to be ‘taxed’ I have taken that to mean costs as assessed in accordance with the Family Law Rules 2004 (Cth) (‘the Rules’).

7. The husband has filed further written submissions by way of reply to the submissions filed on the behalf of the wife and the submissions filed by B Pty Ltd.

8. I propose to deal with the respective applications for costs in the following order:

   ·    the application for costs made by the husband;

   ·    the application for costs made by the wife; and

   ·    the application for costs made by B Pty Ltd.

Legal principles

1. The general rule in proceedings in this Court pursuant to the FamilyLaw Act 1975 (Cth) (‘the Act’) is that each party to the proceedings shall bear their own costs of those proceedings. Section 117(2) of the Act provides as follows:

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

10. Section 117(2A) of the Act provides that in considering what, if any, order should be made for the payment of costs the Court shall have regard to the following matters:

(a)   the financial circumstances of each of the parties to the proceedings;

(b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

(c)  the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

(d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

(e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings;

(f)   whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

(g)  such other matters as the court considers relevant.

11. The matters in s 117(2A) must, as the Full Court said in I and I (No 2) (1995) FLC 92-625, ‘all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.’

The husband’s application for costs

12. The husband’s application is that the wife should pay 30 per cent of his costs.

13. The husband has represented himself in these proceedings since January 2012 and there is no evidence before me as to any costs he may have incurred, albeit that I am aware that he may have incurred disbursements with respect to his expert witness.

14. Notwithstanding that the husband in his submissions did not refer directly to the relevant sub-sections of the Act I will attempt to deal with his application by reference to the relevant provisions of the Act.

Section 117(2A)(a) The financial circumstances of each of the parties

15. As referred to in my reasons for judgment, the husband was born in 1967 and is 46 years of age. He is self-employed and earns approximately $1,200 per week. He has a new partner with whom he has had a child. The husband’s new partner left her employment following the birth of that child and the husband, his new partner and the child live in a property owned by his partner, acquired by her prior to them commencing cohabitation.

16. The wife was born in 1955 and is 58 years of age. At the time of the hearing before me she was working part-time in hospitality and according to her financial statement filed 14 January 2013 was earning approximately $500 per week. She has no formal qualifications and I found that her capacity to earn income was less than the husband’s. She has three children of her previous marriage who are all adults.

17. As a consequence of the final orders made 26 August 2013 the property in which the wife has been living is to be sold and, after payment of the sum of $1,380,000 to B Pty Ltd and the further sum of $465,628 to be paid and held on trust for the payment of Capital Gains Tax (‘CGT’) and less estimated sale costs of $100,000, the husband is to receive 65 per cent of the balance of the net proceeds of sale plus the sum of $69,903 to be paid to him out of the wife’s share of those proceeds. The agreed value of the property for the purposes of the property proceedings was $2,750,000.

18. The effect of the orders made 26 August 2013 was that the husband would be entitled to approximately $522,841 out of the net proceeds of sale of the property, and that he would retain other property valued at $88,605, and there would be an adjustment out of the wife’s share of the net proceeds of sale in his favour in the sum of $69,903. This adjustment allowed for a 65/35 division of the parties’ combined property interests in favour of the husband, excluding the proceeds of sale of the real property.

19. The wife, for her part, retained property, excluding the proceeds of sale of the real property, valued at $155,254 and the sum of approximately $211,628 out of the net proceeds of sale of the property. As referred to in my reasons I took into account the fact that the wife had already had the benefit of in excess of $800,000 from the proceeds of sale of the two townhouses, to the exclusion of the husband.

20. Although I am satisfied, as submitted by the wife, that the husband is in a stronger financial position than the wife both with respect to capital and income, this does not in my view militate against an order for costs being made in favour of the husband if the circumstances justify the Court making such an order.

Section 117(2A)(b) Whether either party is in receipt of legal aid

21. Neither the husband nor the wife were in receipt of legal aid.

Section 117(2A)(c) The conduct of the parties to the proceedings in relation to the proceedings

22. The husband appears primarily to rely upon the wife’s conduct of the proceedings in support of his application for costs and in particular because of what he submits was “the wife’s repeated failure to comply with the court orders, unnecessary and protracted proceedings have been necessitated.”

23. The husband’s complaints about the wife’s conduct of the proceedings include the following matters:

·    that the wife failed to comply with an order made 16 March 2011 in the Federal Magistrates Court, as it then was, that she provide bank statements for any accounts held by her either solely or jointly from 2003 to the date of that order, and that those statements were never supplied in their entirety and the husband was required to subpoena the wife’s bank records;

·    that the wife failed to comply with various orders made in the Federal Magistrates Court, as it then was, with respect to the filing of affidavit material in relation to:

i)the value of the property at C Street, Suburb T;

ii)the amount of any CGT allegedly due and payable with respect to the transfer of that property;

iii)expert evidence as to the shares held by the husband as at 1 March 2004 and as at the date of the orders; and

iv)expert evidence as to the costs of construction of the two townhouses on the property at C Street, Suburb T; and

·    in summary, the husband’s complaint was not that the affidavits were not filed but that they were filed out of time or not provided to the husband in a timely manner.

24. The husband submitted that the wife had deliberately failed to comply with orders of the Federal Magistrates Court, as it then was, and this Court “as part of a strategy to delay proceedings and pressure the husband into a compromised settlement” and the wife was “at no time … willing to engage in meaningful negotiations towards a fair and equitable settlement.” I was not asked to by the husband nor did I make findings with respect to these issues.

25. Although the wife in her submissions concedes that she failed to file affidavits on time, she submits that her failure to do so did not prejudice the husband in the preparation or conduct of his case. The husband certainly did not submit that he was not in a position to proceed with his case or that he was prejudiced in the conduct of his case by the wife’s failure to comply.

Section 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders

26. The proceedings before me were for property settlement and were not necessitated by the failure of either the husband or the wife to comply with previous orders.

Section 117(2A)(e) Whether a party to the proceedings has been wholly unsuccessful

27. Although as noted in the reasons for judgment I had some difficulty following the basis upon which both the husband and the wife put their respective cases it was ultimately not a case in which the Court was required to choose in absolute terms between their respective positions.  As is frequently the case I accepted and rejected various aspects of the parties’ cases.  Although the Court did not make orders in terms of the wife’s application and the orders that were made were closer to orders sought by the husband than those sought by the wife, it could not be said that the wife has been wholly unsuccessful.

Section 117(2A)(f) Whether either party made an offer in writing to the other party and the terms of that offer

28. The husband does not seek to rely upon any offer of settlement.

Conclusion

29. Having regard to all of the matters in s 117(2A) to the extent that they are relevant in the circumstances of this case and in particular, as submitted by the husband, to the wife’s conduct of the proceedings, I am not satisfied that this is a case in which I should depart from the general rule and order the wife to pay the husband’s costs, whatever they might be.

The wife’s application for costs

30. The wife seeks an order that the husband pay her costs from a certain date, or 80 per cent or such other percentage of her total costs as the Court determines on a solicitor/client basis or in the alternative on a party/party basis to be agreed and in the absence of agreement as assessed.

Section 117(2A)(a) The financial circumstances of each of the parties

31. It is submitted on behalf of the wife that the husband has a capital sum from which he could meet an order for costs. I am satisfied that that is the case. As referred to in my reasons the husband is in a superior financial position to the wife both as to capital and income. However, the parties’ respective financial positions would neither lead me to conclude, absent other matters which would support the making of an order for costs, that I should make an order for costs in the wife’s favour nor would it militate against making such an order. 

Section 117(2A)(c) The conduct of the parties to the proceedings in relation to the proceedings

32. The focus of the wife’s submissions in support of her application for costs was the way in which she submits the husband conducted the proceedings. The wife relies upon the following matters:

·    that the husband has failed to comply with previous orders;

·    that the proceedings and the continuation of the proceedings were the result of the husband failing to prove matters relating to his contributions, including his shareholdings and share trading, in a proper way;

·    that the husband was capable of and it follows, logically should have, identified every deposit and the source of the funds and the reason for each withdrawal and how it was applied;

·    that the husband attempted to justify what he said were his contributions by the use of spreadsheets he had prepared rather than evidence;

·    that the wife incurred what would have been unnecessary costs as a result of the husband’s failure to properly prove matters in relation to his contributions;

·    that the husband failed to comply with orders including:

i)his failure to comply with the order requiring him to serve an outline of case for the purposes of the proceedings in the Federal Magistrates Court, as it then was;

ii)he failed to set out in an affidavit the costs of construction; and

iii)he failed to produce his tax returns;

·    that the documents that the husband did produce were produced in a piecemeal fashion; and

·    that the husband failed to acknowledge or accept the debt to B Pty Ltd or the CGT liability.

33. The wife submitted that the deficiency in the husband’s presentation of financial material prolonged the preparation of her case, resulted in adjournments and interlocutory orders and added to the length of the trial. She further submitted that the litigation cost about five times what it would have “if the [h]usband had properly proved his case, which could have been simply done by producing a dated invoice or dated receipt and a dated bank entry as to expenditure and a dated withdrawal from his funds should it be asserted that that withdrawal contributed to an item of expenditure.”

34. Insofar as the wife’s submissions are based upon her criticism of what her expert witness Mr F described as the husband’s “poor record keeping” I am satisfied that, as the Full Court said in Greedy and Greedy (1982) FLC 91-250 at 77,381, ‘it would be quite unfair to order costs against a party merely because that party had not kept proper business records at a time before the separation of the parties.’

35. The wife’s submissions in support of her application for costs are to a significant degree a repeat of the matters that she relied upon at the trial and have little regard to the reasons for judgment or the findings made therein. My findings relevant to the matters upon which the wife now relies include the following:

6.   … Both the husband and the wife attempted to demonstrate, using a variety of mathematical calculations as to the cost of the project and the funds that were available and are not the subject of dispute, that for the husband’s part he had contributed the alleged shortfall of funds and that for the wife’s part no additional funds were required to complete the project.

7.   Notwithstanding the various mathematical calculations used by the husband and the wife and their focus on this particular issue, the inquiry I must make is much broader. It largely fell to me to identify the broader issues and to analyse the evidence relevant to those issues.

…

23. Although the husband appeared at times to be a little overwhelmed by the vast number of documents he had to manage, he represented himself well … The husband generally conducted himself courteously throughout the proceedings and there was nothing about his conduct that would lead me to conclude that he was not doing his best to give honest evidence. There were however, aspects of the evidence of both parties that suggested that they were conscious of what the legal consequences of that evidence might be.

24. My task in this case has been complicated not so much by the fact that the husband was self-represented or because either of the parties were dishonest witnesses but by the attempts of both parties to establish what must have happened based upon their various calculations, rather than confining their evidence to their knowledge of the events and evidence that might otherwise directly support their version of events …

31. The relevant statements for these various bank accounts are either annexed to the affidavits relied upon by the parties in this matter or are exhibits in the case. There is no evidence before me which would suggest that either the husband or the wife have any other accounts that they have failed to disclose or to which they have diverted any funds. The husband also produced online share trading statements for his Westpac online share trading.

32. The husband was cross-examined at length by counsel for the wife about what was referred to as his “Ring Around the Rosie” of transactions between his various accounts, in relation to, firstly, the proceeds of sale of the [Suburb D] property and then, secondly, his share trading using those sale proceeds. Although there were many complaints about the husband’s failure to provide full and frank disclosure, extensive affidavit material was filed by both parties and particularly by the husband, and there was lengthy cross-examination about this issue. I am satisfied, and my finding is supported by the bank statements for the various accounts, that the husband transferred the proceeds of sale of the [Suburb D] property between the ANZ account in his name, his ING account, and then to his Westpac Classic account, and that those proceeds of sale were then used for share trading.

40.  … Whilst it may not be possible to verify each and every transaction, and I will refer in more detail to Mr [F’s] analysis of the husband’s application of the funds in the various accounts, I am satisfied that the proceeds of sale of shares and dividends he received were applied to the costs of construction and used to meet living expenses for he and the wife and her children. As I have previously said, my inquiry is not limited to the contributions made by the parties to the construction.

…

133.I have received detailed written submissions with respect to what is said to be the husband’s failure to provide full and frank disclosure of documents, however having read those submissions and the affidavits, including the affidavit of Mr [F] annexing various letters to the husband with respect to the documentation. I am left with the impression that the complaint was not that he had failed to provide the source documents, such as bank statements for the various accounts, albeit that he may not have done so as promptly as he should have; the complaint is that he has not adequately explained the transactions disclosed in those statements. My assessment of the evidence is that the husband does appear to have attempted to provide a very detailed analysis of the transactions in the various accounts, including the transfer of money between accounts and the application of the funds in those accounts.

134.  Whilst it is true that the husband did rely upon spreadsheets, that there were a number of versions of these spreadsheets during the course of the proceedings, that he could not account for every transaction and that he did on occasions confuse the evidence rather than clarify it, I am satisfied that they were genuine attempts by the husband to give accurate evidence and to analyse that evidence.

…

151.  In the context of the mathematical approach taken by the parties and for the purposes of assessing his contributions, the husband was expected to account for every dollar spent and to provide an explanation for the transfer of funds between the various accounts in the husband’s name and the joint names of the parties.

152.  The difficulty I have with these criticisms of both the husband’s record-keeping with respect to the building project, the conduct of these proceedings and his evidence, is that those criticisms, like the cases of both parties, focus on the costs of construction and are based upon a mathematical approach to the matter, requiring a detailed examination of a significant number of individual transactions. It is, however, well settled that the assessment of the parties’ contributions does not require such a detailed mathematical exercise.

… 

156.  The husband cannot account for how every dollar he had prior to the commencement of cohabitation nor his income during the relationship, either by way of dividends or from his employment or the proceeds of sale of shares, has been spent or exactly what he spent it on. It is not reasonable to expect such detail and precision. However, I am satisfied on the balance of probabilities on the evidence before me that the husband has applied the proceeds of sale of both the shares he owned prior to the relationship and those he acquired with the proceeds of sale of the [Suburb D] property, his redundancy package, dividend income and his income from employment to the construction of the two townhouses and the support of himself, the wife and her children during the relationship.

36. Even if I had not been satisfied that the husband had proven his case there was no evidence nor were there any submissions based upon which I could conclude that the litigation had cost five times more than it should have as submitted by the wife. 

Section 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to comply with previous orders

37. The proceedings before me were for property settlement and were not necessitated by the failure of either the husband or wife to comply with previous orders.

Section 117(2A)(e) Whether a party to the proceedings was wholly unsuccessful

38. The husband was not wholly unsuccessful.

Section 117(2A)(f) Whether either party made an offer in writing to the other party and the terms of any such offers

39. The wife does not seek to rely upon any offer of settlement.

Section 117(2A)(g)- Any other matters the court considers relevant

40. The wife’s case was that the husband should receive either no payment or that if I determined that he had contributed to the cost of the construction of the two townhouses then he should receive $200,000 out of the proceeds of sale of the remaining townhouse. The wife also sought payment of not only the CGT but also the general interest charges (‘GIC’) out of the proceeds of sale of that townhouse. The wife was not successful on either basis.

41. I will discuss this matter in more detail in relation to B Pty Ltd’s application for costs.

42. Although it could not be said that the husband was wholly successful the orders that were made by the Court were significantly more favourable to the husband than those orders the wife proposed should be made. 

Conclusion

43. Having regard to and balancing all of the matters that I must consider, including the wife’s submissions and the findings in my reasons as to the husband’s conduct of the proceedings and the ultimate outcome of those proceedings on the basis of those findings, I am not satisfied that this is a case in which I should depart from the general principle that the parties should each bear their own costs. Although the husband’s financial position would not militate against an order for costs, I am not satisfied that an order would otherwise be justified on the basis of my findings and in particular in circumstances where I did not make findings about either the husband’s failure to prove his case or failure to provide full and frank disclosure as alleged by the wife.

B Pty Ltd’s application for costs

44. B Pty Ltd seeks an order that the husband pay its costs of the proceedings or in the alternative that the wife pay a percentage of those costs as agreed or in the absence of agreement as assessed.

45. B Pty Ltd’s written submissions did not refer directly to the provisions of s 117(2A) however those submissions suggest that the primary focus of its application for costs is the husband’s conduct of the proceedings.

46. B Pty Ltd submitted that it became a party to the proceedings because the husband failed to agree to orders sought by the wife in relation to the sum of $1,380,000 for the transfer to the wife of C Street, Suburb T and any CGT owed by B Pty Ltd incurred as a consequence of the transfer of that property.

47. These proceedings were instituted by the husband in the Federal Magistrates Court of Australia, as it then was, on 24 August 2010. The wife filed a response to the husband’s application on 31 January 2011 in which she sought orders, inter alia, as follows:  

1.   That as between the husband and the wife, the wife be the sole beneficial owner of the property known as [C Street] …;

2.   That the wife retain for her own use and benefit absolutely all of the [net] proceeds of sale of the property known as [C Street] … The wife indemnify the husband against all or any liability whether existing now or in the future in respect of:

(a)all the encumbrances and outgoings and utility expenses of the property[;]

(b)all claims by the [B] Trust including any Capital Gains Tax liability in respect of the transfer (prior to subdivision) to her of the property then known as [C Street] … [;]

…

4.   The husband and the wife contribute equally to any Capital Gains Tax liability in respect of the sale of [C Street] … (as sub-divided).

48. In the written submissions filed on its behalf B Pty Ltd submitted that it had been open to the husband to accede to the wife’s application and that, had he done so, it would not have been necessary for B Pty Ltd to become a party to the proceedings. This submission seems to ignore that the orders sought by the wife would have resulted in the husband being indemnified against any liability to B Pty Ltd albeit that the wife would have retained both the benefit of the proceeds of sale of Property AA, C Street, Suburb T and the property at C Street, Suburb T to the exclusion of the husband.  I am not satisfied, particularly in light of the outcome of the case, that it is reasonable in all of the circumstances to submit that the husband should have acceded to the wife’s application or that the fact that he did not do so is a basis for an order for costs being made in B Pty Ltd’s favour.   

49. In any event, on 16 September 2011 B Pty Ltd filed a response in the Federal Magistrates Court, as it then was, in which it sought a declaration that the wife was indebted to B Pty Ltd in the sum of $1,380,000 and on 21 September 2011 orders were made in the Federal Magistrates Court which included a notation, which was agreed to by both the husband and the wife, that they owed B Pty Ltd the sum of $1,380,000.  B Pty Ltd’s response sought no orders for the payment of any CGT it had incurred. 

50. On 10 December 2012 B Pty Ltd filed an amended response in this Court in which it sought the following:

(a)   a declaration that the wife is indebted to B Pty Ltd in the sum of $1,380,000;

(b)  a declaration that the wife, or in the alternative the wife and the husband, is/are indebted to B Pty Ltd in the amount of the CGT liability, including any interest and penalty thereon; and

(c)  costs.  

51. Although the husband and the wife acknowledged that they owed B Pty Ltd $1,380,000 and as submitted on behalf of B Pty Ltd on 26 August 2013 the Court made orders that both the sum of $1,380,000 be paid to B Pty Ltd and a further sum of $465,628 be paid to the Australian Tax Office (‘ATO’) from the proceeds of sale of C Street, Suburb T, I nonetheless made a number of findings that are relevant for the purposes of this application for costs.

52. At paragraph 97 of my reasons I said as follows:

Although the husband agreed to pay the sum of $1,380,000 to [B Pty Ltd], and ultimately conceded during the hearing that he and the wife had a moral obligation to pay the CGT, it was his case until that time that not only was payment of the CGT never discussed and never agreed to, but that he had assumed that the $1,380,000 that the parties owed [B Pty Ltd] would never have to be repaid and the Trust would ultimately be wound up. There is some support for the husband’s case in the letter from [Mr H], who was then acting on behalf of the husband and the wife, dated 22 August 2006, insofar as he says:

Please note that the transfer will create a debt of $1,380,000 owing by [the wife] to the Trust. In due course the Trust Deed should be amended to include other beneficiaries. The net amount of the debt can then be distributed to various beneficiaries, subject to varying tax situations.

53. I went on to say at paragraph 99 as follows:

Although I am left in some doubt as to the original intention of the parties and in particular the wife and [B Pty Ltd] as the husband agrees that the $1,380,000 should be repaid, it is not necessary for me to determine whether or not it was the intention of [B Pty Ltd] and/or the parties or either of them that it was always intended to be a loan or whether it was intended that it be repaid.

54. B Pty Ltd’s submissions did not identify with any specificity any prejudice it had suffered as a result of the alleged delay by the husband, or for that matter the wife, to acknowledge the alleged debt. In my view, there was little disadvantage to B Pty Ltd in relation to the alleged debt of $1,380,000 in circumstances where the husband and wife both acknowledged that debt within a matter of weeks after B Pty Ltd filed its response in September 2011. This submission also appears to disregard my finding that on 1 September 2009 the wife received the net proceeds of sale of the first of the two townhouses at which time she had the capacity to pay B Pty Ltd at least part of the amount it was said to be owed, and that in May 2011 when her son Mr A Callen became the sole director of B Pty Ltd in the wife’s stead, he took no steps to recover the monies allegedly owed to B Pty Ltd by the husband and the wife.

55. Significantly for the purposes of the application for costs, I found at paragraph 108 as follows:

I am not satisfied on the balance of probabilities on the basis of the evidence before me that there was any agreement either written or verbal between the husband and the wife or [B Pty Ltd] that the husband and wife would be liable for the payment of [B Pty Ltd’s] liability for CGT or the GIC, if any.

56. Although as submitted by B Pty Ltd I did make orders with respect to both the sum of $1,380,000 and an amount of $65,628 for the CGT and a proportion of the GIC, I did so not because I was satisfied that there was an agreement that they be paid but because the husband agreed to pay them. I found at paragraph 114 as follows:

I am not satisfied on the balance of probabilities that there was ever an agreement, either in writing or oral, as alleged, to pay the CGT or an agreement between the husband and the wife and [B Pty Ltd] to pay the GIC. I note that the husband has agreed to pay the GIC up until the date of settlement of the sale of the first of the townhouses and I propose, on that basis, to treat the sum of $465,628 as a debt of the parties and to make an order in the terms proposed by the husband with respect to this issue. I do not propose to make the orders sought by either [B Pty Ltd] or the wife for payment of the balance of the GIC out of the proceeds of sale of the second of the two townhouses.

57. Arguably on the basis of my findings, save for the husband’s agreement, B Pty Ltd would have been wholly unsuccessful with respect to the payment of the CGT and GIC, and although it was not necessary for me to make any findings with respect to the sum of $1,380,000 I did express some doubts about the evidence in relation to that alleged debt. The husband has certainly not been wholly unsuccessful in relation to B Pty Ltd’s claim.

58. As a result of my orders, B Pty Ltd is to be paid the sum of $1,380,000 out of the net proceeds of sale of the second townhouse. The orders provide for the payment of the CGT and a proportion of the GIC and B Pty Ltd will be required to pay the balance of any GIC.

59. As I have already discussed earlier in these reasons, I am satisfied that the husband’s financial circumstances do not militate against the making of an order for costs if it were otherwise proper to do so.

60. I have also taken into consideration that these proceedings were not a result of a failure on the part of either B Pty Ltd or the husband to comply with previous orders, there were no offers made in writing to the other party, and that neither of the parties are in receipt of legal aid.

61. B Pty Ltd also submitted that if I did not order the husband to pay its costs then in the alternative the wife be ordered to pay a percentage of its costs. There were no submissions as to the basis of that claim or its quantum and in those circumstances I am not in a position to make the orders sought by B Pty Ltd against the wife. I am also mindful of the fact that as previously discussed B Pty Ltd took no steps to either recover the capital sum it submitted was owed by the wife, or the husband and the wife, from which it could have met any CGT it had incurred or to recover that CGT from the wife in circumstances where, as I have found, the wife had the use of in excess of $800,000.

CONCLUSION

62. In all of the circumstances of this case and weighing up the matters I must consider I am not satisfied that this is a case in which I should depart from the general rule that the parties should each bear their own costs of the proceedings.

63. Accordingly, I propose to dismiss all three applications for costs.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 9 May 2014.

Associate: 

Date:  7 May 2014