HARB & HARB
[2020] FCCA 3544
•6 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HARB & HARB | [2020] FCCA 3544 |
| Catchwords: FAMILY LAW – Costs – costs arising out of an arbitration – costs sought on indemnity basis – Court’s jurisdiction to award costs where matter has been referred to arbitration – power of arbitrator to award costs – power of arbitrator to issue s. 128 certificate – treatment of addbacks by reference to section 75(2)(o) – valuation of a business – negligent and deficient approach towards disclosure – non-compliance by one party with duty of disclosure – engagement in chicanery to hide non-disclosure – where party’s non-disclosure hampers ability of the other to conduct litigation and resolve case – obfuscation by one party – where husband effectively controls all income and assets of relationship – where proceedings necessitated by failure of a party to comply with prior Orders – justice and equity between the parties – whether a party has been wholly unsuccessful. |
| Legislation: Family Law Act 1975 (Cth), Pt VII; VIII; XV; ss 10L; 13E; 13F; 13G; 75; 117 Family Law Regulations 1984 (Cth), reg 67Q Evidence Act 1995 (Cth), s 128 Federal Circuit Court Rules 2001 (Cth), Div 1; Sch 1 |
| Cases cited: Jones v Dunkel (1959) 101 CLR 298 Other sources: |
| Applicant: | MS HARB |
| Respondent: | MR HARB |
| File Number: | PAC 947 of 2018 |
| Judgment of: | Judge Harman |
| Hearing date: | 6 May 2020 |
| Date of Last Submission: | 6 May 2020 |
| Delivered at: | Parramatta |
| Delivered on: | 6 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Parks |
| Solicitors for the Applicant: | York Law Family Law Specialists |
| Counsel for the Respondent: | Mr Friedlander |
| Solicitors for the Respondent: | Sharah & Associates Solicitors and Conveyancers |
ORDERS
The Husband shall pay to the Wife, as a contribution to the Wife’s costs incurred in these proceedings and on a party-party basis, $139,789.85.
The above sum shall be paid by the Husband to the Wife within 28 days, failing which:
(a)Interest shall then accrue upon that sum at the rate described from time to time by Federal Circuit Court Rules; and
(b)The Wife shall then be entitled to commence proceedings for enforcement of payment of that sum, interest and costs of enforcement in a Court with competent jurisdiction.
The above sum shall be a charge upon the Husband’s interest in any shares held in the company, B Pty Ltd, C Pty Ltd and the real estate property of the parties at Suburb A (owned jointly by the Wife), such charge to be discharged upon payment by the Husband to the Wife of the required sum (being the Order for costs together with any interest accrued thereupon).
IT IS NOTED that publication of this judgment under the pseudonym Harb & Harb is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 947 of 2018
| MS HARB |
Applicant
And
| MR HARB |
Respondent
REASONS FOR JUDGMENT
These proceedings come before the Court today for determination of an Application for Costs.
Before dealing with that Application, it is necessary to deal with a number of matters, including:
a)The history of the substantive proceedings;
b)The material relied upon for today’s determination;
c)The proposals or positions of the parties;
d)The Court’s jurisdiction to entertain and determine the Application; and,
e)Discussion of evidence and submissions and, ultimately, a determination of that Application.
Substantive proceedings
The substantive proceedings were commenced by an Application Initiating Proceedings filed some 26 months ago to the day on 6 March 2018. The substantive proceedings predominately agitated for relief with respect to property adjustment. Whether at the point of commencement or otherwise, the proceedings then came to also incorporate parenting proceedings.
It should be made clear that all substantive proceedings are now concluded.
When the proceedings first came before the Court, it was two days after the parties had separated from each other.
The initial Application was determined on an ex parte basis as urgent injunctive relief was sought.
On 11 April 2018, a Response was first filed by Mr Harb.
Both parties have amended their positions throughout the proceedings. I will come to that shortly.
The substantive proceedings involved a myriad of court events. It would seem from a consideration of the Court file, bench sheets and engrossed Orders that today is the 16th court event with respect to the matter. Sadly, it is unlikely to be the last. It has been foreshadowed, both on the last occasion the matter was before the Court and again today, that enforcement proceedings might shortly be brought. If that transpires, so be it. Such an Application is not before the Court today.
The property aspect of the proceedings has been by far and away the more contentious.
The property proceedings were, at a fairly early stage in the matter, referred to arbitration. An Order was made by consent on the fourth court event, 8 May 2018. What is remarkable in that regard is that:
a)The fourth court event occurred within two months of the proceedings commencing and, for that matter, the parties separating.
b)The referral to arbitration was, as section 13E of the Family Law Act 1975 (Cth) requires, with the consent of both parties – in fact, proposed by them without the Court needing to become involved in, as is described, for example, by Cummings SC,[1] the parties “being cajoled”.
[1] Peter Cummings SC, ‘The Duty List: Arbitration’ on behalf of the Family Law Section, 28 April 2020.
c)The parties agreed, with their consent to referral of the property aspects of the proceedings to arbitration, to a splitting of issues. The parenting proceedings remained before this Court and were ultimately determined, in circumstances I will describe shortly, by Orders made on 8 April 2020, that is, 25 months after the proceedings had commenced.
The court events with respect to the matter need to be enumerated to some extent.
After the first court event on 6 March 2018, the matter returned before the Court expeditiously, a few days later on 13 March. On that date, further Orders were made as for the filing of a Response and for the parties to attend upon a Family Dispute Resolution Practitioner for the purpose of seeking to resolve their disputes with each other. It is unclear whether that occurred, but nothing turns upon it. Orders were made with respect to disclosure and, as had occurred on the first occasion albeit on an ex parte basis, further Orders were made with respect to the parties’ dealings with certain funds and, on the second court event, the return of funds, which had sought to be restrained, to the account from which they had been withdrawn.
On the third occasion the matter came before the Court, 12 April 2018, there were two Applications listed for determination - an Application in a Case by the Wife seeking certain further injunctive relief together with an Application for Contempt. That arose from an allegation that the Husband had not complied with and had failed to comply, without reasonable excuse, with the Orders that had been made on 13 March 2018 requiring the return of certain funds to an account. Thankfully, the contempt was resolved without the need for hearing. The matter was stood in the list for a length of time and Mr Harb attended upon a bank to effect the transfer of funds. The mater was then further adjourned - again, for a very short period - with additional Orders made as regard disclosure and the like.
On 8 May 2018, the matter came before the Court for the fourth occasion. On that occasion, further Interim Orders had been sought in accordance with an Application in a Case, as Mr Harb was suggested to have withdrawn funds from a corporation, D Pty Ltd, of which he was a director and/or shareholder. There is some contention regarding the circumstances of the withdrawal, but those circumstances need not be engaged with. The substantive proceedings are concluded.
Further Orders were made with respect to the return of funds or potions thereof, the release of funds to permit the completion of the purchase of a business and the Order made referring the proceedings to arbitration. Also on that date, an Order for costs was made in the sum of $5,844.30 to be paid by Mr Harb to Ms Harb.
On 31 May 2018, an urgent Application by Ms Harb came before the Court. On this occasion, Orders were sought and granted with respect to Ms Harb travelling out of the jurisdiction with the children.
It should be noted that of the five court events that had occurred within the space of 10 or 11 weeks from the separation of the parties, three of them were dealt with by telephone or other electronic means whilst sitting on Circuit in other registries. Such has been the use of this Court’s resources by the parties at an early stage, although I do not suggest that any of the Wife’s Applications were in any way frivolous or inappropriate.
On 14 August 2018, the matter came back before the Court for the sixth occasion with respect to an Application in an Arbitration, albeit contained in an Application in a Case. That Application sought certain Orders to facilitate arbitration through valuation and disclosure.
The matter returned on a similar basis on 7 November 2018 when further Orders in the arbitration were made with respect to specific aspects of disclosure.
On 12 March 2019, the matter was again before the Court - the eighth court event - when Orders were made to facilitate the arbitration, specifically related to valuation and disclosure.
On 18 April 2019, the matter was again before the Court. On that occasion, further Orders were made to facilitate arbitration and to restrain the Husband from certain dealings, particularly with respect to the funds received by the business or businesses. An Order was made that the Husband not withdraw funds from those accounts, save for the purpose of meeting the expenses occurred in “the ordinary course of business”.
That Order became a significant issue in the arbitration, as withdrawals which were styled in the records of account of the enterprise as “business expenses” were not.
A number of administrative adjournments then occupied the 10th, 11th and 12th court events, adjourning the proceedings for various lengths of time to permit the arbitration between the parties to conclude.
The arbitration had initially been fixed for three days but was ultimately heard over six days - seven if one includes a listing on 6 December 2019 that was intended to allow the parties to arrive at a joint minute of orders upon which an Arbitral Award might be based and avoiding any negative consequence for the parties or either of them. As is apparent from the Arbitral Award, such agreement was not possible and, thus, the arbitrator was required to determine the matter and the Award was delivered promptly and eruditely.
On 5 December 2019, the very day before the Arbitral Award was eventually delivered and settled, the matter was before the Court. There was no appearance by or on behalf of Mr Harb, although I do not suggest criticism in that regard. There are many reasons why that might have occurred. In any event, the matter was adjourned to permit the Arbitral Award to be delivered and registered. It was noted that if the Husband did not appear and did not seek to prosecute his position on the next occasion, that the parenting proceedings might conclude on an undefended basis.
On 26 February 2020, the Arbitral Award was registered. There was a delay of approximately six weeks from the date that the Arbitral Award was filed with an Application for Registration and its registration. That was, in part, impacted by the Christmas closedown period and also by an absence of consent to registration. I do not express it in those terms to suggest any active opposition. It is merely to describe the practice adopted in my Chambers that upon receipt of an Arbitral Award, both parties are contacted by email to seek their consent to immediate registration without the need for any delay. Absent response – and in this case there was no such response – it is necessary for what is often referred to as the “disallowance period”[2] of 28 days from the date of service of the Application for Registration to pass. The affidavit of service was filed, 28 days were calculated and the Award was registered on the 29th day, following service and absent objection, being 26 February 2020.
[2] Regulations 67Q (3) and (4) of the Family Law Regulations 1984 (Cth) provide that once an Application to Register an Arbitral Award has been filed that it must be served on the other party/ies and that a party on whom an Application is served may then, within 28 days of service, bring to the attention of the Court any reason why the Award should not be registered although if no such material is brought to the Court’s attention then the Court must register the Award.
On 8 April 2020, the matter returned before the Court - the 15th court event. On that date, the parenting aspect of the proceedings was resolved. Leave was granted to Mr Harb to withdraw and discontinue his Application for parenting relief. Orders were made on an undefended basis as sought by Ms Harb, simply cementing the present arrangement and that which has pertained, essentially, since the parties separated - the children living with their Mother (those children are now aged 10 and 12) and Ms Harb making decisions for them both day-to-day and long-term.
The matter returns before the Court today to permit determination of the Application in a Case with respect to costs, as I have already identified.
Material considered in dealing with the proceedings today
I have read and considered the material that is filed or tended by the parties. In the case of Ms Harb, that comprises her Application in a Case filed 12 February 2020 and an Amended Application in a Case filed 21 April 2020. There is, I am satisfied, no prejudice to Mr Harb by the amendment. It produces a small amendment to the quantum of costs that are sought. It does not impact upon the basis on which costs are sought.
The Amended Application in the Case, as it is pressed today, seeks that Mr Harb pay the Wife’s costs of and incidental to the property adjustment proceedings before this Court from the date of their commencement, 6 March 2018, to the present, and fixed in the sum of $329,339.87. Those costs, as might be inferred from the quantum of costs, are sought on an indemnity basis.
A Response to that Application in a Case was filed by Mr Harb on 22 April 2020. Mr Harb seeks that the Wife’s Amended Application in a Case be dismissed, (hence there could be no controversy as to Mr Harb’s knowledge and understanding of that Application). It is thus inferred that Mr Harb proposes that each party meet their own costs of and incidental to the entirety of the proceedings.
Ms Harb otherwise relies upon an affidavit sworn or affirmed by her on 6 February 2020 and filed the same date together with oral submissions put by her legal representatives today and a tender bundle which shall, for today’s purposes, comprise exhibit A. Most of the material within the tender bundle, without intending criticism, relates to circumstances of the parties post-separation and, thus, save to the extent that it might assist in an assessment of the financial circumstances of the parties, does not speak to the fundamental issues involved in the determination of the Application.
In the case of Mr Harb, I have also read and considered his affidavit filed 22 April 2020 and a brief Outline of Submissions provided by Mr Harb’s counsel.
Fundamentally, the most significant aspect of the evidence in relation to this determination is the Arbitral Award of Mr E delivered on 17 December 2019. It evidences an arbitration spread across six full days of hearing together with 6 December, a date when further oral submissions were put.
The Arbitral Award is extraordinary and must be noted that the Arbitral Award is, in light of the length of hearing and the volume of evidence taken by the arbitrator, extraordinarily erudite and yet thorough and complete in addressing the issues and controversies between these parties.
The Arbitral Award is, of itself, a rejection of the proposition that family law matters of any complexity cannot and should not be arbitrated.
The Arbitral Award is a testament to the quality of determinations made by arbitrators accredited by AIFLAM and suggests a healthy future for the address of such disputes by arbitration.
I will shortly turn to and deal with the Arbitral Award as it is the most helpful and useful means by which to address this controversy and to inform and understand the submissions that are put by each of the parties with respect to the issue of costs. Before doing so, however, I propose to address the issue of jurisdiction.
Jurisdiction
This jurisdiction to award costs is contained in section 117 of the Family Law Act (supra), contained within Part XV, headed “Miscellaneous”. The issue of jurisdiction is important, as the Court must be satisfied by reference to the Judiciary Act 1903 (Cth) that before proceeding to hear and determine any cause of action, there is jurisdiction to do so.
To the extent that it might be suggested that referral of property adjustment proceedings to arbitration does not include a consideration of costs, I make clear – although it need not be authoritatively determined as the arbitrator has not been requested to do so – that an arbitrator is authorised and empowered to make an award of costs following upon or during arbitration.
As observed, costs are contained within Part XV of the Family Law Act (supra) headed “Miscellaneous”. The jurisdiction to award costs is not, to that end, a jurisdiction by and of itself. It is a jurisdiction ancillary to the more substantive jurisdiction discharged by the Court under Parts VII and VIII and similar provisions. Thus, the referral of the entirety of the property adjustment proceedings between the parties to arbitration - that which was incorporated within the section 13E Order made on 8 May 2018 - includes the jurisdiction to determine costs.
Lest I am wrong in that regard, I am conscious that the parties had entered into a written arbitration agreement which, in all probability, was that published as a pro forma by AIFLAM. The arbitration agreement specifically invests the arbitrator with a jurisdiction as to costs.
Thus, the execution of an arbitration agreement invests in the arbitral tribunal the power to determine costs, even if a section 13E Order and the Court referral of arbitration did not include costs. The jurisdiction is contractually conferred such that the arbitration agreements creates jurisdiction for the arbitrator to determine costs through the parties’ consent and submission. It would, in effect, expand jurisdiction so as to then fall within the category of voluntary arbitration (as it is often referred to, although styled differently in the Act).[3]
[3] Section 10L(2)(b) Family Law Act 1975 refers, instead, to relevant property or financial arbitration.
Notwithstanding that I am satisfied that the arbitrator has power to award costs, it is not a power that the arbitrator must exercise. Indeed, during submissions on behalf of Mr Harb, reference was made to the inclusion within the Arbitral Award at paragraph 37 of a “liberty to relist”, for want of better description, if costs were to be pressed. The provision that is included within the Arbitral Award is as follows:
In the event either party presses an Application for Costs pursuant to section 117(2) of the Family Law Act and they desire for the arbitrator (as opposed to the Court) to hear and determine such costs application, the applying party shall notify the other party and the arbitrator in writing of the same and within 28 days from the date of this final Award shall lodge with the arbitrator and serve upon the other party a proposal of Orders in relation to costs sought and any affidavit evidence upon which they seek to rely in support of their Application for Costs.
Thus, the arbitrator clearly apprehended that the parties may approach the arbitrator and, through private contract and payment, authorise and engage the arbitrator to determination any issue of costs or, alternatively, to approach the Court. To that end, I am satisfied that the proceedings are and have been at all times since they were commenced “before the Court”. The referral of proceedings to arbitration does not change the reality that the proceedings are before the Federal Circuit Court of Australia. It is simply that the Court has, with the parties’ consent, referred the determination of the substantive dispute to arbitration.
The Court remains at all times vested with jurisdiction. The Court can hear and determine Applications in an arbitration, can determine issues with respect to applicable law or principle[4] and can, including of its volition, terminate the referral to arbitration if it is considered necessary or appropriate, although the circumstances in which that would occur would be extremely limited.
[4] Sections 13F and 13G Family Law Act 1975 (Cth).
Thus, I am satisfied that the Court’s jurisdiction is, at it were, collateral with that of the arbitrator, and the parties are entitled to either ask the Court to determine the issue, as they are proceedings before the Court, or to have the arbitrator determine the issue. Thus, I am satisfied I am seized with jurisdiction.
Evidence
In dealing with the Application for Costs, it is necessary to gain an appreciation of the arbitral process and Award. The entire reasons for the Award, comprising 119 pages, have been read and considered in some detail. That is because submissions are put by the parties as to what the Arbitral Award and the reasons given demonstrate, either in support or opposition to an Order for costs. The reasons make clear the following matters.
Paragraph 11
In addition to the six days of arbitration, there were also three pre-arbitration planning meetings. They would have incurred cost and expense for both of the parties, both in payment of the arbitrator and payment of their own legal representatives.
Paragraph 13
The matter was initially listed for a three-day arbitration but, as described within that paragraph, as a consequence of matters arising with respect to expert evidence very much central to the determination the Court is asked to make, the hearing time increased 100 per cent. The matter occupied six days.
Paragraph 15.4
It is made clear, notwithstanding that Ms Harb had engaged what might be referred to as an adversarial or shadow expert in addition to a joint expert who had been commissioned to prepare a valuation of certain business enterprises operated by the Husband, that at the conclusion of the arbitration, a submission was ultimately put by the Wife’s counsel and the Husband’s that the evidence of the single expert should be accepted and preferred over that of the adversarial or shadow expert.
Paragraph 18
Comment is made by the arbitrator regarding the absence of the Husband’s brother as a witness called to give evidence and be cross-examined. An affidavit had been prepared but it was rejected on the basis that the witness was required for cross-examination and not produced. Thus, it was made clear by the arbitrator that a Jones v Dunkel[5] inference was both available and drawn - that the absence of that witness, integral as it was to understanding a number of allegations in the proceedings, was damaging to the Husband’s case. That is particularly significant as the arbitrator described that those allegations, in large part, related to the Husband “channelling” funds to his brother’s account.
[5] (1959) 101 CLR 298.
Paragraphs 20-22
It is made clear that the adversarial expert, Mr F, as well as the single expert engaged by the parties, Ms G, had conferred with each other, had produced a joint statement, agreed on many things and that they were both called to give evidence and, as it were, “hot-tubbed”. At paragraph 21, a number of significant tenders were observed by the arbitrator. At paragraph 22, it was observed by the arbitrator that the parties were unable to agree upon the nature and value of all of their property. The most significant dispute with respect to valuation relates to the Husband’s business enterprises.
Paragraph 28
The arbitrator records:
A significant point of dispute as between the parties is the value of the interest of the Husband in a private company known as B Pty Ltd trading as business H and business I.
There is an additional limb to the Husband’s business interest, that being a one-half interest the Husband owns in C Pty Ltd. I will turn to that shortly.
It is observed at paragraph 28 that the Wife had agitated at the commencement of the arbitration for the business to valued at $1,154,335. The Husband had agitated, and continued throughout the arbitration to agitate, for a valuation of $480,000. The business was ultimately valued at a figure slightly higher than had been agitated for by the Wife (the finding made by the arbitrator at paragraph 232 of the reasons that the business had a value of $1,233,942). That is 305 per cent more than the business had originally been valued for, as will become apparent.
Paragraph 29
The arbitrator recorded that throughout the arbitration and until the final submissions put in December 2019, the Husband had argued to retain all three businesses or his interests therein, held by various corporate entities.
Paragraph 30
The Wife’s position at arbitration, although, as is correctly submitted by counsel for the Husband, not always in the proceedings, was prefaced upon a finding of equal contribution to the date of separation and an adjustment of five per cent post-separation for additional and more onerous contributions she had been required to make.
Paragraph 31
The Husband’s position for the purpose of arbitration, and it seems consistent with his position throughout these proceedings, was observed to be that there should be, overall, an assessment of contributions - 65 per cent to the Husband and 35 per cent to the Wife. That would appear to be predominantly based upon an initial contribution – for want of better description – of a property at Suburb J owned by the Husband at the commencement of the relationship with an undetermined value and encumbered by a mortgage, the value of which was also not known. That is spoken to in various aspects of the evidence, including, as regards to the latter controversies, paragraph 248 and 249.
Paragraph 32
The adjustments that each agitated with respect to section 75(2) of the Family Law Act 1975 (Cth) were outlined.
The Wife sought an adjustment in her favour of 15 per cent. The Husband conceded an adjustment in the Wife’s favour of three per cent. The Arbitral Award ultimately divides the assets identified therein and the values ascribed thereto on a 65/35 basis as between the Wife and the Husband. Thus, whilst there is little to be gained from mathematising the position, the Wife received an Award that was five per cent less than she agitated for at arbitration. The Husband received an award that was 30 per cent less than he had agitated for at arbitration.
By reference to the positions that each of the parties outlined in their respective Application and Response when the proceedings were commenced, the Wife received 23.4 per cent less than she had sought. The Husband, calculating – and for present purposes I accept the calculation – that the net effect of the Orders sought by the Wife was an 88.4 per cent division in her favour. Nothing turns upon whether that calculation is entirely accurate or not. It is merely illustrative.
The Husband has, throughout, been strident in his position that it should be a 65/35 per cent division in his favour, a position which not only did not find favour with the arbitrator but, based upon the findings of fact that were made by the arbitrator, was simply unobtainable and simply never could have or should have been sought or pressed as his position.
Paragraph 69
The arbitrator makes a finding, based on unchallenged evidence, that the sale of the Husband’s pre-cohabitation property, leaving aside any issue as to its value and mortgage encumbrance at the date of cohabitation – assuming for one moment that is particularly relevant – was $677,755.23. I need not consider how those funds were applied. It is not relevant. The substantive dispute has been determined.
Paragraph 76
A number of agreed facts are then observed commencing at paragraph 76 of the reasons. Importantly, it is observed that at the time of separation of these parties in March 2018, the Husband had contracted, with the Wife’s knowledge, to purchase a one-half share in the business C Pty Ltd. That business itself was in the process of purchasing a property at Suburb K.
Paragraph 77
It was an agreed fact presented to the arbitrator that the Husband was liable, as a consequence of that purchase and commitment, to contribute one half, i.e. $319,000. I have referred to that as significant, as the Husband’s position has been throughout the proceedings that his action - that which precipitated the initial ex parte Application commencing these proceedings (the withdrawing $780,000 from the parties’ funds) - was necessary to complete the purchase and that, as a consequence of the Wife obtaining restraints against the Husband, the Husband had not been able to complete the entire purchase and thus only acquired a one-half share. That submission on behalf of the Husband is entirely contrary to what is stated as the agreed position of both parties at arbitration.
Paragraph 78
It is made clear, tolerably so, that the withdrawal by the Husband of $780,000 the day after separation became known to the Wife not through any advice to her by the Husband but by the Wife checking the bank statement. Upon checking, the Wife became aware and alarmed as to the withdrawal, immediately instructing solicitors and commencing these proceedings the same day.
Paragraph 82
Similarly, in relation to the conduct of the financial affairs of the parties immediately post-separation, at paragraph 82 it is recorded that the Wife was, some few days after separation, charged by police with driving an unregistered vehicle as the vehicle she was driving was no longer registered, the Husband having failed to reregister the car or renew its insurance. That is not a matter of great moment, save and except to speak to the submissions put on behalf of the Husband as to his conduct and behaviour, a significant element of that which the Wife relies upon in agitating for costs. Clearly, the Husband was doing very little to make life easy for either of these parties.
Paragraph 84
It is recorded that there was noncompliance with the injunctive relief that had been granted by the Court until, at paragraph 86 and as described above, the return of funds after the Wife had commenced a Contempt Application.
Paragraph 87
Referable to the third or fourth court appearances, it is recorded that on 11 April 2018, the Husband withdrew a sum of $75,974.83 from the account of D Pty Ltd. Thus, the Wife then brought yet another Application for injunctive relief. Again, this is no criticism of her. It was an appropriate Application.
Paragraph 91
The arrangements for the children are clarified here and at various other paragraphs of the Award, which counsel for one or other of the parties have spoken to during submissions. As the arbitrator observed and as is clear from the provisions of section 13E of the Family Law Act (supra), the arbitration related only to financial issues, not parenting. Thus, whilst paragraphs 281 and 303 are referred to specifically as to the Husband’s commitment to his parenting relationship and love and affection for the children, paragraph 91 sets out what has actually occurred. There have been three visits between the children and their father in the space of the year. Ultimately, that aspect of the proceedings was, effectively, abandoned.
Paragraphs 102 to 104
These address the Wife’s credit. The arbitrator found the Wife plausible, believable and credible. The arbitrator was satisfied the Wife had given full and frank disclosure - in fact, observing that no suggestion to the contrary had been raised.
Paragraph 115
This commences a discussion of the Husband’s credit. In light of the significance of that issue in the arbitration, paragraph 115 and its myriad subparagraphs runs for quite some pages, 20 or so,
At subparagraph (1), the arbitrator records the Husband’s nondisclosure of income - $98,326 in a particular year - and suggests the impact of that upon other evidence.
At subparagraph (2), the arbitrator records a finding that the Husband had failed to disclose – indeed, the Husband conceded it during cross-examination – director’s fees paid to him as an additional source of income.
Ultimately, one can paraphrase the arbitrator’s position with respect to credit as the Husband being recorded as making concessions with respect to matters only when confronted with incontrovertible material - largely, the putting to him of documents which had been produced on subpoena. In that regard, it should be observed that there have been 23 subpoena filed in the substantive proceedings. All have been filed by the Wife. There is, of course, no need for the Husband to issue a subpoena for the production of any document in the financial proceedings. All documents were within his possession, custody and control.
At subparagraph (11), the arbitrator records that he finds the Husband’s evidence “unbelievable” and evasive.
At subparagraph (13), the arbitrator records the Orders that were made by the Court restraining the Husband dealing with the business accounts, save to meet expenses incurred in the course of business. The arbitrator then goes on to record that there had been a significant number of transactions in which the Husband had transferred funds to his brother and gave explanations which the arbitrator found neither plausible nor credible. The arbitrator found that the Husband had, in addition to making such payments contrary to the Order, misdescribed the payments - describing them as matters that would, as the arbitrator observed, but for the Wife’s vigilance and, as it were, “detective work”, have gone undetected.
The arbitrator refers to issuing a section 128 certificate under the Evidence Act 1995 (Cth) to the Husband, following which certain admissions were made. Whether the arbitrator has power to do so or not I am not asked determine, but I am satisfied the arbitrator can. In any event, that evidence was given.
The following is then recorded:
I am satisfied that the banking transaction narrative descriptions used by the Husband was intended to make the transfer to Mr L, the Husband’s brother, appear as though it was a legitimate payment of a business expense to a supplier in the ordinary course of business, something the Wife may not have noticed had she not been diligent in the review of bank records.
Thus, the arbitrator’s findings are not only that the Husband is at times unbelievable, lacking credit or evasive, but actively deceptive, engaging in chicanery to misdirect the Wife and to seek to excuse non-compliance.
Again, at subparagraph 16, the arbitrator records that Mr Harb made admissions but only when pressed and again when faced with documents which demonstrated clearly that the evidence he had sought to adhere to, but for that pressure, could not be true.
At subparagraph 19, the following is recorded:
At no time prior to the commencement of the arbitration hearing itself or during the giving of his evidence-in-chief did the Husband make any attempt to clarify matters so as to ensure I would not be misled or that an injustice would not be visited upon the Wife.
At subparagraph 21, similar statements are made:
During cross-examination of the Husband, the Husband conceded he had also caused for moneys to be advanced to Mr L’s bank account from the B Pty Ltd bank account in breach of the Court Orders with the assistance of and by Mr M, who was an employed professional on site working at the business H and/or the business I. After it was revealed the Husband alone, and with the assistance of Mr M, had been transferring and/or advancing funds to Mr L’s bank account in the manner described above, the Husband admitted his wrongdoing and indicated his preparedness to pay money back so as to not prejudice the Wife in these proceedings.
At subparagraph 22, similar statements are made regarding the “deliberate channelling of money” from the business bank account to the account of the brother and, in at least two instances, an employee. It should be made clear that the only means by which that chicanery was revealed was through the Wife’s diligence. The description of “the Wife” includes her legal representatives and those retained by her, including the shadow expert. She has ascertained those matters through being put to the additional, onerous and unnecessary task of issuing 23 subpoena.
At subparagraph 28, the arbitrator again records that certain transactions, as described by the Husband, are fanciful and not borne out by the Husband’s own evidence.
Ultimately, a finding is made at 15.31.6 that there had been a deliberate channelling of specific funds - as set out in that paragraph, being funds from the account of C Pty Ltd, a business in which the Husband has a one-half interest - to his brother’s account. There is no suggestion that the Husband’s business associate is involved in those transactions and, indeed, if he were not, he may well have his own cause of action against the Husband.
At subparagraph 34, it is made clear the extent to which the Wife was put to task to be able to piece together reality as opposed to that advanced by the Husband - the Wife and, it would seem, arbitrator, having to review till reports for the business, comparing them to cash payment receipts and bank statements to find what might be described as “missing” or “undisclosed” funds. That would be an onerous and time-consuming exercise beyond reasonable reparation in any property proceedings and entirely unnecessary had Mr Harb complied with his duty of disclosure, which the arbitrator was fully satisfied he had not.
The quantum of those understatements is made clear at subparagraph 35. In a period of 10 months, Mr Harb had under-disclosed or failed to account for $48,120.50 in income. Similarly, at subparagraph 36, Mr Harb advances that he didn’t stop the cash payments on purpose, but his evidence did not provide to the arbitrator a clear or cogent explanation why the funds had not been banked but instead placed into a safe. Similarly, subparagraph 37 addresses the same issue.
At subparagraph 39, the arbitrator rejects the Husband’s explanation about how that came to be and made a specific finding at subparagraph 40:
To the extent that cash income received at the point of sale of the business H and/or the business I has not been entered into the bank accounts of B Pty Ltd, the same is not necessarily picked up and recorded as trading income in the financial statements and reports of B Pty Ltd. Cash pocketed by or on behalf of the Husband from B Pty Ltd is not, therefore, captured in the financial accounts.
It continues in the following paragraph:
It is not possible for the Wife or me to precisely identify and quantify all of the cash takings.
All of those aspects are relevant as they impact significantly upon the valuation of the enterprise, a fairly central and pivotal issue with respect to this Application for Costs.
Paragraph 120
Commencing at paragraph 120, the arbitrator sets out a concise and erudite discussion of relevant Full Court authorities with respect to nondisclosure and the duty of disclosure which attaches to parties. To that end, I incorporate the discussion of the arbitrator at paragraphs 120, 121, 123, 124 and 126. It is a most erudite discourse with respect to the area.
120. In Oriolo & Oriolo (1985) FLC 91-653, the Full Court of the Family Court of Australia articulated with precision and clarity the overarching obligation on parties involved in financial matters to make full and frank financial disclosure of all relevant financial circumstances, citing with approval the judgment of Smithers J in Briese & Briese (1986) FLC 91-713 as follows:
“… in financial proceedings between spouses each party must make full and frank disclosure of all material facts… full and frank disclosure was required as a matter of principle in light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or Court rules required. In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred.
121. The matter of Black and Kellner (1992) 15 Fam LR 343, involved a proceeding in which adverse findings were made concerning the credit of a husband who was a self employed chiropractor. In that case, the adverse findings of credit made led the trial judge at first instance to be unable to ascertain the true extent of the husband’s assets or his income. In that case, the husband made false claims in his sworn Financial Statement and, most importantly, the evidence before the trial judge revealed that in the conduct of his chiropractic practice was considerably more substantial than he had conceded. This, in turn, had a further effect in that not only was the husband’s income more substantial than he admitted, but the valuation of the husband’s chiropractic practice on which the husband relied was found to be obviously flaws because that valuation very much depended upon the income of the practice.
123. As a consequence of the husband’s non disclosure in Black and Kellner, the Court was more generous to the wife in relation to the overall percentage based entitlements to property. On appeal to the Full Court of the Family Court of Australia, the trial judge’s approach was upheld. In dismissing the husband’s appeal, Nicholson CJ found as follows:
“It follows from what I have said that I do not believe that his Honour’s judgment can be attacked upon the basis relied upon by the husband. I might perhaps add that speaking for myself, although I note that there is no cross appeal, I would have been disposed to find that the husband was entitled to nothing, and certainly would not have interfered with a decision by hi Honour dismissing the husband’s claim entirely. Indeed it may well be that he was fortunate to get the award that he did.
124. It is often recited, as it was in the matter of Weir & Weir [1992] FamCA 69, that cases involving deliberate non disclosure by a party present considerable difficulty for the other party to the litigation to establish the fact of deliberate non disclosure, let alone establish the quantum thereof. This is exactly the same difficulty the wife has faced, and faces, in this arbitration. The matter of Weir was, of course, a proceeding in which the issue of non disclosure related to allegations made by a wife against a husband regarding the husband’s practice of pocketing case payments from a business without recording them in the normal course of proper business record keeping. In Weir, the Full Court of the Family Court of Australia articulated the following principle:
“It seems to us that once it has been established that there has been a deliberate non disclosure, which follows from his Honour’s finding in this case, then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
126. As was summarised by the trial judge in the matter of Chang and Su [2002] FamCA 156, being a matter in which the trial Judge appeared to have significant difficulty assessing the financial position of the parties, her Honour said:
“… it is the obligation of parties to make full and proper disclosure of the financial circumstances, either as to assets, liabilities, or income … where there has been non disclosure by one party, the court should not be ‘unduly cautious’ about making findings in favour of the other party.
Paragraph 138
The arbitrator sets out a number of “addbacks” that the Wife contended should be included. I do not seek to engage with any controversy arising from authorities such as Kowaliw & Kowaliw (1981) FLC 91-042, Bevan& Bevan [2013] FamCAFC 116 or the High Court’s decision in Stanford & Stanford (2012) 293 ALR 70, as to whether such a species of property – if it might be so described as an “addback” - exists as opposed to an adjustment pursuant to section 75(2)(o). Ultimately, the arbitrator, by and large, took the approach discussed by Justice Baker in Kowaliw of treating any such issues by reference to section 75(2)(o).
It is relevant, however, as one of the Husband’s submissions and as addressed in his affidavit, (paragraph 16), is a criticism of the Wife for having agitated for addbacks which were not included. At paragraph 16, the Husband makes that statement. What is clear from a consideration of the lengthy discourse by the arbitrator in relation to those matters, (paragraph 152 to 199), is that a number of the matters were included and a number were dismissed.
What is clear, however, is that all of the Wife’s arguments with respect to addbacks only arose from or were invited by the Husband’s chicanery, his failure to disclose, his manufacture of descriptions for payments which were completely false and required the Wife’s vigilance and investigation, including with the assistance of legal practitioners and accountants to ascertain the true situation. Even though a number of addbacks, as they are described, were not included or accepted by the arbitrator, the fundamental argument most assuredly was.
Paragraph 144
Similarly, the arbitrator sets out, commencing at paragraph 144, an erudite and precise discussion of the relevant case law relating to addbacks.
Paragraph 155
It is submitted on behalf of the Husband that the Wife has failed to make disclosure with respect to her legal fees or that which is paid. That is contrary to paragraph 155 of the Arbitral Award. Therein, it is recorded that the Husband did not agitate for addbacks of legal fees expended by the Wife or, one would presume, himself.
But the arbitrator makes clear and records that the Wife had extensive legal fees that she had not been able to afford to pay and that those which she had paid to date - and which she had disclosed as paid, at least during the arbitration, whether included in a financial statement previously filed or not - had been met by her through the largess of or borrowing from family members.
Paragraph 200
The pivotal issue is described as the valuation of the business. Discussion of those valuation issues commences at paragraph 200 of the Arbitral Award.
What should be made clear from the outset is that Ms G had been appointed as a joint expert to prepare a valuation. An initial valuation report was prepared, (paragraph 202), fixing a value for the business of $378,467.
The Wife, sensing chicanery and dissatisfied with the figure produced - and, no doubt, the figures which were set out within the report upon which the calculation was based - engaged a Mr F as her adversarial or shadow expert. Mr F then prepared a valuation of his own, (paragraph 204), asserting a value for the business of $753,959. It is submitted that the Wife had wasted, time, money and effort and made the arbitration more complex, lengthy and expensive by having commissioned that expert. I reject that submission. The Arbitral Award makes clear that it was not so, let alone common sense dictating to the contrary.
The adversarial or shadow expert was not just called by the Wife for the purpose of giving expert evidence as to the value of the business. It would seem Mr F has played a number of roles, including in conferring with Ms G, they agreeing on many matters and, as a consequence of that agreement, Ms G being persuaded to vary her report in various and significant aspects.
Ultimately, and as a consequence of cross-examination - two days for the Husband and one day for Ms G, thus doubling the arbitration - it is suggested that the figures for income of the enterprise were dramatically increased, arising from the concessions made by the Husband. Those concessions, as the arbitrator records, were made after being confronted with material that required the concession. They were not volunteered. They should have been.
The role of Mr F in, thus, informing cross-examination, liaising with and assisting counsel in developing a strategy, directing what subpoena might have been issued and the like, whilst not specifically known, is probable. In any event, even if Mr F was silent on those issues, his role in undertaking further inquiry and advancing certain propositions ultimately accepted by Ms G have led to a more than tripling of the value of the enterprise, as both parties ultimately accepted. It is made clear in the Award that both Husband and Wife urged the arbitrator to accept Ms G’s evidence as to the value of the business. It was ultimately valued, for reasons that will follows, at $1,233,942.
That arose through an increase in the multiplier used for the maintainable earnings of thee business. The earnings of the business, as disclosed by the Husband, were dramatically less than they were ultimately found to be. That finding was based, in part, upon the concession by the Husband as to his actions in not disclosing all income or even, at times, concealing income or misidentifying expenditure.
Thus, when the initial report was prepared, the multiplier was less on the basis that the business was seen as struggling. When the true picture was revealed through the extensive preparation and work undertaken by Ms Harb and those assisting her, and put to the Husband, eliciting concessions, the multiplier, as well as the income base for the business, both increased. That much is made tolerably clear from the Arbitral Award and numerous paragraphs thereof - some of which have been referred to, some of which I will turn to shortly.
What is also made clear is that at the conclusion of the arbitration, notwithstanding Ms G’s changed evidence, the Husband still contended that the business enterprise should be valued at $480,000, (paragraph 217).
Paragraph 218
The fact that both parties agitated for the acceptance of Ms G’s evidence and the acceptance of her evidence over that of Mr F is recorded. But it is to be remembered that but for the evidence of Mr F and his engagement by the Wife, the initial valuation might have been accepted, thus removing nearly $800,000 from the pool of property that was ultimately considered.
Paragraph 221
The arbitrator recorded that the Husband’s behaviours, his chicanery with respect to the above transactions, had negatively impacted the initial valuation.
Paragraph 224
The arbitrator recorded that he had been greatly assisted by the cross-examination of Ms G, which was no doubt, again, informed both by the information obtained by the Wife, but which should have been disclosed by the Husband without the need for such steps, as well as the evidence of Mr F, including his joint conference and hot-tubbed cross-examination.
Conclusion of the Arbitral Award
The ultimate reward, as the reasons reveal, was based on a finding of contribution of 53 per cent by the Wife and an adjustment for section 75(2) factors of 12 per cent. That included adjustments pursuant to section 75(2)(o) of the Family Law Act (supra), all the matters referred to above, including nondisclosure, and the retention or use of assets. Hence, even to the extent that arguments with respect to addbacks were not accepted by the arbitrator, those transactions and amounts, to the extent that they could be quantified, were ultimately taken into account and the Wife’s efforts and agitations in that regard were rewarded, so to speak.
Beyond that, the Wife sets out in her material the basis for costs, although it is slightly amended as a consequence of revised invoices. The Wife seeks her legal costs paid to her lawyers, being a previous firm and that presently retained, the payment of counsel’s fees, payment to Ms G, payment to the shadow expert Mr F, payment to a tax expert and payment of the arbitrator’s fees. There are also other disbursements which one might take into account. And the Husband, as I have indicated, opposes any Order for costs, but especially so on an indemnity basis.
Costs
As is trite to observe, costs are dealt with under section 117 of the Family Law Act. Subsection (1) creates what is often referred to as the general rule, as discussed by the High Court in Penfold & Penfold (1980) 144 CLR 311, that each party will pay his or her own costs.
Subsection (2) reserves the discretion to the Court or, I am satisfied, an arbitrator, to make an award of costs if satisfied, (see Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812) that it is both justified as a departure from the general rule and that it is just to do so.
Subsection (2A) sets out a prescriptive but non-exhaustive list of considerations.
Subsections (3), (4) (4A) and (5) are not relevant as they deal with applications by or involving Independent Children’s Lawyers or Child Welfare Agencies.
I will deal with each of the factors in subsection (2A) briefly before turning to the issue of indemnity costs and, if an order for costs is to be made, how it is to be quantified.
Financial circumstances of the parties
The Wife has the care of the two children of the relationship, 10 and 12, and has had that care since these parties separated 26 months ago. She does not presently receive child support. There is an assessment for a modest amount of money but the Husband is shown as being in credit and thus the Wife does not receive payment.
I have no confidence as to an assessment of the Husband’s present financial circumstances. The findings made by the arbitrator – and I make clear I do not rely upon them for any purpose other than the issue of costs, nor to make any factual finding or determination as to the Husband’s present income – would cause some doubt as to reliance upon the Husband’s assertions.
Certainly, what he had asserted on Oath for the purpose of the arbitration was ultimately demonstrated, through the Husband’s own concessions, to be anything but accurate. The best that I can do is look to the assets of the parties, both those that are to be divided between them and those which are set out at the commencement of the Arbitral Award as being retained by the parties or either of them.
By reference thereto and as a consequence of the Arbitral Award, Mr Harb is to retain $37,661 as a remaining interest in the Harb Family Trust, $26,045 in a bank account and a smaller account, the Husband’s interest in C Pty Ltd not taken into account in the business valuation, a motor vehicle and his superannuation. There is then, of course, the Husband’s ongoing income from the business enterprises comprising three businesses.
The Husband’s financial circumstances are also relevant to the extent that he has, at all times during the substantive proceedings, had the control of all major assets of the relationship, save and accept the home at Suburb A which the parties had purchased, sadly, shortly before their separation and with the joint intent, at the time of its purchase, to occupy it jointly as a family. That has not come to pass. The Wife remains in occupation of that property. It is encumbered by a substantial mortgage, the servicing of which is unclear.
The Husband certainly derives income. His income, based upon that which was found, largely from his own concession during the course of the arbitration, is not extreme but is certainly a more than comfortable income.
The total assets of the parties as found by the arbitrator, and with respect to which neither of the party cavils, is some millions of dollars.
The Wife’s financial position, I accept, is less than the Husband’s. Whilst she has occupation of the home, she is not presently working, has not worked for any significant period of time and does not receive child support.
The financial circumstances of the parties would not speak in any significant fashion to justification, save and accept to the extent that the Husband might be seen, analogous to that which would apply in the corporations jurisdiction, as having engaged in something approaching, if not in fact, oppression of a minority shareholder. The Husband has had control of all assets and all information relating to those assets. He has had that control at all times since these parties separated, if not before. He has chosen, through his negligent and deficient approach towards disclosure, to deprive the Wife of that information. She has obtained it through her own efforts, albeit at great cost.
It should be observed at this point that disclosure, in addition to the case law taken into account by the arbitrator at set out above, is of fundamental importance in any civil proceedings. The importance of disclosure in proceedings under the Family Law Act is discussed at length in the judgments above as well as Burgoyne & Burgoyne (1978) FLC 90-467 and many others. Disclosure is a fundamental means by which parties are able to assess the strengths and weaknesses of their own case, the case that they are facing and are able to determine how they might best engage in a settlement of their affairs and a division of their assets.
Importantly, disclosure does not only assist the efficient conduct of litigation and cross-examination. It also assists in two other important ways.
Firstly, disclosure is the means by which parties can assess which issues require exploration or further exploration at trial. It enables parties to limit issues. In this case, there has been no opportunity to do so. All issues have had to be explored and many more issues than should have been necessary had the Husband engaged in a proper exercise of disclosure, bearing in mind it was he and only he who had the possession, custody or control of records other than through issue of subpoena.
When parties give full disclosure, then both parties are able to make frank and forensic concessions as to the strength and weakness of their case, and either reach agreement as to facts or determine which facts they will challenge. In this case, the Wife has had to rely upon her own resources. She has found out about transactions when she has seen bank statements. She is not told in advance. She has had her suspicion piqued by what are apparently changes in circumstances with respect to businesses and has, thus, been put to the cost and expense enumerated above and addressed and considered in the Arbitral Award and reasons.
I am satisfied, in this case, that Mr Harb has significantly hampered Ms Harb in her ability to conduct her litigation and in her ability to resolve the case. That is all the more tragic when the costs that have been incurred, assuming that the Husband’s costs are in any proportional to the Wife’s, are over half a million dollars. The Wife’s costs, if one takes out the additional work that was required to be undertaken, including doubling the length of the arbitral hearing, etcetera, should have been $100,000 or less. Whilst many in the community would balk at that sum, the amount of work that has been undertaken is substantial and time consuming.
Secondly, disclosure and discovery are an investment in settlement. In the absence of full and proper disclosure, it is not possible nor safe for a party to resolve their dispute. They do not know what the real facts are. They cannot even determine what real issues might be in dispute, let alone what issues might be capable of proof or challenge.
There is no clear evidence before the Court - a factor that must be considered - as to offers of settlement, although I am less critical of the Wife in that regard than I am of the Husband. The Wife was, as it were, led a merry dance by the Husband. The phrases that are used by the arbitrator in his award refer to the Husband adopting a “catch me if you can” versus a more open and frank approach towards disclosure. The Husband has not assisted at all and, indeed, he has engaged in obfuscation and chicanery to make that task even more difficult.
I will deal with those issues again shortly, save and accept to address a number of authorities which touch upon the failure of a party to engage appropriately with litigation.
Sackar J opined in Bryant v Hawkesbury Radio Communication Co-operative Society Limited [2014] NSWSC 848:
In my view, in the modern era –
referring to New South Wales civil procedures legislation, although the Practice Direction No. 1 of 2020[6] in this jurisdiction is in remarkably similar terms –
– parties have an obligation to constructively collaborate, not just on the issues to be ventilated but on the most efficient methods to do so. As has been otherwise said, litigation is not a game and the expense of the courts to the public is so great that their use must be made as efficient as is compatible with just conclusions.
[6] Federal Circuit Court, Joint Practice Direction 1 of 2020 – Core Principles in the Case Management of Family Law Matters, 28 January 2020.
Certainly, these parties have spared some cost to the public purse by taking their matter to arbitration, appropriately so. However, that has simply meant that they have incurred an additional cost in meeting the arbitrator’s fees, although, in light of the amount of time, effort and work required of the arbitrator - effectively at least 10 days committed to the hearing itself, (6 days for the arbitration, three days of pre-arbitration planning meetings, which would have been substantial, and a further day for submissions, let alone the time then taken to review material and deliver an extensive but erudite arbitral award within a fortnight of conclusion) - the arbitrator has been extremely modestly paid.
Sackar J concludes at paragraph 157:
While the system of justice administered by Courts is adversarial, in the modern era, in my view, parties have a distinct and clear obligation to cooperate with each other and the Courts to achieve a quick and inexpensive solution to their grievances, including, in my view, good faith settlement discussions.
Much is written in academic literature as to what “good faith” might mean in the sense of settlement discussions. I need not become engaged in that discourse. Suffice to observe that the Husband’s actions in misdescribing transactions in what was conceded by him, at times, as deliberate and at other times unintentional – although, how that could be so is unclear – subversion of the Orders made by the Court and removal of funds from the Wife’s access, could not be described as good faith.
Similar statements to those of Sackar J have been made, for example, in Ken Tugral v Tarrants Financial Consultants Pty Limited,[7] Setka v Abbott[8] and Yara Australia Proprietary Limited v Oswald[9] amongst others.
[7] [No 1] [2013] NSWSC 1561.
[8] [2014] VSCA 287.
[9] [2013] VSCA 337.
It should also be observed, as was opined by Justice Felix Frankfurter of the US Supreme Court, “Litigation is not a game of chess. It is a means to an end.”[10] One of the most important tools to achieve that end is disclosure and discovery, a process which the Husband could not pretend to have engaged with properly or appropriately with. Thus, the Husband’s actions have dramatically inflated his own costs, but far more so the Wife’s.
[10] Indianapolis v Chase National Bank (1941) 314 U.S 63, 69.
Thankfully, the Wife is a sophisticated litigant. She has exceptional legal representation and, it would seem, forensic accounting advice. If the Wife were less nuanced in her understanding of the affairs of the businesses or the financial affairs of corporations generally, she would not have been in a position to understand where the chicanery might have been in the fashion that she, thankfully for her own protection, has.
Finally, I am conscious of the decision of Fitzgerald JA in Studer v Boettcher [2000] NSWCA 263 where, at paragraph 63, his Honour opined:
It is often impossible to predict the outcome of litigation with a high degree of confidence. Disagreements on the law occur even in the High Court. An apparently strong case can be lost if evidence is not accepted and it is often difficult to forecast how a witness will act in the witness box. Many steps in the curial process involve value judgments, discretionary decisions and other subjective determinations which are inherently unpredictable. Even well organised efficient courts cannot routinely produce quick decisions [although the arbitrator most assuredly did]…and appeals further delay finality. Factors personal to a client and any inequality between the client and the other party to the dispute are also potential immaterial. Litigation is highly stressful for most people and notoriously expensive. And obligation on the litigant to pay the costs of another in addition to his or her own costs can be finically ruinous. [That is one of the submissions put on behalf of the Husband]. Further, time spent by parties and witnesses in connection with litigation cannot be devoted to other productive activities [in this case, parenting the children]. Consideration of a range of competing factors such as these can reasonably lead rational people to different conclusions concerning the best course to follow.
I wholeheartedly embrace and adopt his Honour’s comments. However, in this case, the very beginnings of that approach were frustrated by the Husband. He had effective control of all income and assets, save the matrimonial home, and even then he has effective control of the income that would be necessary to service the mortgage encumbering the matrimonial home, leaving the Wife entirely dependent upon him.
It is that aspect of the financial circumstances of the parties that I am satisfied has some real relevance in this case. It is a factor that speaks to justice more so than justification but is important.
Whether a party is in recent of legal aid
Clearly, neither is.
The conduct of the parties to the proceedings
This is the gravamen of the Application. The Arbitral Award and the findings made by the arbitrator are laboured to be clear in labelling the Husband’s conduct as reprehensible. To require that a litigant issue 23 subpoena just to be able to obtain the information that should have been disclosed without the issue of a single subpoena and through the discharge of a duty of disclosure is, put bluntly, reprehensible.
It is submitted on behalf of the Husband that the Court would be aware that, post-separation, parties may not be “at their best”. Indeed, the arbitrator records in the reasons on several occasions that Mr Harb has suggested that the timing of certain transactions, often in breach of injunctions issued by the Court, were whilst he was having a “meltdown”.
I accept that separation is fundamentally difficult for adults. It is fundamentally difficult for children. The Wife and the two children were left to deal with that grief without any recourse to the various assets that the Husband, of course, was able to access, it seems at his will.
The Husband’s failure to engage in any sense with disclosure would be enough, of itself, to my mind, to justify some form of Order for costs, not necessarily on an indemnity basis or for the totality of the proceedings. But when one adds to that the level of complexity with respect to the Husband’s failure to disclose and his engagement in chicanery to seek to hide his non-disclosure or to actively manufacture a circumstance which was not reflective of reality, I am satisfied justification is found.
As to justice, there is of course the reality that the Wife is the one who has borne the cost of seeking to reveal the Husband’s chicanery and then press it to the point of proof, much of which has arisen through the forensic preparation of the case and being able to put matters to the Husband. That has arisen through the issue of subpoena, through the engagement of the adversarial or shadow expert and through the hard work, planning and execution of a litigation plan by the Wife’s legal representatives and counsel.
I am satisfied that not only are costs justified by the Husband’s conduct as detailed above, but that it would be unjust if an Order for costs were not made. Whilst the requirement of the Act is that it is just that an Order is made, I make clear that both findings are made. It is just that the Wife receive some recompense for the additional cost that she has had to incur in these proceedings.
If this matter had been conducted as it should have been - with full and proper disclosure, the valuer given access to all relevant and accurate information - the parties should, with the quality of legal representation they have both retained, have been able to resolve this matter through Family Dispute Resolution, let alone requiring a determinative mode of dispute resolution in the form of arbitration.
The matter is not complex. The only complexity in this case arises not from the value of assets but from the difficulty in seeking to ascertain the value of assets - the very matters identified by the arbitrator in the portions of the Arbitral Award and reasons discussed above,
If the Husband had, as it were, put his cards on the table, produced full and proper statements of account for these businesses, had not continued to obfuscate and seek to justify his actions (for example, continuing to assert that $780,000 was needed to complete the purchase of the Suburb K business when, in reality, it was an agreed fact that only one half of that business was to be purchased and much less than one half of the amount withdrawn was actually required) then this case can and should have resolved in a matter of months through round table, lawyer-assisted negotiation or, at its highest, a facilitated settlement through Family Dispute Resolution. All of that was rendered impossible by the Husband’s obfuscation, deceits and chicanery.
Thus, I am satisfied that both justification and justice are founded in conduct. Lest I am wrong in that regard, I will consider the balance of factors.
Where the proceedings are necessitated by the failure of a party to comply with a prior Order
A number of the court events were not complied with by Mr Harb. For example, the Applications that were made and pressed on 12 April 2018, 8 May 2018, 14 August 2018, 7 November 2018, 12 March 2019 and 18 April 2019 were all required to address the Husband’s failure to comply either with an Order of the Court or his duty of disclosure (which had been formalised by Orders of the Court). Disclosure need not be ordered. The obligation of disclosure is contained within the Federal Circuit Court Rules 2001 (Cth). The principles of disclosure are simple principles of civil litigation.
The Husband at all times has been legally represented and by competent practitioners. He has either not listened to their advice or chosen to deliberately ignore it. That he cannot point during the course of his evidence to the arbitrator to any real justification or explanation for not only failing to comply with Orders but taking active steps to conceal non-compliance is extraordinary.
Costs Orders are not made on a disciplinary basis to punish litigants. In this civil jurisdiction, it is not the Court’s concern to send a message to the community. But what is sought to be addressed is justice and equity between the parties. For the Wife to be put to the expense of undertaking significant work and enquiries that were and should have been entirely unnecessary can only be addressed by costs and I am satisfied should be.
The Husband has failed to comply with Orders and duties and responsibilities of any litigant before any civil court. That must also provide justification and justice. Again, it would be wholly unjust to expect the Wife to perform tens, if not hundreds of hours of additional work issuing subpoena and the like and simply bear that cost, taking it on the chin, or perhaps more accurately, flush to the face, because the Husband determined that he will ensure that it is necessary. The Wife, of course, had a choice. She did not need to expend that time and effort. She could have accepted the fundamentally flawed and inaccurate valuation produced as a consequence of the Husband’s chicanery. She chose not to, and perhaps thankfully so as the costs to her would also be costs to the children who live with her.
There is also an additional element, although it is far from the most significant consideration of this case, that is, the Husband’s abandonment of his Application for parenting relief. It is he who introduced the plea for relief, and whether he feels that he is frustrated by the Wife or otherwise, he has ultimately withdrawn his Application. Thankfully, it has not consumed any significant time before this Court, although in realty they were more important issues than money. Perhaps the Husband signals which is the more important issue to him through the efforts that he has put into the financial aspect of the proceedings without taking any significant step at all in the parenting case. However, that factor I am satisfied also supports an Order for costs.
Whether a party has been wholly unsuccessful
I am taken by counsel for the Husband to the reality that the Wife’s position, as the Husband calculates it, a plea to receive 88.4 per cent of the property pool, was not successful.
The Wife’s position at arbitration, to receive 70 per cent, was also more than she ultimately received, although not by any great amount.
If one considers, however, that 88.4 per cent of the pool as it was described, based upon the fundamentally flawed valuation, was significantly less than that which the Wife obtained, then the Wife has, through all of the extra effort and assertion she has put in, which was fundamentally unnecessary had the Husband complied with his obligations, been remarkably successful.
But the real test is the Husband’s success and in that regard I am conscious that the Husband has fallen well short of what he sought. Indeed, the Husband’s position in relation to financial relief has been fundamentally ill-advised from the commencement. I do not use that phrase to seek to castigate legal practitioners retained by the Husband. It is the Husband, ultimately, who provides instruction. But the Husband could never have obtained an Order that he receive 65 per cent of the available assets of these parties. There was irresistibly a section 75(2) adjustment to be made in the Wife’s favour based upon disparity of income, care of children and paucity of child support, if nothing else. That is before any consideration is even given, as the arbitrator appropriately did, to section 75(2)(o) factors.
The Husband has been spectacularly unsuccessful. Certainly, the Wife has received a percentage significantly less than her Initiating Application sought, but that must be tempered as criticism of the Wife or those representing her by the reality that the Wife has at all times, essentially up and until the commencement of the arbitral hearing, been in an information vacuum. She has received no assistance from the Husband and has been left to her own devices to seek to even ascertain what the assets are, let alone their worth.
Accordingly, I am satisfied - whilst it is the least of the factors - that the Husband’s lack of success and the Wife’s relative success, obtaining something not dissimilar to that which she sought at the arbitral hearing itself, is a factor giving some further small weight to both justice and justification.
Offers
There is no clear evidence that any offer has been put. Each party has appeared somewhat strident in their position, but, again, the Wife is far more excused in that regard.
It is impossible for the Wife to seek to put an offer to the Husband or negotiate with him when, in reality, she has been left to try and find a needle in a haystack - when she has been left to try and understand the case that she is answering, let alone to receive the information she requires to prosecute her own position, without a single piece of assistance from the Husband and, in fact, active opposition and chicanery with the matters referred to above.
For all of those reasons, I am satisfied that justification and justice are both established by the Wife and an Order for costs can and should be made.
Should costs be awarded on an indemnity basis?
On the outset, I make clear that I am not satisfied that it is so. To that end, I incorporate paragraphs 72 and 73 of my earlier decision in Blanco & Blanco (No.2) [2019] FCCA 2458. That discussion sets out the Full Court’s comprehensive discourse on the issue in Prantage & Prantage (Costs) [2013] FamCAFC 105. Fundamentally, it concludes with the proposition as set out by Shepard J in Colgate-Palmolive Co v Cussons Pty Ltd,[11] that an indemnity costs Order might be made when it is seen as necessary or proper for obtainment of justice or for maintaining or defending the rights of the party.
[11] (1993) 46 FCR 225.
72. The Full Court discussed the issue of indemnity costs in considerable detail in Prantage & Prantage (Costs) [2013] FamCAFC 105[86] and earlier in Muldoon & Carlyle [2012] FLC 93-513. In the earlier authority the Full Court stated at [115]-[116]:
It is beyond doubt that in order to justify an award of indemnity costs, it must be demonstrated that there are exceptional circumstances, such that the usual order for party-party costs should be departed from (Colgate-Palmolive Company v Cussons Pty Limited(1993) 46 FCR 225; Kohan and Kohan (1993) FLC ¶92-340; Munday v Bowman(1997) FLC ¶92-784; Yunghanns & Ors v Yunghanns & Ors and Yunghanns(2000) FLC ¶93-029; Limousin & Limousin (Costs)(2007) 38 Fam LR 478; Fennessy & Gregorian(2009) FLC ¶93-399; D & D (Costs) (No 2) (2010) FLC ¶93-435, Stephens v Stephens and Anor(2010) 44 Fam LR 117). As was said by the Full Court in Stephens (at [67]):
An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages...
In support of the application for indemnity costs, counsel pointed only to the fact that it was always apparent there was no merit in the appeal. This is in our view not an exceptional circumstance as would justify an order for indemnity costs.
73. A useful discussion of the principles applicable to indemnity costs is undertaken by Jackson J in John Holland Pty Ltd v Adani Abbot Point Terminal Pty Ltd (No.2) [2018] QSC 48 at [9]-[14]:
[9] There are numerous cases that consider similar statutory powers to order that costs be assessed on the indemnity basis, which is sometimes included in the category of a “special” order for costs. Many of the cases refer to the 1993 decision in Colgate-Palmolive Co v Cussons Pty Ltd[88] as containing a leading statement of some of the relevant considerations. In the context of the legislation applying in Queensland, the Court of Appeal has made a number of useful pronouncements that inform the exercise of the general discretionary power.
[10] In Di Carlo v Dubois,[89] White J said:
“… [In] Colgate-Palmolive… Sheppard J was able to derive a number of principles or guidelines. At p232-p234 his Honour recognised that the categories in which the discretion may be exercised are not closed. Woodward J at 637 in Fountain said that there needs to be some special or unusual feature in the case to justify a court departing from the ordinary practice. Sheppard J instanced the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; misconduct that causes loss of time to the court and the other parties; the fact that the proceedings were commenced at or continued for some ulterior motive; or in wilful disregard of known facts; or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; the imprudent refusal of an offer to compromise; and costs against a contemnor.”
[11] White J reviewed other cases in which cognate statements were made and continued:
“It is important that applications for the award of costs on the indemnity basis not be seen as too readily available when a particular party against whom the order is sought is seen to carry responsibility for the state of affairs calling for a costs order without some further facts analogous to those mentioned in Colgate and other considered decisions.
[12] In Schache v GP No. 1 Pty Ltd, Muir JA considered the power to order costs on the indemnity basis as follows:
“The circumstances warranting the ordering of indemnity rather than standard costs were discussed at some length by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd. In that case, his Honour observed that the settled practice in Australia has been for costs to be awarded to the successful party to a proceeding on, what is in effect, the standard basis unless the circumstances warrant departure from that course. His Honour noted that some of the circumstances which had been thought to warrant the making of an indemnity costs order were: the making of allegations of fraud which were either known to be false or irrelevant; the engaging in misconduct that caused loss of time to the court and other parties; the commencement or continuation of proceedings for some ulterior motive ‘or in wilful disregard of known facts or clearly established law’; the making of allegations which ought never to have been made or the undue promulgation of a case by groundless contentions; and an imprudent refusal of an offer to compromise. Sheppard J concluded this list with the observation:
‘The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.’
[13] In LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo,] Boddice J said:
“The applicable principles for the awarding of indemnity costs were usefully summarised by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd. However, those principles operate as a guide to the exercise of the relevant discretion. They do not define all of the circumstances in which the discretion is to be exercised and do not limit the width of that discretion. Further, the categories in which the discretion to award indemnity costs may be exercised are not closed.
Whilst the awarding of costs on an indemnity basis will always ultimately depend on the exercise of a discretion in the particular circumstances of each individual case, the justification for an award of indemnity costs continues to require some special or unusual feature of the particular case. As was observed by Basten JA in Chaina v Alvaro Homes Pty Ltd, the general rule remains that costs should be assessed on a party and party basis, and the standard to be applied in awarding indemnity costs ought not ‘be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis, absent some blameworthy conduct on its part.’
[14] To those observations, it may be added that the Court of Appeal has treated a case of abuse of process as sufficient ground for an order that costs be assessed on the indemnity basis.]
An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages.
In support of the application for indemnity costs, counsel pointed only to the fact that it was always apparent there was no merit in the appeal. This is, in my view, not an exceptional circumstance as would justify an order for indemnity costs.
However, as the Full Court also observed, including through a consideration of Colgate-Palmolive, the usual rule in section 117(1) of the Family Law Act (supra) should only be departed from when it is demonstrated that there is what might be paraphrased as “exceptional circumstances”.
I am satisfied that justice can be done as regards to the Wife without an award of indemnity costs for the entirety of the Wife’s proceedings. That is for a number of reasons.
Firstly, as the authorities discussed in Prantage make clear, an award of indemnity costs is not only a departure from the general rule in all civil litigation jurisdictions but it is, in effect, a signing of a blank cheque in favour of one party. The Husband has no control of the bargain of the Wife as to the costs that she incurs - although, in this case, again I make clear that the Husband has had significant impact upon the costs of the Wife. She has had to undertake vast work which was simply unnecessary had the Husband discharged his obligations and shown any decency towards the Wife.
The second difficultly that arises is that the parties are entitled, as section 117(1) envisages, to proceed on the basis that they will each pay their own costs. If the Husband had done all within his power to comply with his duty of disclosure fully, frankly and promptly, the matter may still have incurred legal costs of some tens of thousands of dollars. There would still have been the necessity for the parties to be involved in that process and there would and could have been no criticism.
Whilst I have tempered any criticism of the Wife as to the apparent application for 88.4 per cent of the assets, whether that is an accurate calculation or not, it is, if that is correct, well outside of a range of outcomes that the Wife might have expected as one might ultimately take as conceded by her by the variation to the relief that she sought at arbitration. Although, again, the Wife was in such a vacuum that it was difficult for her to understand what the asset pool was or what it was worth.
For all of those reasons and by reference to the Full Court’s discussion in Prantage, I am not satisfied that an indemnity costs Order should be made but I am satisfied that a costs Order should be made for the events and for the work and additional work that was rendered necessary by the Husband. To that end, I turn to the specific amounts that I propose to Order by reference to Division 21 of the Federal Circuit Court Rules (supra) and Schedule 1 to those Rules. They will still be substantial amounts.
I also make clear that I propose to work from Schedule 1 as it is presently drafted. I am conscious that the proceedings have been on foot for two years and, thus, there have been variations in that scale from time to time. I am conscious that appellant authority might be critical of using the most recent scale rather than that which applied at the time the specific steps were taken. However, the majority of costs that I propose to award relate to work that has been undertaken during the course of the arbitration and thus by reference to the current scale.
Further, I am conscious that Division 21 permits departure from the scale. It is not prescriptive. It is intended to be an illustrative, event-based scale so that litigants might know in advance, if costs are contemplated and ordered, the quantum that they might face without the need to then engage in an assessment of costs, yet another cost imposed upon the parties.
I am satisfied that the costs that the Husband should bear are those which arose from his actions or which increased the Wife’s work through either his actions or his inactions. That includes a number of the court events.
I am satisfied the Husband should meet the Wife’s costs of the first court event of 6 March 2018. That was necessitated by the Husband’s actions which could not sit with the findings that were made with the arbitrator. Indeed, the Husband’s own evidence, it being stated as an agreed fact, was that he required significantly less than the amount he withdrew. Accordingly, I am satisfied the Wife would be entitled with respect to that event to:
§Item 1, $2,802.
§Attendance, half day, $1,120.
§Advocacy loading, $560.
§Total $3,972
I am satisfied that the Husband should meet the Wife’s costs of the appearance on 12 April 2018. On that occasion, there is no dispute that the Husband had failed to return funds which he had already been ordered to return. The Wife was put to the expense of bringing not only an Application in a Case, but an Application for Contempt. The matter stood to enable the Husband to purge his contempt. Accordingly, in relation to that appearance I propose to allow:
§Item 3, $1,867.
§Full day attendance, $2,241.
§Advocacy loading, $1,120.50,
§Being items 3, 13 and 12 respectively and totalling $5,228.50.
I would order costs in relation to the appearance on 8 March 2018, however, costs were ordered on that date in the sum of $5,844.30. It has already been ordered and paid.
I propose to award costs for each of the Applications in an Arbitration on 14 August and 17 November 2018 as well as 12 March and 18 April 2019. Each of those related to issues regarding disclosure, valuation or further restraints upon the Husband and his dealings, many of which the arbitrator recorded the Husband simply ignored. On each of those occasions, I propose to allow the same amounts as were ordered for 12 April:
§Item 3, an interlocutory interim application, $1,867.
§Half day attendance, item 13, $1,120.
§Together with advocacy loading, item 12, $560.
Accordingly, for each of those four events – 14 August and 17 November 2018, 12 March and 18 April 2019 – a total amount of costs of $3,547 for each of the four events is ordered (totalling $14,188).
I propose to allow the costs of today. The Application for Costs has been appropriately made. It has been successful. It has been prosecuted and the entire day consumed, albeit with other business interrupting the Court, but the parties required for the whole day. Accordingly, those costs will be awarded on the same basis of 12 April 2018, i.e.:
§Item 3, $1,867.
§Item 13, full day appearance, $2,241.
§And advocacy loading, $1,120.50.
§Total $5,228.50
There are then the costs of the arbitration. I propose to allow one half of the total costs paid by the Wife in relation to the arbitration. Those costs were $28,346. One half is $14,173. It is made perfectly clear at the outside of the Arbitral Award and reasons that the matter was listed for three days and would and could have concluded in that time but for the issues in relation to valuation. The Husband was responsible for the generation of those issues. He should bear the costs.
I propose to allow the entire cost of Mr F, the shadow or adversarial expert. Whilst it is submitted that, ultimately, the arbitrator preferred Ms G, it is made tolerably clear that even though there might have been some issues by reference to Makita (Australia) Pty Ltd & Sprowles [2001] NSWCA 305, with the acceptance of his evidence, it was ultimately not pressed. Both parties urged the arbitrator to accept Ms G but at the dramatically increased valuation of a little over $1.2m, not that which was initially prepared, although the Husband continued to assert the value of $480,000 should be accepted.
I propose to allow one half of Ms G’s costs. Those costs were $10,606.75. I will allow an amount of $5,303.35. Ms G’s job was made more difficult, more costly and more protracted by the Husband’s actions. She was required for a full day of cross-examination. She was required to engage in meetings and consultations with Mr F, whose evidence I make very clear has had a fundamental impact on these proceedings, even if ultimately the valuation figure that he advanced was not accepted (although, it must be observed that figure was at least $300,000 less than the figure ultimately established on Ms G’s evidence). Why would the Wife seek to have Mr F’s value accepted in those circumstances? Ms G’s costs have accordingly been substantially increased and whilst it is an arbitrary determination of one half, it is on the same basis as the extension to the arbitration - it doubled what was required.
I propose to allow one half of counsel’s fees. I am conscious that item 13 provides for attendance, however, counsel is not a disbursement. Counsel cannot be included in items 14 and 15 as such. Counsel is not photocopying. Counsel is experience and the knowledge that is brought to bear upon the dispute, and the conduct of the hearing is vast.
The fees that are charged by counsel, a little over $70,000 in total, might seem an extraordinarily large amount. However, the reality is that counsel would have been involved in not only the effective seven days of arbitration – six days of hearing and one day of additional submissions – but the three pre-arbitration meetings. There is a requirement for preparation. Counsel does not simply walk into an arbitral hearing or a courtroom, put down their brief and begin the case without reading or preparation.
In this case, preparation would have been extensive. It is why I have laboured the findings of the arbitrator. It has been necessary to compare various different source documents to find the discrepancies and to ascertain the chicanery which has gone on. It is only then that the true picture is revealed.
Counsel would have been required not only for 10 days of work engaging directly with the arbitration, but, I am satisfied - as a rule of thumb often used by the bar - one day of preparation for each day of the arbitration. Accordingly, the amount that would be charged by counsel, when spread over 20 days or so, is only a little more than the amount that would be permitted by item 13, and that preparation is in addition to that undertaken by the Wife’s solicitors. Accordingly, that amount, half of the fees, $35,238.50 will be allowed.
I propose to allow fees for an instructing solicitor for the three additional days of arbitration rendered necessary, I am satisfied, by the Husband’s actions or inactions. That is, under item 13, $2,241 per day or $6,723 in total. Whilst it might be suggested that this is a duplication - that item 13 should include the appearance, full stop - I am not satisfied it is so. Lest I am wrong in that regard, again, I am conscious that Division 21 does permit departure from the scale. It is indicative.
Counsel should not appear without instructors. Counsel are retained and instructed by the solicitor, not the client. It is a common practice that counsel will appear uninstructed, no doubt to seek to save money for parties and explicably so, but in a case such as this, with such myriad complexity, it would be folly for counsel to seek to appear without instructing solicitor. It would be verging upon negligence to seek to do so on direct brief. Accordingly, those amounts will also be allowed.
I am satisfied that there should be an allowance for preparation for the arbitration. Item 7 and 8 permit an amount of $5,921 for a two day hearing plus an amount of $1,268 for each additional day. I am not at all satisfied that is in any way adequate recompense for the vast and significant work that would have been required to be undertaken by the Wife’s legal representatives in preparation for this arbitration.
I propose to allow item 7 but multiplied by five, that is $29,605. The amount of work that is required in issuing 23 subpoena, inspecting the material, collating and cross-referencing the documents, obtaining instructions, discussing with and instructing experts, obtaining their advice and input, returning to the documents and then then applying that advice and alike is all work that would have been avoided had Mr Harb taken an appropriate attitude towards the discharge of his duties.
Accordingly, I am satisfied any lesser amount would not reflect the additional work that has been required. I am satisfied the preparation costs would have been more. However, that is, as best as can be ascertained and arbitrary as it might seem, a mechanism to seek to determine the additional work required - many tens, if not hundreds, of hours of work.
As there are 23 subpoena issues and with respect to which a $55 filing fee is required with respect to each. I propose to allow that amount as a disbursement, item 14, totalling $1,265.
There is then service and conduct money for each subpoena. Using a base amount of $150 to cover both, that would produce, over 23 subpoenas, a further disbursement of $3,450.
There would also be, as is apparent from the file which resides within a box, many thousands of pages of photocopying, and in this case the photocopying a significant number of financial records produced on subpoena. It could not be argued in this case that photocopying the material is unnecessary. If the case were conducted before the Court, it could simply be inspected, tabulated and tendered from the original document as the hearing is conducted. Of course, the parties have attended arbitration, which means the documents needs to be copied and provided to the arbitrator as well as to counsel as well as a copy retained by instructing solicitors. Doing the best I can – and it is very much an arbitrary amount - I propose to allow at the scale rate of 77 cents per page for 3000 pages of photocopying, or $2,310. That is, I am satisfied, but a fraction of the amount of copying that would have occurred.
All of those amounts total $139,789.85 and that is the amount that I propose to order.
I certify that the preceding two hundred and one (201) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 24 December 2020
15
6