Harris and Breen

[2015] FamCA 1060

FAMILY COURT OF AUSTRALIA

HARRIS & BREEN [2015] FamCA 1060

FAMILY LAW – COSTS – Circumstances justifying order

Family Law Act 1975 (Cth)

APPLICANT: Mr Harris

RESPONDENT: Ms Breen

FILE NUMBER: BRC 9614 of 2011

DATE DELIVERED: 27 October 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 27 October 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Mr Biggs

Biggs Fitzgerald Pike

THE RESPONDENT: In person

Orders

1. That the respondent shall pay a sum fixed in the amount of $3,750 towards the applicant’s costs of and incidental to this application for contempt.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 9614 of 2011

Mr Harris

Applicant

And

Ms Breen

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. In this matter, I am asked to make a costs order in favour of the applicant, Mr Harris. He is the applicant in an application for contempt that he filed in this Court on 18 September 2015. The Respondent is Ms Breen. Mr Harris sought that Ms Breen be held in contempt of this Court as a consequence of non-compliance with orders that were made by consent by me on 15 May 2014 in contested property adjustment proceedings between the two parties

2. The application for costs is made in the context of the application for contempt not being proceeded with by the applicant on the morning that it was listed for hearing because, as I am informed by the solicitor who appears for the Applicant, the primary objective of filing the application was to achieve the compliance that was the basis for the application for contempt in the first place. Since the filing of the application and service of it upon the Respondent that compliance has occurred.

3. In the circumstances, the Applicant husband asks for his costs of and incidental to the application, principally on the basis of apparent 100 per cent success having regard to the objective sought to be achieved by the application and the outcome I just referred to.

4. In the consent Order of 15 May 2014, a document of some length and some complexity dealing with the unravelling and disentangling of the financial circumstances of the parties following the breakdown of their relationship, under a subheading “E Super Fund”, paragraph 25 sets out some obligations upon the Respondent, Ms Breen. Those obligations imposed upon her in the Order of 15 May 2014 required her, within 30 days of the date of the Order, to do all acts and sign all such documents necessary to (a) resign from her position as Trustee of the E Super Fund; (b) resign as a member of the E Super Fund; (c) transfer to the Applicant or the Applicant’s nominee some property that was an asset of the superannuation fund that the Respondent was still a registered owner of as trustee for the fund; (d) cancel the Respondent’s signatory arrangements with respect to all bank accounts or accounts held with any other financial institution by the E Super Fund; (e) ensure that the E Super Fund remains a complying self-managed superannuation fund including joining with the Applicant in appointing a corporate trustee; and the Orders required the Applicant at his expense to provide to the Respondent any document required to be executed by her to give effect to the Order.

5. Relevantly, the E Super Fund is a self-managed superannuation fund of the parties. The two parties were indeed the individual trustees of that superannuation fund; they were both members of the self-managed superannuation fund; and interestingly, it is accepted as an agreed fact, the Respondent had no credit balance whatsoever in her member entitlement account in that superannuation fund at the time of the trial and the making of the Orders, or ever since.

Some Background

1. The solicitors who act for the Applicant husband have given sworn evidence that on a date in October last year, 2014, they sent some documents to the Respondent’s solicitors who were then on the record to commence the process of resignation of the Respondent from the trust as required by paragraph 25 of the Orders. They deposed to having received information or advice back from those solicitors saying they no longer acted for the Respondent. They depose that they then send to the Respondent, at an address that she had confirmed was her address for all correspondence, in circumstances where she had refused and denied them email access to her, a letter that included the same documents that they had sent to her solicitors, namely a couple of draft resolutions of the trustees of the fund that needed to be signed off on before more formal steps in respect of variation of the deed could be put in train.

2. There is no dispute that the Respondent received that letter and those documents. She wrote back to the solicitors on 10 November 2014, in summary, effectively telling them of her displeasure at the nature of the documents that were sent to her and recording her requirements as to what she would need to see in order to progress this matter further in the form of documents. Before me today from the bar table, she asserts that this was in accordance with advice obtained from a very experienced family lawyer working at the Legal Aid Office in F Town. She did not depose to that and there is no evidence from the solicitor to that effect. With all due respect, even if that was advice given to her by a solicitor, I do not regard her response to the receipt of those documents as reasonable in the circumstances, or necessary.  I regard her response as more reflective of a generally uncooperative approach to the carrying out of her obligations imposed on her by paragraph 25 of the order.

3. The solicitors give evidence that on 12 January 2015 they wrote back to the Respondent, in essence, complying with her requirement to a certain extent, actually having their client sign the documents the Respondent complained were unsigned when they were sent to her by him, but also providing her with the other more formal documents being the variation and change of trustee deed for the superannuation fund including a statutory declaration as well to be signed to effect the matters that the Respondent was obliged to do.

4. Although she does not actually swear in her affidavit expressly to not having received that letter and/or the contents that were said to be in it, the Respondent asserts in her case in an indirect fashion that she did not ever receive those documents. She did not depose to being away at the time. She did not depose to any assertions that she experienced mail otherwise sent to her not being received in her mail box. Most curiously though, during the course of the hearing, the Respondent handed up to the Court a bundle of documents that she said she had received later in the year, which was in July, under cover of another letter from those solicitors which on my reading of them appeared quite conclusively to be the bundle of documents that the solicitors have said they had sent to her under cover of the letter dated 12 January.

5. The solicitors received no response from the Respondent and on her own admission, for the entirety of the first half of 2015, she failed to communicate with them in any reasonable or meaningful way in respect of the matter of the resignation from her responsibilities of membership of that self-managed superannuation fund. In circumstances where she asserts to the Court that it was out of genuine concern for her responsibilities in the position that she occupied that she acted in the way that she did (that I will refer to in a moment), one must question why it was that she took no steps in six months to pursue any further enquiries of those solicitors to ascertain the progress of the matter, particularly where she asserts she had not received any further correspondence after her letter back to the solicitors in November.

6. The solicitors for the Applicant, not having heard or received any return correspondence or communication in any form from the Respondent in return for their January letter, did as they were entitled to do in the circumstances. They came back to this Court under s 106A of the Family Law Act 1975 (Cth) (“Family Law Act”) and applied to the Registrar of the Court and obtained from that Registrar a signature of the Registrar on the relevant document in lieu of the Respondent’s signature giving effect to her resignation from trusteeship and membership of that fund.

7. That, I am satisfied, occurred on 1 May 2015. On 24 June 2015, a month or so thereafter, the Applicant says in his affidavit he learned, by attending at a branch of the bank at which the superannuation fund had its bank account where it held its cash assets, that on 18 June, a week before, all of the balance of that account in the sum of approximately $139,000 had been withdrawn. He learned that the Respondent had withdrawn those funds. He was told that they had been withdrawn at an ANZ Bank branch at G Town.

8. He deposes to, and I do not consider there is any factual disagreement about this, his solicitors receiving a letter from the Respondent dated 3 July 2015, but received by them on 9 July, in which she told them that she had withdrawn the money from the superannuation fund’s bank account after she had noticed some very “unorthodox and questionable transfers” (to use her words) from that bank account. Her information to the Applicant’s solicitors was that she discovered that by chance and when she did she acted to put the money into a safe place until “the matter is properly finalised” (to use her words again).

9. The Applicant’s solicitors then wrote back to the Respondent very shortly thereafter in or around mid-July, telling her that she had been removed as a trustee of the fund, reminding her that she was to have no interest in the fund as a trustee or a member, telling her she was removed as a signatory, informing her quite clearly that her failure to execute documents to achieve the formal removal of her as a trustee lead to the Family Court intervening to execute the documents, telling her that new trustees had been appointed, and telling her that she was not a trustee.

10. In her own case, the Respondent says she responded to the solicitors saying to them that she had not received any appropriate documentation to execute to that point in time so that she could resign from the fund or cease to have an interest in it, and asking them, as one might expect, what has occurred regarding the matter. “Will you please produce to me any evidence that you may have that I have been severed from the fund if this in fact what occurred”.

11. That is exactly what the solicitors say they did. They wrote a letter back a couple of weeks later to the respondent, in which they say they enclosed a copy of the variation and change of trustee deed of the E Super Fund, advising her in the letter that a Registrar of the Family Court had executed the deed in lieu of her given her failure to sign and return the documents, telling her again she is a not a trustee of the fund or a member of the fund and that her signatory arrangements with respect to the Bank account were cancelled following the making of the final Order on 15 May 2014,  telling her that what she had done was unlawful and telling her that it was unlawful as she had no entitlement to the monies. They made it absolutely clear “you are to return the fund’s bank account”.

12. The respondent’s evidence then is that she subsequently called a solicitor, Ms H, who works for a firm known to the Court, J Lawyers in Brisbane, whose job it was to prepare the superannuation fund’s variation of trust deed that the Registrar of the Court had executed. By her own file note exhibited to her affidavit filed to defend herself in this case, the Respondent confirms that the solicitor of the independent firm of J Lawyers had told her this Court’s Registrar had signed off on the documents and that she had done that on 1 May 2015.

13. Critically, the Respondent advances no evidence of any follow up attempt to communicate with Biggs Fitzgerald Pike in which she reasonably asked for any further information or confirmation in respect of the question of whether a Registrar had indeed signed off as they had told her and as had been confirmed to her by an independent solicitor.

14. More critically, from where I sit in determining this matter today, the Respondent had made no effort to contact the Court to ascertain whether indeed the assertions put to her by those two sets of solicitors were indeed correct. Had she done so, in my view, any legitimate concerns that she still harboured about her potential liability or risk as a trustee in respect of compliance issues, having regard to concerns about unorthodox transfers that she had apparently identified, would have been easily and quickly remedied. As she was told, she would have learned and confirmed that from 15 May she was no longer a trustee and therefore not responsible in any way for actions that occurred in June that caused her concern.

15. Indeed at no point does she, on the evidence before me, advance a case that she made proper enquiry through Biggs Fitzgerald Pike or the applicant as to the actual nature of the transaction that caused her concern in the first place to satisfy herself more appropriately that there was nothing to be concerned about even if she was a trustee at the time. But instead of making the enquiries that I regard would have been reasonable for a person in her position to have made, the evidence establishes that the Respondent rushed off to the Tax Office drawing to their attention what she regarded as unorthodox and non-compliant transactions on the superannuation fund’s account, even when she had been told she was not a trustee at the time. She continued to pursue that with the Tax Office.

16. As I have said during the course of argument today, the Respondent’s actions seemingly present, at least to the objective observer, the appearance of being more motivated by some desire to see the Applicant given some difficulty or put in a situation of having to answer to the Tax Office for something the Respondent herself considered inappropriate.

17. The solicitors for the Applicant husband then commenced proceedings on 18 September, over a month after the time that I consider the Respondent was in a position, at the very latest, to have been able to reasonably satisfy herself that she had no cause for concern and whereby thereafter she should have immediately transferred the money that she was clearly not entitled to, back to the Applicant’s control.

18. The situation reached a point where I am satisfied that the Respondent should have made arrangements to put the money back into the self-managed superannuation fund and should have walked away from the matter and walked away from that fund as the 2014 Orders required her to do. However, she did not, and the Applicant was required to commence these proceedings in order to achieve that outcome.

19. After he had commenced the proceedings and in the weeks leading up to the hearing of his application, the Respondent acted and deposited the sum of $139,454.10 back into the Applicant’s solicitor’s trust account.

20. The Applicant has put before the Court evidence of his costs in an affidavit of his solicitor. Attached to the affidavit of his solicitor is a costs agreement between him and his solicitors. I have had a concession from the solicitor from the bar table that it is a costs agreement that effectively uplifts the costs that they were reasonably able to charge the Applicant from that which applies pursuant to the scale to a higher amount. That is a matter of contractual agreement and arrangement between the Applicant and his solicitors.

21. Exhibited to that same affidavit is a schedule prepared by the solicitor which sets out the work and the amount of costs incurred by their client in pursuing this matter, calculated in accordance with that costs agreement. The work started on 24 June 2015 and goes through to today. It includes some three hours of time for the solicitors here at court today, which in the circumstances appears not unreasonable particularly given the fact that I am not quite finished yet and they have had to travel from Chermside where they practice. The total amount is $7,916.70. Effectively, by asking for that amount to be repaid by the Respondent, the Applicant’s solicitor concedes that would be an indemnity costs order.

22. Costs in matters in this Court determined pursuant to the Family Law Act are to be determined in accordance with s 117 of that Act and all of its constituent sub-sections. Indeed, in the first instance, s 117(1) provides that subject to remaining other sub-sections that are mentioned, “each party to proceedings under this Act shall bear his or her own costs”.

23. However, that is subject to a discretion conferred on the Court pursuant to sub-section (2). Where a Court is of the opinion that there are circumstances that justify doing so, the Court may make an order as to costs as the Court considers just. In doing so, the Court must consider matters set out in in s 117(2)(A) of the Family Law Act. I will not list all of those, save to say that I have had regard to them in the determination of this matter. In the circumstances, particularly having regard to my satisfaction that from at least in around the middle of July the Respondent should have, if she had been acting reasonably, been in a position where she would have realised that the money was to go back into the self-managed superannuation fund forthwith and that she was to simply walk away, no longer being a member or trustee of that fund, without there being any compliance concerns for her in respect of the two transactions that she had identified as causing her concern, but rather that she waited until after these proceedings were commenced to return the money, I am satisfied that an order for costs being made against the Respondent is justified.

24. I am not satisfied that the requirements that the authorities set out need to be in place in order for an indemnity costs order to be made are met in this particular case. I am not satisfied to the requisite extent necessary that the Respondent’s actions were somehow contumeliously motivated, although I have said there is some suggestion that her behaviour has been motivated by other than simply worrying about her own interests. Nevertheless, I am satisfied that a costs order ought to be made.

25. I am also satisfied, when looking at the bill, that work for which the Applicant ought be compensated by a costs order is work that commences at the beginning of August 2015 having regard to the timeline giving the Respondent a reasonable period of time once she actually had the information in her hands about no longer being a trustee to have satisfied herself that the assertions that were made to her by the solicitors about her having been written out of the trust in May were indeed correct.

26. I have regard to what I have heard from the Respondent about her financial circumstances, which are relevant. She says she is in receipt of a disability pension, rents her own accommodation and does not have much in the way of assets or financial resources other than superannuation interests. Nevertheless,  I am s satisfied that in appropriate circumstances costs orders should be made even if a party’s financial circumstances are not great. I am satisfied that a costs order is justified in this matter and that the order I am about to make is a just one.

27. I order as follows.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 27 October 2015.

Associate:

Date:  1 December 2015