GREENING & GREENING

[2016] FamCA 185

FAMILY COURT OF AUSTRALIA

GREENING & GREENING [2016] FamCA 185

FAMILY LAW – COSTS – where the applicant seeks that each party should bear their own costs – where the respondent seeks an order that the applicant pay costs on a party/party basis – where consideration is given to s 117(2A) factors – where it is ordered that the applicant pay the respondent’s costs (including counsel fees) to be calculated on a party/party basis as and from a fixed date.

Family Law Act 1975 (Cth) s 117

Family Law Rules 2004 r 19.08, 19.18

APPLICANT: Mr Greening

RESPONDENT: Ms Greening

FILE NUMBER: ADC 2983 of 2011

DATE DELIVERED: 30 March 2016

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 1 February 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lindsay

SOLICITOR FOR THE APPLICANT: Jordan & Fowler Barristers and Solicitors

COUNSEL FOR THE RESPONDENT: Mr Bowler

SOLICITOR FOR THE RESPONDENT: Duncan Basheer Hannon

Orders

1. The applicant do pay the respondent’s costs (including counsel fees) to be calculated on a party/party basis as and from 16 August 2013 as agreed or assessed excluding her costs in respect of the application for security of costs and the application for injunction to restrain the husband from disposing of property.

2. That the applicant pay the respondent’s disbursement fixed in the sum of SEVEN THOUSAND SIX HUNDRED AND EIGHTEEN DOLLARS AND NINETY NINE CENTS ($7618.99) within 120 days.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Greening & Greening 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 ADELAIDE

FILE NUMBER: ADC 2983  of 2011

Mr Greening

Applicant

And

Ms Greening

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. On 5 August 2015, orders were made that listed all applications for final hearing to a trial on 1 February 2016.

2. The matter was listed for mention on 23 December 2015 and trial direction orders required that Mr Greening (“the applicant”) file and serve his trial documents by 18 September 2015.

3. Ms Greening (“the respondent”) and Mr B (“the second intervener”) were required to file their trial affidavit material by 6 November 2015.

4. On 10 November 2015, orders were made that noted that the applicant was five weeks late in serving his trial affidavit and accordingly, time was extended for the intervener to file its trial affidavit by 30 November 2015.

5. On 23 December 2015, the applicant filed a Notice of Discontinuance in respect of the intervener and an order was made that as between the husband and the second intervener there be no order for costs.

6. The proceedings were not resolved as between the applicant and respondent and an order was made extending time for her to file her trial affidavit to 15 January 2016.

7. The respondent filed her trial affidavit documents by 14 January 2016.

8. On the first day of trial, the Court noted the parties had finalised the proceedings by the applicant filing a Notice of Discontinuance on 21 January 2016 in respect of the Initiating Application filed 1 November 2012.  The order notes that the parties are to retain their property and resources free from claim by the other, but that the finalisation of the proceedings for property settlement did not prejudice the wife’s application for costs.

9. Orders were made that required the applicant and the respondent to file written submissions as to the question of costs.  Submissions were received and considered.

10. The respondent seeks an order that the applicant pay her costs as may be agreed or assessed and the applicant opposes an order for costs being made.

BACKGROUND

1. The applicant commenced proceedings by the filing of an Initiating Application on 1 November 2012 seeking the following orders:-

   (1)That by way of settlement of property or alteration of interests in property the wife do pay to the husband such sum as this Honourable Court deems just and equitable.

   (2)A declaration of the interests of the husband and/or the wife in the properties situate at C Street, Suburb D and E Street, Suburb F.

2. The applicant sought by way of interim relief an order pursuant to s 44(3) of the Family Law Act1975 (Cth) (“the Act”) namely, that he have leave to institute proceedings out of time.

3. His affidavit in support filed 1 November 2012 set out the history of the relationship between the parties.  They met in 1985 and commenced a relationship in 1987.  They married in 1987 and separated on 10 July 2010 following a period of 22 years.  A divorce order was made on 14 October 2011.

4. The applicant acknowledged that at the time of marriage he had no assets of significance, whereas the respondent owned a house at Suburb D which had been purchased from the applicant’s grandmother with some family assistance.

5. The early years of marriage between the parties was uneventful, however the wife’s mother died in 2000 and following the grant of probate in 2005, the wife inherited shares in a family company G Pty Ltd (“the company”)

6. The parties lived at Suburb F until they purchased a property at H Street, Suburb D.  Whilst at Suburb F, the respondent’s parents purchased a home at E Street, Suburb F and the applicant alleges that he used his skills as a brick layer and builder to renovate and restore the property.

7. The applicant asserted that there was always an understanding in the family that the respondent would ultimately inherit the E Street, Suburb F property on the death of her father.  That contention was not admitted by the respondent.

8. In 2003, the wife’s family purchased a farming property at C Street, Suburb D.

9. The parties took up residence at the C Street, Suburb D property and again the applicant alleges that certain substantial renovation work was undertaken by him.

10. In essence, the applicant says that he and the wife had a mutual understanding from discussions with the respondent’s father that:-

    (a)The beneficial ownership of the land (16 acres) comprising most of the C Street property would be held by the wife and her sister in equal proportions;

    (b)The house property and enough surrounding land to qualify for the issue of a separate title would be the wife’s property; and

    (c)The wife’s brother Mr I would be given the family farm (the vineyard) in lieu of any interest in the C Street subdivision.

11. The respondent filed a Response on 7 December 2012 seeking the following substantive order:-

    (1)That the wife and husband have as their property and resources free from any claim from the other all chattels, real property, property, financial resources, superannuation in their respective names or in their power, possession and control to the exclusion of the other.

12. In her initial affidavit filed in support of the response, the respondent agreed that she had inherited two ten cent shares in the company, but denied that she had an equitable interest in the C Street property.

13. It is apparent from correspondence annexed to the respondent’s affidavit that the parties had attempted to negotiate a resolution.  By letter dated 22 November 2011 (MG4 to the applicant’s affidavit), the respondent asserted that she did not have ownership of the property at C Street, Suburb D, that the property at E Street, Suburb F was owned by the respondent’s father Mr B Snr and that all she received were two ten cent shares in the company by way of inheritance from her mother’s estate.

14. Notwithstanding her assertion that the preponderance of the property standing to the parties was held by the applicant, it was the respondent’s proposal that the parties should retain property currently in their respective possession and indemnify the other from debt and in particular various liabilities that the respondent had including a substantial loan to the company for $70,000.

15. By letter in response of 16 February 2012, the applicant’s solicitors assert on behalf of their client:-

    I must say that it appears that your client is unwilling to acknowledge she has any equitable interests in the land referred to in correspondence.  I see this is an indicator that the proceedings should issue, but I will seek instructions from my client about that.

    I do not have any instructions as to your offer, although my client has been sent copies of your letters.  I cannot imagine that he would be settling on those terms, but again I will seek his specific response.

16. It is reasonable to infer at an early stage in the proceedings that the applicant held a strong view that the respondent held an equitable interest in the land and was unlikely to be persuaded otherwise.

17. By Application in a Case filed 12 July 2013, the applicant sought further and better discovery from the respondent.

18. Whilst the dispute was as to the extent of the disclosure made by the respondent, documents that were produced and inspected on 26 June 2013 provided the following information:-

    ·The B Family Trust was established on 11 November 2001;

    ·The Power of Appointment for the B Family Trust was held at the time by the wife’s brother;

    ·The Trustee of B Family Trust was B Pty Ltd incorporated on 12 November 2001;

    ·The equal shareholders were and remain the respondent, her brother and her sister;

    ·That the property at C Street, Suburb D was purchased for and on behalf of the Trust;

    ·That B Pty Ltd changed its name to J Pty Ltd; and

    ·In 2008 the respondent and her sister were added as appointors.

19. In relation to the C Street property, it was again asserted that the applicant undertook significant work and improvement to the property and that the respondent had an expectation of “beneficial ownership of the property”.

20. By her Response filed 16 August 2013, the respondent denies that she did not make full and frank disclosure and stated that upon receiving correspondence from the applicant’s solicitors, a substantial quantity of documents were provided.

21. An index to a list of documents was forwarded to the applicant’s solicitors by letter dated 15 February 2013 and no further requests were made for formal or better discovery prior to the Conciliation Conference.

22. The applicant’s father filed an affidavit on 16 August 2013 setting out the financial arrangements between the parties and the respondent’s family.  In short, it was alleged that substantial sums of money were loaned to the parties to pay off debts and to assist in the day to day expenses of the family.

23. In answer to the applicant’s assertion that he undertook building renovations on the Suburb F property and thereby there was an expectation that the legal and equitable interest in the property would be transferred to the respondent at some point in the future, it was argued that any works undertaken by the applicant were the subject of payment for both materials and wages.

24. Significant detail was provided that whilst not necessarily accepted by the applicant, nonetheless provided a clear denial of any representation having been made that the parties would in some way benefit or had accrued an interest in the farming land.

25. By his trial affidavit filed 29 October 2015, the applicant considered that notwithstanding the Suburb D property had been purchased by the B Family Trust without any financial input by the parties, nonetheless he still asserts that there was a family arrangement in respect of the Suburb D farm that would see the property being subdivided “to allow the creation of a separate allotment and title for the dwelling house and a small amount of surrounding land for the wife, with the remainder of the land (most of it) for the wife and her sister [K] equally.”

26. In the respondent’s trial affidavit filed 14 January 2016, she states that the property of the parties was modest but that the preponderance of property rested with the husband by reason of his 25 per cent interest in a property at Suburb D, a 50 per cent interest in a property at Suburb L and his interest in a property at M Street, Suburb F subject to a substantial mortgage.

27. The wife’s interest in the shares held in the company had been the subject of value by N Real Estate at $37,175.  The valuation report is annexed to her affidavit.

28. The following matters are raised in the respondent’s trial affidavit:-

    [117]Until the husband’s claim against the Interveners are resolved, I view myself largely as a passenger in these proceedings, unable to advance matters. 

    [118]I have no control over the position taken by the Interveners and I do not agree with the husband’s claims against them.

    [119]I have incurred considerable legal expenses in participating in these proceedings which are protracted because of the husband’s claim against the Interveners.

    [120]If the husband’s claim against the Interveners is unsuccessful, I intend to make a claim for costs against the husband.  I would expect the Interveners will similarly make a claim for costs.

APPLICATION FOR COSTS

1. Pursuant to rule 19.08(1) of the Family Law Rules 2004 (Cth) (“the Rules”), the wife applies for an order that the husband pay her costs.

2. The method of calculation of costs is referred to in Rule 19.18:-

   (1)The court may order that a party is entitled to costs:

   (a)of a specified amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

3. Sub-rule 19.18(3) provides that the Court may consider:-

   (a)the importance, complexity or difficulty of the issues;

   (b)the reasonableness of each party’s behaviour in the case;

   (c)the rates ordinarily payable to lawyers in comparable cases;

   (d)where a lawyer’s conduct has been improper or unreasonable;

   (e)the time properly spent on the case or in complying with the pre-action procedures; and

   (f)expenses property paid or payable.

4. In considering what order should be made, if any, in respect of the wife’s costs, s 117(2A) of the Act required the Court to have regard to the following:

   (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 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 the 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 any terms of such offer; and

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

5. Accordingly, I have a wide discretion in respect of matters relating to a potential costs order.

6. I am however mindful that s 117(1) of the Act provides that each party should bear their own costs save in circumstances when s 117(2) applies namely:-

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

SECTION 117(2A) FACTORS

1. The applicant seeks that each party should bear their own costs, whereas the respondent seeks an order that the applicant pay her costs on a party/party basis.  There is no suggestion that if an order for costs is appropriate it should be considered on an indemnity basis.

Financial circumstances of each of the parties to the proceedings

1. It is conceded by each of the parties that their separate financial circumstances are modest.  Each of the parties filed updated financial statements in preparation for the trial.  As to the applicant, he is effectively without significant asset but retains and interest in modest superannuation.  The respondent’s financial position is that she has an excess of liability over asset and modest superannuation entitlement.  Her income is derived from a Centrelink benefit or pension.

2. The trial affidavit of the respondent reveals that her total costs including disbursements are in the sum of $54,283.69 with the sum of $43,887.37 of those costs having been paid from monies advanced from her family.  She remains further indebted to her solicitors for the outstanding sum of $10,396.32.

3. There is some information pertaining to the applicant’s legal costs as set out in his financial statement confirming that as at 15 October 2015 he had legal fees outstanding in the sum of $6,351.

4. It is not known as to the extent of the legal fees paid and outstanding by the respondent as to what proportion of those fees would be in respect of party/party costs.  It seems to me that the figure would be significantly less noting that of the total amount, the disbursements total $14,315.24.

5. The position of each of the parties are meagre, but taking into account the extent of the respondent’s legal fees, I do not consider that the financial circumstances of the parties is a relevant factor either in support of the applicant’s claim or justifying that a claim for her costs should not be successful.  There is no argument as to impecuniosity by the applicant.  In any event and in the circumstance of this case, I am not satisfied that the applicant is either impecunious and if he were, that it alone would be a barrier to an order for costs.

Conduct of the parties

1. It is argued by the applicant that there should be an adverse finding against the respondent arising out of “the significant conduct aspects ….. which relate to the wife’s institution of and abandonment of applications relating to security for costs, in opposition to the extension of time and for injunctions relating to the husband’s real property described herein”.

2. It is also alleged that the conduct of the interveners should be brought to account both as to the first intervener being the wife’s father and the second intervener being J Pty Ltd (Mr B).

3. The principal argument of the applicant is that the respondent and the first and second interveners were recalcitrant and possibly deliberately so, in providing discovery which would have enabled the applicant to better consider the merits of the orders that he sought.

4. This must be seen against the proposal made by the wife that the parties retain all property in their possession and control without claim or adjustment in favour of the other.

5. The affidavit of the applicant filed 1 November 2012 highlights his knowledge that the respondent was a beneficiary of her mother’s estate and had inherited shares in the company.  At paragraph 28, it is clear that he understood both the legal and equitable interests that attached to the properties at C Street, Suburb D and E Street, Suburb F.

6. There was no misunderstanding on the part of the applicant as to where any claim may lay.  It was not in the equitable interest that the respondent may have in the properties, but rather, it was limited to the extent, if any, of the wife’s equitable interests.

7. Moreover, it could not be said that there had not been disclosure of the wife’s interest in shares held in the company.  Her Financial Statement filed 7 December 2012 estimates the value at $100,000.

1. It may well be that ultimately the respondent’s assessment of the value of her interest in the company was inaccurate, but it could not be said that it was misleading.

2. The applicant had requested certain financial documents relating to the financial circumstances, financial statements and tax returns for the company and the trust prior to 30 June 2009.  It appears that there was an initial refusal by the first and second interveners to make the documents available.  On 27 August 2013, the applicant issued subpoenas to the wife’s brother as a director of J Pty Ltd and to the wife’s father.  On 12 November 2013 the subpoena was dismissed at the request of the applicant.  There is no reason provided which explains why he did not pursue the subpoena in order to have documents that he considered critical to his claim produced. 

3. It is argued that the intervention by the intervener in January 2014 may provide an explanation in the sense that the documents may well be required to be provided as part of the obligation and consequence of the intervener joining the proceedings.

4. The Court record reflects that affidavit material was filed by the intervener on 26 May 2014 which provided information relating to the family and the trust.

5. On 26 November 2014, the Court noted that the applicant intended to instruct valuers to inspect and value the properties at C Street, Suburb D and E Street, Suburb F and that the parties would appoint at their joint expense a single expert to undertake a valuation of the wife’s shareholding in the company.

6. On 3 December 2014 the husband discontinued his application of 1 November 2012 as it related to the first intervener and on 23 December 2015 the applicant filed a Notice of Discontinuance against the second intervener.

7. It could not be said that the wife promoted the resistance of the interveners to the production of documents.  Nor could it be said that she promoted their intervention.  That occurred as a result of the orders sought by the applicant.  It was reasonable for him to consider that where by his own admission, the property of the parties was modest, without an order being made that would directly affect the property of third parties (first and second interveners), it was likely that they would intervene in order to protect their interests and to resist the declaratory relief sought by the applicant.

8. It could not be said that the applicant was not otherwise than on notice that the proceedings could accrue a complexity that was beyond the legal interests that each of the parties held in property.

9. It is not the case that the respondent did not make disclosure of her understanding of her legal and equitable interests or otherwise in certain identified property, it was that the applicant did not accept the assertions of the respondent.

10. There may be some merit in the applicant’s argument that the respondent was unsuccessful in respect of the following applications:-

    (a)Her opposition to the application for leave to proceed out of time;

    (b)Her application to security for costs;

    (c)Her application to injunct the husband from disposing of and/or dealing with his interest in real property.

11. Save as to those matters, I do not consider that there are matters relevant to the consideration of the conduct of the parties to the proceedings.

Whether the applicant was wholly unsuccessful in the proceedings

1. It is conceded that the applicant has been wholly unsuccessful by reason of his discontinuance of the proceedings.  It is argued that “his lack of success is a function of his discontinuance”.  It is not clear what is to be drawn from that proposition, but it appears to be linked to the publication and distribution of the N Real Estate report which determined that the value to be attributed to the respondent’s shares in the company was unexpectedly low.  Whilst there are various explanations in the report as to why the company value may have been unexpectedly depressed, what was always known to the applicant was that the respondent was a minority shareholder and that any value attributed to the shares would have been the subject of a significant discount due to lack of control.

Whether either party to the proceedings has made an offer

1. The respondent argues that an offer to settle was made in correspondence dated 22 November 2011.

2. It is reasonable that the applicant have an opportunity to consider whether that offer had merit.  The response from the applicant’s solicitors was to reject the offer, but not based upon a financial consideration but the clear assertion by the applicant not to accept the respondent’s position as to the relevant legal and equitable interests held in the subject properties.  To some extent the proceedings were pursued by the applicant not because there was uncertainty as to valuations and therefore the value to be ascribed to the parties separate interests, but his refusal to accept the respondent’s assertion as to the limitations of her interest.  It was only when the reality of the modest nature of the property that was held by the respondent was better understood that the applicant reconsidered his position.

3. The focus of the proceedings was not upon the value of the respondent’s shareholding, but rather, the applicant’s refusal to accept the respondent’s assertion that she did not have a legal or equitable interest in the properties considered important to the applicant’s claim.

CALCULATION OF COSTS

1. The respondent refers to paragraphs 128 to 132 of her trial affidavit to set out the quantum of her costs.  The total costs incurred by her including disbursements is $54,283.69.  There has been no suggestion that the applicant should pay costs on an indemnity basis and accordingly, no calculation has been provided as to the party/party costs properly incurred by the respondent.

2. Other than the respondent’s disbursement costs (excluding counsel fees) in the sum of $7618.99, I do not propose to fix the amount of costs payable by the applicant to the respondent.  There is however merit in the argument of the applicant that it was reasonable for the applicant to have an opportunity to properly consider information reasonably available before deciding whether and if so in what manner he should proceed.

3. I note  that an index to documents was forwarded on 15 February 2013 and the respondent’s father filed an affidavit on 16 August 2013 providing evidence as to the financial arrangements between the family and the respondent.

4. I consider that it is reasonable for each party to bear their own costs up to and including the receipt by the applicant of the respondent’s father’s affidavit on 16 August 2013, but that thereafter the applicant is to pay the wife’s costs on a party/party basis together with her disbursements, save and except for her costs in respect of the application for security of costs and the application for injunction to restrain the applicant from disposing of his real property which should not be included.

5. Accordingly, I make orders as appear at the commencement of these reasons.

I certify that the preceding seventy seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 30 March 2016.

Associate: 

Date:  30 March 2016