Hall and Hall (No 2)

[2016] FamCA 194

FAMILY COURT OF AUSTRALIA

HALL & HALL (NO 2) [2016] FamCA 194

FAMILY LAW – PROPERTY – interim orders – single expert valuations – where the husband has previously failed to comply with Court orders – where it is ordered that the husband provide written instructions to the single expert valuers within fourteen days.

FAMILY LAW – COSTS – party / party basis – where the Court is not satisfied that an order for the husband to pay the wife’s costs with respect to the valuation issues on an indemnity basis has been established – where it is ordered that if the husband fails to comply then the requirement to authorise the commencement of valuations is dispensed with and the husband is to pay the wife’s costs on a party / party basis in relation to the instructions to the single experts.

Family Law Act 1975 (Cth) s 117

Bele & Vaughan (Costs) [2012] FamCAFC 198
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029

APPLICANT: Ms Hall

RESPONDENT: Mr Hall

INDEPENDENT CHILDREN’S LAWYER: Legal Services Commission of SA

FILE NUMBER: ADC 3671 of 2013

DATE DELIVERED: 1 April 2016

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 10 March 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Livesey, QC
(with Ms Kari)

SOLICITOR FOR THE APPLICANT: Barnes Brinsley Shaw Lawyers

COUNSEL FOR THE RESPONDENT: Mr Lindsay

SOLICITOR FOR THE RESPONDENT: Jordan & Fowler Barristers & Solicitors

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mrs West

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Legal Services Commission of SA

Orders

1. Within fourteen [14] days from this date the husband provide written instructions to the single expert valuers as set out in paragraphs 8 and 9 of the orders of 10 February 2015 as amended by paragraphs 1, 2 and 7 of the orders of 22 September 2015.

2. Within seven [7] days of the husband complying with the abovementioned order the husband forward to the solicitors for the wife written confirmation of his compliance with the orders.

3. If the husband fails to comply with 1 or 2 of the above orders then the requirement for the husband to authorise the commencement of the valuations pursuant to paragraphs 8 and 9 of the orders of 10 February 2015 as amended on 22 September 2015 and as further amended by the order of this date be dispensed with and that the husband pay the wife’s costs on a party / party basis in relation to the instructions for the valuations being:

   (a)the cost of any subpoena issued by the wife hereafter to the husband’s accountants for the provision of necessary documents to enable the valuations to progress;  and

   (b)the additional costs of the wife in instructing the valuers and providing documents requested of the husband.

   Such costs to be determined in accordance with the Family Law Rules 2004 (Cth).

4. The husband pay the wife’s costs of and incidental to the Application in a Case filed on 16 February 2016 such costs to be agreed and in default of agreement within one [1] month as assessed.

5. The Application in a Case filed by the wife on 16 February 2016 is dismissed and removed from the active pending cases list.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hall & Hall (No 2) 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 3671  of 2013

Ms Hall

Applicant

And

Mr Hall

Respondent

REASONS FOR JUDGMENT

Introduction

1. By Application in a Case filed by the wife on 16 February 2016 the wife sought interim orders which included:

   2.That the requirement for the husband to authorise the commencement of the valuations pursuant to paragraphs 8 and 9 of the Orders of 10 February 2015 (as amended on 22 September 2015) be dispensed with.

   3.That the husband pay the wife’s costs on an indemnity basis with respect to valuation issues, including but not limited to:

   3.1the cost of any subpoena issued by the wife to the husband’s accountants for the provision of necessary documents to enable the valuations to progress;  and

   3.2the additional costs of the wife in instructing the valuers and providing documents requested of the husband.

2. Paragraphs 8 and 9 of the orders of 10 February 2015 (as amended on 22 September 2015) provided:

   8.On or before 7 August 2015 the parties jointly instruct as singe expert valuers the following:

   (a)DD Valuers and in particular [Mr EE], [Mr FF] and [Mr GG] to value commercial properties in which the parties and/or any entity and/or trust in which they have an interest and specifically those properties referred to in the quotation obtained from [DD Valuers] dated 6 February 2015 being Annexure “A” to the affidavit of [Mr R] sworn 10 February 2015 and tendered this day (refer annexure “2” attached hereto);

   (b)[HH] to value the residential properties owned by either of the parties and/or any entity and/or trust in which they have an interest being the following:

   (i)     [Properties AA] and [BB] in the State of South Australia;

   (ii)    [E Street, Suburb F] in the State of South Australia;

   (iii)   [II Street, Suburb L] in the State of South Australia.

   9.On or before 7 October 2015 the parties jointly instruct as single expert valuer [Ms JJ] to value any entity and/or trust and/or business in which either party has an interest in (refer annexure “3” attached hereto).”

3. Annexure “3” being:

   A.With respect to the wife:

   ·MM Pty Ltd

   ·LL Pty Ltd

   ·S Brothers Pty Ltd

   ·S Corporation Pty Ltd

   ·S Holding Pty Ltd

   ·NN Pty Ltd

   ·OO Pty Ltd

   ·Any trust from which she has received a distribution

   ·Any other entity and/or trust in which the wife has an interest as a result of the estate of her late father

   B.With respect to the husband, the Hall Group of companies including but not limited to the following:

   ·The QQ Holdings Trust

   ·The QQ Trust

   ·RR Nominees

   ·SS Pty Ltd

   ·RR Investment Trust

   ·TT Corporation Pty Ltd

   ·PP Investment Trust

   ·XX Pty Ltd

   ·VV Service Trust

   ·YY Trust

   ·ZZ Pty Ltd

   ·AB Trust

   ·BC Pty Ltd

   ·RR Property Trust No 1

   ·UU1 Pty Ltd

   ·UU2 Pty Ltd

   ·UU3 Pty Ltd

   ·UU3 Trust

   ·VV Nominees Pty Ltd

   ·WW Pty Ltd

   C.All entities referred to in the annexures to the affidavits filed pursuant to paragraph 3 of the order hereof.

4. The orders made on 22 September 2015 provided inter alia by consent at paragraphs 1, 2 and 7:

   1.Order 8(a) made on 10 February 2015 in this Honourable Court be varied to provide that the valuation of the parties’ commercial property interests be conducted by [Mr EE] and [Mr GG].

   2.No later than 4.00 pm on 23 September 2015 the husband do instruct his solicitors to sign and send the letter of instruction to [Mr EE] dated 14 September 2015 and to provide a signed copy of the same contemporaneously to the wife’s solicitors, failing which the wife’s solicitors be permitted to provide such instructions, without further notice.

   7.Forthwith the parties do all such acts and things necessary to jointly instruct the single expert valuers appointed pursuant to paragraphs 8 and 9 of the Orders of 10 February 2015 (as amended herein) such that the work required to undertake their respective valuations not be commenced until 1 December 2015.

5. The husband did not file any Response to the Application in a Case but did file an affidavit in which he referred to the orders of 10 February 2015 and 22 September 2015.  The affidavit also refers to valuations he obtained, or which were obtained as a result of his attempts to refinance with the ANZ Bank.  These are obviously not the valuations which were ordered to be prepared by the independent valuers.

6. Although the affidavit of the husband filed on 8 March 2016 refers to a Response to the Application in a Case filed contemporaneously there is no such document on the Court file.

7. The affidavit does however refer to the objections taken to subpoenas issued on behalf of the husband and speculation about a possibility of a further appeal to the Full Court.  In essence, in paragraph 21 of the affidavit of the husband it is stated:

   …  The cost of the valuations is significant and updated valuations would only result in further unnecessary cost.”

8. Paragraph 23 of the affidavit says:

   In the circumstances, I seek an order that paragraph 7 of the order dated 22 September 2015 be suspended and that the issue of valuations be adjourned to a date to be fixed by the Court on application by either party following the earlier of either:-

   a.  the expiry of the appeal period in relation to the Honourable Justice Dawe’s judgment regarding the Objections to Subpoenas filed by [Mr Simons], [Ms D S], [Mr  C S], [Mr E S] and [Mr F S] (all filed 24 September 2014);  or

   b.  the parties sending a joint letter to the Court indicating that neither party will appeal the abovementioned judgment.

9. The affidavit of the solicitor for the wife, Mr R, filed on 8 March 2016 (but deemed to have been filed on 9 March 2016) sets out in detail the correspondence between the solicitors and the valuers.  In particular I refer to paragraph 20 which states:

   On 8 March 2016 I spoke with each of Mr [JJ] (sic) and Mr [EE] when they indicated that if all necessary documents and information were provided to them by the end of next week, that they could probably provide their reports within about ten (10 weeks.  This estimate by each of them was subject to qualifications, in particular that they are promptly supplied with all further documents and information that may be requested and that there not be any unexpected problems.  [Ms JJ] indicated that it was very difficult to make an estimation of time as she had no information at all about the husband’s business entities.

10. The orders of the Court delayed the commencement of the valuations until after 1 December 2015.  Since then the husband has failed to comply with the orders of the Court in that he has failed to provide information and failed to confirm his instructions to the single expert valuers.

11. Whilst it is possible that the final trial of the property settlement issues between the parties may not be held in the immediate future, it is also necessary to consider that the valuation of the parties’ interest in the various real estate properties and business entities should greatly assist those advising each of the parties and the parties themselves to negotiate a sensible resolution of the financial proceedings. Whilst it may be necessary to consider in due course whether any updated valuations need to be obtained, the significant work will have already been done.

12. The proceedings between the parties have already been referred to the list of matters awaiting trial allocation and have been adjourned for trial directions on a date to be advised.  (See order of Registrar Paxton on 16 February 2016).

13. The orders of 10 February 2015 (over a year ago now) vacated the directions hearing before the Registrar on that day and ordered that a re-listing take place on a date to be advised “after the solicitors of the husband and wife confirm in writing that the single expert valuations referred to in the orders today have been completed”.  It was on that date that paragraphs 8 and 9 of the Court orders provided for the single expert valuations which were subsequently postponed at the request of the husband.  Specifically paragraph 7 provided:

    Forthwith the parties do all such acts and things necessary to jointly instruct the single expert valuers appointed pursuant to paragraphs 8 and 9 of the Orders of 10 February 2015 (as amended herein) such that the work required to undertake their respective valuations not be commenced until 1 December 2015.

14. The information currently before the Court is that the directors of the V Group of companies in which the wife has an interest are ready and willing to cooperate with a single expert valuation of her interest in the Group. 

15. One of the matters which remains unresolved however is the claim by the husband that the wife has a greater interest in the V Group because of the wording of her late father’s will.

16. This factor however does not provide the husband with an excuse for failing to comply with the orders of the Court which will provide valuations of the assets, the ownership of which is not in dispute.

17. Taking into account therefore the significant failure of the husband to comply with orders of the Court and the need for valuations to be obtained pursuant to the orders which were first made over a year ago, I consider it appropriate to make further orders in terms similar to those sought by the wife.

18. It will be appropriate to give the husband fourteen days to comply with the orders of the Court but to also make orders that if he does not comply then the orders which the wife seeks (which provide the need for the husband to give instructions be dispensed with) will come into force.  The valuations can thereafter proceed on the instructions of the wife and her solicitors only with the extra costs to be recovered from the husband.

19. The orders which the wife sought included paragraph 3 wherein the wife sought costs on an indemnity basis with respect to valuation issues, including but not limited to, the costs of any subpoenas issued by the wife to the husband’s accountant for the provision of necessary documents to enable the valuations to progress and the additional costs to the wife in instructing the valuers and providing documents requested of the husband.

20. When considering the orders sought in relation to costs, the factors in s 117 of the Family Law Act 1975 (Cth) are relevant. Those provisions indicate that each party to the proceedings shall bear his or her own costs subject to the Court’s discretion set out in subsection 2 which allow the Court to make an order for costs if the Court is of the opinion that there are circumstances that justify it.

21. In this matter the failure of the husband to comply with orders of the Court is a clear indication that there are justifying circumstances.

22. Section 117(2A)(d) provides for the Court to take into account “whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court”.

23. The significant factor is also the conduct of the husband in these proceedings (s 117(2A)(c)).

24. Section 117(2A)(g) “such other matters as the court considers relevant” is also to be taken into account when considering the orders sought by the wife.  The orders which she has sought and which the Court is proposing to make will provide for her solicitors to undertake steps that should have been undertaken by and on behalf of the husband.

25. The financial circumstances of the parties are not yet clearly determined, but in relation to this costs order they are not a factor which would prevent an order for costs being made.

26. The question of indemnity costs however requires consideration.  The ordinary rule provides for costs to be on a party / party basis.  Taking into account the authorities of Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 and the authorities as discussed by Justice Strickland in Bele & Vaughan (Costs) [2012] FamCAFC 198 I am not satisfied that the order for the husband to pay the wife’s costs with respect to the valuation issues on an indemnity basis has been established.

27. I am satisfied however that the wife should be able to recover the extra costs incurred by her which will be incurred due to the husband’s failure to comply with the Court orders.  An order for costs on a party / party basis is therefore justified.

28. The Application in a Case was brought about by the failure of the husband to comply with orders of the Court. The husband did not make an application to extend the time for compliance or to vary the orders. Taking into account the significant s 117 factors, and in particular that this Application in a Case was brought about by the husband’s failure to comply with orders of the Court and that the wife has been successful to a significant extent, it is appropriate, just and equitable to make an order that the husband pay the wife’s costs of and incidental to this Application in a Case.

29. For the reasons previously given in relation to the costs to be incurred by the wife in relation to the valuations, I consider it appropriate to make an order on a party / party basis.

30. For the above reasons I make the orders which are set out at the commencement of these reasons.

I certify that the preceding thirty three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 1 April 2016.

Associate: 

Date:  1 April 2016