HAVEN & HAVEN
[2020] FamCA 954
•19 November 2020
FAMILY COURT OF AUSTRALIA
| HAVEN & HAVEN | [2020] FamCA 954 |
| FAMILY LAW – NATIONAL ARBITRATION LIST – arbitrator determining property alteration proceeding and spousal maintenance application – arbitrator dismissed wife’s applications – respondent applying for indemnity costs of more than $240,000 – wife penniless – husband bettering offer of compromise – order sought by respondent not just – lesser sum ordered. |
| Family Law Act 1975 (Cth), ss 13E, 74(1), 75(2), 79, 106A, 117 |
| Armington & Armington and Ors (No. 3) [2020] FamCA 765 Bacall & Zagar (No. 2) [2020] FamCA 598 Blakeley & Jaine (No. 4) [2020] FamCA 811 Calderbank v Calderbank [1975] 3 All ER 333 Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Cutts v Head [1984] 1 All ER 597 Denison & Tilford [2020] FamCA 604 Easom & Burhan (No. 2) [2020] FamCA 14 Fitzgerald v Fish (2005) 33 Fam LR 123 Goodridge & Beadle and Ors (No 2) [2019] FamCA 786 Guild & Stasiuk (No. 2) [2020] FamCA 564 Harlen & Hellyar (No. 2) [2020] FamCA 413 Hearl & Digby [2020] FamCA 474 In the Marriage of Hogan (1986) 10 Fam LR 681 Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 Manesh & Manesh (No. 2) [2020] FamCA 904 Medlon & Medlon (No 6) (2015) 54 Fam LR 1 Stanford v Stanford (2012) 247 CLR 108 |
| APPLICANT: | Ms Haven |
| RESPONDENT: | Mr Haven |
| FILE NUMBER: | PAC | 5743 | of | 2018 |
| DATE DELIVERED: | 19 November 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 10 November 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Not applicable |
| COUNSEL FOR THE RESPONDENT: | Not applicable |
| SOLICITOR FOR THE RESPONDENT: | Messenger Family Law |
Orders
The applicant must pay the respondent’s costs of and incidental to the proceeding from 18 July 2019 onwards on an indemnity basis in the sum of $30,000.
The applicant must make that payment within 90 days of these orders.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Haven & Haven has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: PAC 5743 of 2018
| Ms Haven |
Applicant
And
| Mr Haven |
Respondent
REASONS FOR JUDGMENT
Introduction
Following the arbitration of this proceeding, the arbitrator dismissed the applicant’s amended application for property settlement and spousal maintenance. The respondent has applied for an order for the payment of his costs on an indemnity basis. Those costs were said to exceed $240,000. The applicant contends she has no capacity to meet a costs order of that magnitude.
Synopsis
For the reasons that follow, in my judgment an indemnity costs order should be made but not in the sum sought by the respondent.
Relevant factual setting
On 17 December 2019 his Honour Judge Myers of the Federal Circuit Court of Australia made orders pursuant to s 13E of the Family Law Act referring to the arbitration of the Hon. P. I. Rose AM QC the applicant’s amended application filed 5 November 2019. In that amended application the applicant sought orders –
a)for the payment to her by the respondent of $400,000 by way of property settlement within 28 days from the making of such an order;
b)for the payment to her by the respondent of $1,500 per week for 3 years for spousal maintenance;
c)in the nature of declaratory relief that each party be the sole owner of all other property in his or her possession or control;
d)that the respondent retain 100% of his superannuation entitlements;
e)for costs;
f)for the sale by the respondent of his real property situated at and known as E Street, Suburb B, in case the respondent failed to pay the applicant the sum of $400,000 mentioned above; and
g)orders pursuant to s 106A of the Family Law Act in the event of any party failing to execute any document.
In paragraph 3 of the arbitrator’s award, the arbitrator indicated that the applicant was granted leave to further amend her amended initiating application. In the further amended application the applicant sought the following orders –
a)the respondent pay her $250,000 by way of property settlement; and
b)$156,000, being spousal maintenance at the rate of $1,000 per week over three years.
The respondent sought orders dismissing the proceeding.
So far as formal particulars of relevant events was concerned, the arbitrator succinctly distilled them. They were –
a)the applicant is 51 and unemployed;
b)the respondent is 60 and acts as the managing director of his group of companies;
c)a dispute emerged about the date of commencement of cohabitation, the applicant contending it was 15 July 2017 and the respondent contending it was 22 August 2017;
d)the parties married in 2017;
e)no children were involved;
f)the date of separation was disputed, the applicant contending it was 23 September 2018 and the respondent contending it was 22 September 2018;
g)the duration of cohabitation was 13 or 14 months;
h)the parties divorced in 2020; and
i)neither party repartnered.
The arbitrator identified five issues that fell for his determination. They were as follows –
a)the period of cohabitation;
b)the respondent’s financial contributions;
c)the weight to be given to each party’s respective contributions;
d)the application by the applicant of the sum of $200,000 given to her by the respondent after separation; and
e)whether the applicant made full and frank disclosure of relevant financial information.
The arbitrator determined that the period of cohabitation was 13 months.
According to the applicant wife, the arbitrator found that the total net asset position was $14,663,616.32 whereas according to the respondent husband, the total net asset position was $16,055,208.
To the extent that the evidence of the applicant diverged with that of the respondent, the arbitrator accepted the respondent’s evidence preferring it to the applicant’s. The arbitrator’s precise finding was as follows –
I find that the applicant is a witness who is unshackled by the truth.[1]
[1] Paragraph 25.13 of the arbitral award dated 30 April 2020.
So far as contributions were concerned, the arbitrator found as follows –
27.I find that the Respondent’s financial contributions direct and indirect over a very short period of cohabitation were overwhelming compared to the contributions of the Applicant. The effect is that, in those circumstances, little weight can be given to her contributions.
The arbitrator addressed s 75(2) matters. Relevantly distilled, the arbitrator found as follows –
a)the applicant is 51 and the respondent 60;
b)the applicant’s general practitioner diagnosed the applicant as “emotionally disturbed”;
c)the arbitrator accepted the general practitioner’s evidence that the applicant requires counselling and support;
d)the applicant did not disclose any income and she described herself as unemployed;
e)the arbitrator considered the applicant’s evidence of her capacity to earn income as being unsatisfactory;
f)the respondent was in good health;
g)his earning capacity is proven and the respondent operated a highly successful group of companies;
h)the arbitrator found that the applicant had not made full and frank disclosure;
i)the applicant has five children in Country G yet the arbitrator found that the applicant’s evidence about her provision for them was vague and unconvincing; and
j)the parties enjoyed a reasonable standard of living.
The arbitrator addressed the applicant’s use of the sum of $200,000 provided to her by the respondent on 22 August 2018. The arbitrator accepted the evidence of the applicant to the effect that she had exhausted $49,561.15 of the $200,000 and therefore had left $150,438.85.
The arbitrator dismissed the applicant’s property adjustment claim. The following is a synthesis of the arbitrator’s main reasons for the dismissal of that application –
a)citing Stanford v Stanford[2] the arbitrator concluded that s 79 requires the court to not make a property settlement order unless satisfied that it is just and equitable to do so and that s 79(4) identifies the matters that must be taken into account;
b)the relationship was of 14 months duration or thereabouts during which the applicant did not make any direct or indirect contributions to any of the property interests of the respondent;
c)the applicant was able to retain her property interests without any diminution due to the respondent’s financial contributions;
d)the applicant’s primary contribution was as a home maker over a very short period so the weight to be given to it was negligible;
e)the applicant failed to make full and frank disclosure so the weight to be accorded to s 75(2) matters was difficult to assess;
f)the respondent paid the applicant $200,000;
g)the applicant dissipated a portion of that sum without providing a believable and rational explanation for such dissipation in a short time; and
h)her failure to provide full and frank disclosure did not assist the applicant’s case that it is just and equitable for a property settlement order to be made in her favour.
[2] (2012) 247 CLR 108.
The arbitrator determined to dismiss the claim for spousal maintenance. The following is a distillation of the main reasons for that determination –
a)s 74(1) provides for the making of a spousal maintenance order if such an order is proper;
b)the applicant relied on her inability to support herself by reason of her unemployment with little available property or financial resources; and
c)the applicant’s evidence was defective as it did not include her estimated current living expenses, her estimated needs to support herself, her capacity to earn or her use of the $200,000 provided to her on 22 August 2018 or current funds available to her and her lack of credibility generally.
The arbitrator found that it would not be proper to make the spousal maintenance order sought.
The award dated 30 April 2020 was in the following terms –
1.That the Amended Application of the Applicant for property settlement and spousal maintenance filed 5 November 2019 further amended by the Minute of Orders sought being Exhibit 3 in the proceedings is dismissed.
Registration of the arbitral award
The arbitrator did not deal with costs.
When this proceeding was before the Federal Circuit Court of Australia prior to its transfer to this court pursuant to the orders made by his Honour Judge Dunkley on 27 August 2020, the proceeding was placed in the docket of his Honour Judge Harman under his Honour’s control of the National Arbitration List in the Federal Circuit Court by order made 16 June 2020. By order made on 26 June 2020, his Honour Judge Harman registered the arbitral award with the consequence that it became a decree of the Federal Circuit Court of Australia. His Honour adjourned the proceeding to 21 August 2020, indicating that costs would be addressed on 21 August 2020. On 13 August 2020 an order was made in chambers by his Honour Judge Harman adjourning the proceeding to 18 September 2020.
I first dealt with the case on 18 September 2020. On that occasion the applicant appeared in person and informed me that she intended to obtain legal assistance. At the time the respondent pressed me to make a costs order against the applicant in the sum of $240,148.78. I informed the applicant that this was a very serious matter for her and that she should endeavour to obtain legal assistance. I gave her two weeks to find legal help and adjourned the proceeding to 2 October 2020.
On 2 October 2020 the applicant appeared before me again, unrepresented. I required each party to file and serve affidavit material in relation to costs within stipulated periods and otherwise adjourned the argument about costs to 10 November 2020. The respondent was ordered to file his affidavit material by 16 October 2020. He did so two days early, on 14 October 2020. The applicant was ordered to file her affidavit material by 30 October 2020. She filed her material on 9 November 2020.
It became necessary to examine the affidavit evidence filed by both.
Respondent’s costs claimed
Mr Haven swore an affidavit on 14 October 2020. The following is a synthesis of the more important matters to which he deposed –
a)he met the applicant through a dating site, they dated once in March 2017, twice in June 2017 and on 22 August 2017 the applicant moved in with the respondent culminating in their marriage in 2017;
b)he said the applicant brought only her clothing with her;
c)he said the applicant arrived in Australia on a tourist visa in 2016 which later changed to a protection visa;
d)the applicant commenced litigation in the Federal Circuit Court of Australia on 30 April 2019 and by agreement they attended a mediation with S. O’Ryan QC;
e)the parties agreed to arbitrate this proceeding;
f)the arbitration was conducted over two days;
g)Mr Haven deposed to spending the following sums –
i)$36,483.70 for junior counsel;
ii)$66,522.50 for senior counsel;
iii)$130,530.43 for solicitors;
iv)$6,112.15 for the mediator;
v)$500 for mediation room hire;
vi)$21,950 for the arbitrator; and
vii)$3,300 for the arbitration venue
$265,398.78
Mr Haven deposed to having actually paid that sum.
Applicant’s evidence
In her affidavit made 9 November 2020 the applicant deposed to not only events relevant to the arbitration but also to broader issues including her status as a visa holder. Relevantly distilled, she deposed to the following –
a)she is unemployed with no permanent residence;
b)after leaving the respondent she lived in a refuge;
c)in May 2019 she ran out of funds;
d)when she met the respondent she was the holder of a bridging visa;
e)she disputed that the respondent was forced or tricked into marrying her;
f)she told the respondent that she was a single mother of six from very humble circumstances in Country G;
g)one of her daughters died in 2017;
h)she commenced living with the respondent on 15 July 2017;
i)in May 2018 she said the respondent told her that she was not to work and that instead she was to undertake household duties;
j)she commenced consulting a psychologist on 13 July 2018;
k)she said she owned a parcel of land in Country G in respect of which she invited the respondent to become registered as an owner in order to demonstrate to her ex-partner in Country G that a co-owner existed;
l)she has sought a protection visa in relation to her ex-partner as she fears him because he is a police officer in H City;
m)she was unable to sell the interest in land to the respondent (so she said) because she and the respondent were spouses;[3]
n)the respondent paid her $200,000 on 23 August 2018 as a voluntary transfer in order to help her and her children in Country G;
o)a few days later she said the respondent requested her to return the funds;
p)she said she believed the respondent gave her the $200,000 “so that he could claim ownership of me” (her words);
q)on 22 September 2018 her relationship with the respondent officially ended; and
r)she is nearly homeless.
[3] It seemed that she was seeking to convey the notion that the conferral of an interest in land upon a spouse was not a sale, properly so called.
To her affidavit the applicant exhibited several documents, one of which was a report prepared by Ms D, a psychologist, for the Department of Immigration. In that letter Ms D stated that the applicant was depressed. Dr C, a general practitioner provided a medical report dated 30 March 2020 stating that the applicant presented with complex psychological issues requiring ongoing counselling and support. The applicant also exhibited various documents from F Organisation addressed to the Migration Review Tribunal concerning the applicant’s psychological trauma. In that correspondence it was asserted that the applicant will be killed by her ex-partner, the police officer. She sought consideration for a protection visa based on family violence.
The applicant’s affidavit did not address issues relating to costs. It seemed to amount to another attempt by her to ventilate her views of the abusive relationship she said she endured with the respondent. That said, it went a short distance in demonstrating (in a very minor way) her financial circumstances, one of the matters I am required to consider under s 117(2A) of the Family Law Act.
Offers of compromise
Among the documentary material on which the respondent relied were two letters from his solicitors, Messenger Family Law, to the applicant’s previous solicitors, the first dated 20 March 2019 and the second dated 18 July 2019. Each lapsed as neither was accepted within the time prescribed, and in accordance with learning espoused in such cases as Cutts v Head[4] and Calderbank v Calderbank.[5] In the first the respondent offered to settle the proceeding by paying the applicant $40,000 in full and final settlement. No response was provided to that offer. In the second the respondent offered to settle the litigation upon his paying the applicant $140,000. No response was provided to that offer. Thereafter the litigation went to an arbitral hearing resulting in an arbitral award dismissing the proceeding. On any view, the respondent bettered the second offer rendering the applicant susceptible to an order for indemnity costs.
[4] [1984] 1 All ER 597.
[5] [1975] 3 All ER 333.
Costs orders under s 117(2)
Under the Family Law Act, s 117(1) operates in such manner as to make each party responsible for the payment of his, her or its own costs, in the absence of an order under s 117(2). If the court considers that a costs order is appropriate in the circumstances of a particular case, it is competent for a court to make a costs order under s 117(2) thereby deviating from the usual order under s 117(1). But in any order under s 117(2), the court must address the provisions of s 117(2A).
In my view a costs order is appropriate in this case. It seems to me that –
a)the applicant was wholly unsuccessful in her litigation against the respondent; and
b)she rejected an offer of compromise that would have disposed of this litigation on terms vastly more advantageous than those ordered by the arbitrator.
Section 117(2A)
It is necessary to address the factual matters in this case against each subsection of s 117(2A).
For the purposes of s 117(2A)(a), the financial circumstances of each party must be addressed. Here, the applicant is of extremely modest financial circumstances. She says she is homeless. Conversely, the respondent enjoys a considerably more favourable state of financial circumstances.
Neither party was in receipt of legal aid for the purposes of s 117(2A)(b) of the Family Law Act.
The conduct of the parties is relevant under s 117(2A)(c). While it may be that the applicant’s case was weak at the outset, no evidence was before me to reveal that the applicant conducted herself in such manner as to attract a costs order under that specific subsection.
Section 117(2A)(d) was not enlivened in the circumstances of this case.
Section 117(2A)(e) invites attention to whether a party was wholly unsuccessful. The applicant wholly failed in both components of her case.
Section 117(2A)(f) addresses the making of an offer in writing to settle the proceeding. As has been already canvassed, the respondent made two offers each of which was not accepted and each lapsed.
Therefore, s 117(2A)(e) and s 117(2A)(f) were engaged in this proceeding.
In my view it was appropriate to make a costs order against the applicant in favour of the respondent.
Indemnity costs
In a string of recent decisions[6] I have made a collection of observations about indemnity costs incorporating statements of principle from the High Court in Knight v F.P. Special Assets Ltd[7] and the very many statements made by a variety of full courts of this court including in Medlon & Medlon (No 6).[8]
[6] Goodridge & Beadle and Ors (No 2) [2019] FamCA 786, Easom & Burhan (No. 2) [2020] FamCA 14, Harlen & Hellyar (No. 2) [2020] FamCA 413, Hearl & Digby [2020] FamCA 474, Guild & Stasiuk (No. 2) [2020] FamCA 564, Bacall & Zagar (No. 2) [2020] FamCA 598, Denison & Tilford [2020] FamCA 604, Armington & Armington and Ors (No. 3) [2020] FamCA 765, Blakeley & Jaine (No. 4) [2020] FamCA 811 and Manesh & Manesh (No. 2) [2020] FamCA 904.
[7] (1992) 174 CLR 178.
[8] (2015) 54 Fam LR 1.
In In the Marriage of Hogan[9] it was held that any costs order must be just.
[9] (1986) 10 Fam LR 681.
Conventionally, the decision in Colgate–Palmolive Co v Cussons Pty Ltd[10] is usually cited for the test of the circumstances in which it is appropriate to order indemnity costs. Costs on an indemnity basis may be awarded –
a)where a party made allegations of fraud knowing them to be false or where that party made irrelevant allegations of fraud;
b)where evidence of misconduct existed causing loss of time to the court and the other parties;
c)whether the proceeding was commenced for some ulterior motive;
d)whether the proceeding was commenced or continued with wilful disregard of known facts or clearly established law;
e)where allegations were made that ought never to have been made;
f)where the proceeding was unduly prolonged by groundless contentions; and
g)where there was an imprudent refusal of an offer of compromise.
[10] (1993) 46 FCR 225.
To my mind, the imprudent refusal of an offer of compromise is sufficient ground for the grant of an order for indemnity costs. Plus, in Fitzgerald v Fish[11] it was held that one factor only needs to be satisfied in s 117(2A) to warrant an order for costs under s 117(2).
[11] (2005) 33 Fam LR 123.
The quantum of the indemnity costs
The respondent sought an order for indemnity costs of more than $240,000. In the context of a homeless applicant that is an extreme position for the respondent to adopt. That is not an outcome that is just within the contemplation of the statement of principle in In the Marriage of Hogan.[12] I refuse to make such an order. It must not be forgotten that this was a two day arbitral hearing. The arbitrator’s fees were modest. Silk and junior counsel have rendered fees that reflect preparation, advice and appearances at the various hearings. Of course, a party is entitled to select such legal representation as he, she or it may choose. However, in my view it will orchestrate a very real hardship (and, to use the words of In the Marriage of Hogan, the opposite to a just order) for an impecunious litigant to be saddled with the full financial burden of expensive legal representation engaged by the successful party. That is not a just costs order. That said, the applicant chanced her arm by bringing this proceeding then amending the sum she sought. She further chanced her arm by pressing ahead with this litigation after imprudently refusing an offer of compromise the later of the two of which was made in July 2019.
[12] (1986) 10 Fam LR 681.
Any assessment of indemnity costs should be limited temporally to a date after the applicant imprudently refused to accept the July 2019 offer of compromise. On that analysis –
a)only two fee slips for junior counsel were relevant totalling $6,811.75;
b)all of senior counsel’s fees were relevant;
c)only the fees of Messenger Family Law from 22 July 2019 and following were relevant;
d)the mediator’s fees were not relevant;
e)the mediation room hire fee was not relevant;
f)the arbitrator’s fees were relevant; and
g)the arbitrator’s venue fees were relevant.
Even if those sums are recoverable on an indemnity costs order basis, that translates to an amount of or greater than $100,000. To my mind, such an order is not just.
While I am willing to make an indemnity costs order it must be tempered by the justice of the circumstances. I do not accept the respondent’s submission that the applicant has at her disposal the net balance of the $200,000 paid to her by the respondent so that she can use that net balance to meet a costs order.
It is competent for me to fix a particular sum by way of costs. I fix $30,000 and I order that sum to be paid within 90 days of these orders.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 19 November 2020.
Associate:
Date: 19 November 2020
13
1