Hepner & Scheid

Case [2024] FedCFamC1F 118

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Hepner & Scheid [2024] FedCFamC1F 118

File number: SYC 5892 of 2022
Judgment of: CAMPTON J
Date of judgment: 5 March 2024
Catchwords: FAMILY LAW – COSTS – Where the husband filed an Application in a Proceeding seeking for the wife, in her capacity as director of the corporate trustee of the superannuation fund, to do everything necessary to permit the husband to withdraw $150,000 from his own member entitlement for litigation funding and living expenses – Where the wife agreed to releasing the funds but only on condition that the withdrawal would be characterised as an “interim distribution” to the husband for the purposes of the final hearing – Where the wife consented to the husband’s relief during the interim hearing – Where the husband sought fixed costs – Where the wife sought fixed costs – Where the wife’s conditions for the husband to access his own property as she had historically accessed from her superannuation entitlement post-separation, was wholly misconceived – Where the wife’s conduct had caused the husband to incur wholly unnecessary costs – Wife ordered to pay the husband’s costs in the fixed sum of $20,748.
Legislation: Family Law Act 1975 (Cth) ss 79, 80, 114, and 117
Cases cited: Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 22
Division: Division 1 First Instance
Number of paragraphs: 23
Date of hearing: 5 March 2024
Place: Sydney
Counsel for the Applicant: Mr Cox SC
Solicitor for the Applicant: Frazi Lawyers
Counsel for the Respondent: Ms Gardiner
Solicitor for the Respondent: Santone Lawyers

ORDERS

SYC 5892 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR SCHEID

Applicant
AND:

MS HEPNER

Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

5 MARCH 2024

THE COURT ORDERS THAT:

1.The wife pay the husband’s costs of and incidental to his Application in a Proceeding filed 26 February 2024 and of the wife’s Response to an Application in a Proceeding filed 4 March 2024 fixed in the sum of $20,748 within 21 days of the date of this order.

2.The wife’s application for costs of the said Application in a Proceeding and Response thereto be dismissed.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hepner & Scheid has been approved pursuant to s 121(9)(g)…

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Hepner & Scheid [2024] FedCFamC1F 118
Case
[2024] FedCFamC1F 118
Decision Date

CaseChat Overview and Summary

In the matter of Scheid v Hepner, the Federal Circuit and Family Court of Australia dealt with a dispute concerning the husband's application for access to his own superannuation funds for litigation funding and living expenses. The wife, who was the director of the corporate trustee of the superannuation fund, agreed to release the funds but only if the withdrawal was characterised as an interim distribution for the purposes of the final hearing. The husband sought fixed costs, while the wife sought costs of her own. The court found that the wife's conditions for the husband to access his own property were wholly misconceived and had caused the husband to incur unnecessary costs. As such, the wife was ordered to pay the husband's costs in the fixed sum of $20,748.

The primary legal issue before the court was whether the wife's conduct in obstructing the husband's access to his own property justified a costs order in his favour. The husband argued that the wife had created false roadblocks for the purposes of advancing her personal position in the litigation, which may have conflicted with her fiduciary duty as an officeholder of the corporate trustee of the superannuation fund. The court accepted the husband's submission that his access to his own member entitlement did not prejudice the wife's substantive relief sought and reflected that relief. The wife's conduct in requiring, as a condition of the husband accessing his own property, for it to be classified as an addback or categorised as an interim or partial property distribution, was misconceived. The court found that the husband had established circumstances which justified departure from the position that each party pay their own costs, and as to the making of a costs order in his favour.

The court reasoned that the wife's conditions as to the facilitation for the husband to receive some of his superannuation entitlements, maintained until the running of the interim hearing, was doomed to fail. The prolongation of this interlocutory dispute was occasioned by the wife's ill-founded conditions. The husband's costs incurred in bringing the application were wholly unnecessary. The wife knew, or ought to have known, that the position she adopted on the disputed issue may be attributed to having an ulterior motive, or that it was grounded from a wilful disregard of advice. It was just for the wife to pay the husband's costs in the fixed sum as sought.

The court ordered that the wife pay the husband's costs of and incidental to his Application in a Proceeding filed 26 February 2024 and of the wife's Response to an Application in a Proceeding filed 4 March 2024 fixed in the sum of $20,748 within 21 days of the date of this order. The wife's application for costs of the said Application in a Proceeding and Response thereto was dismissed.

Orders

Orders of the court

SYC 5892 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR SCHEID

Applicant

AND:

MS HEPNER

Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

5 MARCH 2024

THE COURT ORDERS THAT:

1. The wife pay the husband’s costs of and incidental to his Application in a Proceeding filed 26 February 2024 and of the wife’s Response to an Application in a Proceeding filed 4 March 2024 fixed in the sum of $20,748 within 21 days of the date of this order.

2. The wife’s application for costs of the said Application in a Proceeding and Response thereto be dismissed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

For the reasons that follow, the wife is ordered to pay the husband’s costs fixed in the sum of $20,748. The wife’s application for costs is dismissed.BACKGROUND The wife was born in 1953 in Australia and is currently 70 years old. The husband was born in 1959 in the United Kingdom and is currently 64 years old. The parties commenced cohabitation in or about early 1997 and were married in mid-2007. They separated on 23 October 2020 and were divorced in 2022. There are no children of the marriage. They have both retired. The wife has three children from a previous relationship, all of whom are now adults. The wife’s granddaughter, D, was born 2006 and is currently 17 years old. From the time D was 12 months old, she has lived with the husband and the wife. On or about 13 November 2009 orders were made for the wife to have sole parental responsibility for D and for D to live with her. The proceedings were commenced by the wife by way of an Initiating Application filed 23 August 2022 seeking orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) for the adjustment of property. The husband filed a Response to and Initiating Application on 23 September 2022 seeking different orders as to the adjustment of property. On 26 April 2023 directions were made listing the proceeding for trial before Curran J over four days commencing on 9 April 2024. The husband contends that the property of the parties is valued in the range of $20 million. The property of the parties includes the jointly held real property at Suburb C valued in the range of not less than $5 million and Suburb E valued in the range of not less than $3 million, and real property held by the wife in Country F. The single experts’ valuations of real property are in the process of being updated. Substantive issue exists as to whether the interests of the wife as a primary beneficiary of a discretionary trust, known as the G Trust, established by the wife’s now deceased mother in 2005, is property of the wife for the purposes of s 79 of the Act. It is the husband’s case that the wife is the appointor of the G Trust and the sole shareholder of the corporate trustee. The wife is the “governing director”, having contended additional powers to the exclusion of other directors. The wife is also the primary beneficiary and default capital and default income beneficiary. As I understand it, it is the husband’s case that the G Trust is, both in law and in practice, under the control of the wife and that the wife can obtain or effect the obtaining of all the property of the G Trust should she elect or be ordered to do so. The parties are the sole members of the Scheid Superannuation Fund, established during the marriage. They are each the shareholders and directors of the corporate superannuation trustee, B Pty Ltd. At 30 June 2023, the value of the husband’s benefit in the Scheid Superannuation Fund was in the range of $1,783,157, and the wife’s benefit in the range of $2,057,982. The husband in his affidavit said that from about November 2021 to October 2023, the wife withdrew $385,000 from her pension in the Scheid Superannuation Fund. He said that these funds have been applied to purchase a property at Suburb H QLD in mid-2022 and at least $15,455 to meet her legal costs associated with these proceedings. During the hearing the wife confirmed that some monies drawn from her member entitlement in the fund had been applied to pay her legal costs in these proceedings.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The party seeking costs bears the onus to establish circumstances which justify departing from the position that each party pay their own costs, for the making of a costs order in their favour. If it is established there are circumstances justifying a costs order, the next consideration is on what basis should costs be paid. That second consideration is not in contest in this matter. The Full Court has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. I shall refer to such s 117(2A) matters as are relevant and engaged here.CONSIDERATION Each party has the benefit of significant property yet to be adjusted. Their respective financial circumstances do not materially impact on the circumstances justifying the making of costs orders as sought by the other. The husband identified the wife’s conduct in obstructing him accessing his own property, producing the necessity of the filing of his Application in a Proceeding. He identifies, and I accept, that on no less than four occasions he sought the wife’s consent for him to access that property to pay his legal fees in not dissimilar terms to the wife had accessing her own superannuation property post separation, to apply as she elected. I accept the husband’s submission that:(a)The wife created “false roadblocks” for the purposes of advancing her personal position in the s 79 litigation that may have conflicted with her fiduciary duty as an officeholder of the corporate trustee of the superannuation fund to progress the interests of the members of the fund; and(b)The husband’s access to his own member entitlement did not prejudice the wife’s substantive relief sought. It reflected that relief. The wife’s conduct in requiring, as a condition of the husband accessing his own property, for it to be “classified as an addback” or categorised as an interim or partial property distribution, was misconceived. The wife could not identify during the hearing how an exercise of power pursuant to s 79 and 80(1)(h) could operate to adjust the husband’s own property in his favour. Cast against this circumstance, she consented to the primary order sought by the husband. Her conditions as to the facilitation for the husband to receive some of his superannuation entitlements, maintained until the running of the interim hearing, was doomed to fail. The husband’s costs incurred in bringing the application were wholly unnecessary. The wife knew, or ought to have known, that the position she adopted on the disputed issue may be attributed to having an ulterior motive, or that it was grounded from a wilful disregard of advice. The prolongation of this interlocutory dispute was occasioned by the wife’s ill-founded conditions. I find that the husband has established circumstances which justify departure from the position that each party pay their own costs, and as to the making of a costs order in his favour. I find that the wife has not established a circumstance to justify an order for costs in her favour. It is just for the wife to pay the husband’s costs in the fixed sum as sought.