Hirschfield and Hirschfield

[2007] FamCA 631

FAMILY COURT OF AUSTRALIA

HIRSCHFIELD & HIRSCHFIELD [2007] FamCA 631

FAMILY LAW - COSTS - Indemnity costs

APPLICANT: MR HIRSCHFIELD

RESPONDENT: MRS HIRSCHFIELD

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: MLF 2154 of 2005

DATE DELIVERED: 28 June 2007

PLACE DELIVERED: Townsville

JUDGMENT OF: Monteith J

HEARING DATE: 28 June 2007

REPRESENTATION

APPLICANT FATHER Self Represented

COUNSEL FOR THE RESPONDENT: Mr D.A. Mort

SOLICITOR FOR THE RESPONDENT: Berger Kordos Lawyers

INDEPENDENT CHILDREN’S LAWYER COUNSEL:

INDEPENDENT CHILDREN’S LAWYER SOLICITOR:

Orders

1. The husband’s amended Application dated 30 November 2006 to have the Final Orders made on 16 August 2006 set aside pursuant to the provisions of section 79A of the Family Law Act 1975 be dismissed.

1. The Court release to the wife the duplicate Certificate of Title Volume … Folio … produced by the husband and that the Court release to the wife the original lease between the Husband and the tenant of P in the State of Victoria produced by the husband.

1. The amount held on trust by Klonis Kirby & Co in the sum of $8500.00 pursuant to the Order of Justice Young made by consent on 29 March 2007 for security of rent owing be forthwith paid to the wife’s Solicitors for the benefit of the wife.

1. The husband forthwith pay to the wife’s solicitors, Berger Kordos Lawyers, … all her legal costs, fees and disbursements incurred with them on an indemnity cost basis which having regard to the material provided to the Court, is fixed at $82,419.92.

1. As and by way of security for the payment of the costs ordered in paragraph 4 hereof:

(a)The operation of paragraph 4 of the Orders made 16 August 2006 be stayed;

(b)In the event that the husband has not paid the total costs within thirty (30) days of the date of this Order, the wife be at liberty to sell Property A (“[Property A]”) and for that purpose, the husband shall provide to the wife a Withdrawal of any Caveat he has lodged against Property A within seven (7) days and in the event that he fails to do so then an officer of this Court be and is hereby appointed to execute same in the name of the Husband, pursuant to s 106A of the Family Law Act1975.

(c)Upon completion of the sale, the proceeds of the sale be applied as follows:

(i)First to pay all costs and expenses of the sale and to pay any Council or water rates, maintenance levies or any such other or like expenses outstanding in respect of Property A;

(ii)Secondly, to pay to the wife at her direction any and all costs which may be outstanding pursuant to these Orders together with compound interest thereon at the rate of 12 percent per annum adjusted monthly from the date of due compliance to the date of payment;

(iii)Thirdly, the balance to the husband.

1. In addition to the costs order made in paragraph 4 hereof, the husband pay the wife’s costs of and incidental to these proceedings incurred with Rosalie Gutman and Associates prior to the engagement of her present solicitors on an indemnity basis, to be taxed in default of agreement.

1. Pending the husband’s full compliance with these Orders, the husband be and is hereby restrained from lodging any Caveats or other charges of whatsoever nature and kind against Property A and/or the property situate at P (“the [P] property”).

1. The monies held by the wife’s solicitors, Berger Kordos Lawyers, on trust pursuant to the Orders of Justice Young on 29 March 2007 in the amount of approximately $47,000.00 be utilized to satisfy in part the Orders for costs herein.

1. Otherwise the Orders made on 16 August 2006 remain in full force and effect.

1. All extant applications filed by the husband and the wife in these proceedings be dismissed.

1. Pursuant to Rule 19.50 of the Family Law Rules, this matter reasonably required the attendance of Counsel.

1. All subpoenaed material to be returned.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2154 of 2005

MR HIRSCHFIELD

Applicant

And

MRS HIRSCHFIELD

Respondent

REASONS FOR JUDGMENT

1. This is an application brought by the husband under section 79A of the Family Law Act 1975. The matter came on before me on the first occasion on 18 June 2007 when Mr Ramsey of counsel was representing the husband, Mr Mort was representing the wife, and Mr Strum was representing the interveners. The interveners were the husband's former solicitors and they had intervened with regard to their costs which had not been paid to the firm, Marshalls and Dent.

2. On that day, an application was made by Mr Ramsey to adjourn the case sine die on the basis that the husband wanted to further explore what he said was the wife's nondisclosure in relation to property in Israel arising out of the sale of a unit back in 1989 for $US100,000 and what he said was the way in which that had been invested by the wife, with a claim that the wife, by reason of the use of those moneys since 1989, had a net worth in hidden assets in Israel of some $A2 million.  I refused the application to adjourn sine die. 

3. On that date, I made an order that the husband pay the intervener's costs - that is, his former solicitor's costs of Marshalls and Dent - in the agreed sum of $10,736.08 which was the outstanding amount.  I reserved the wife's costs on that day and adjourned the matter for hearing on Wednesday, 20 June 2007, to enable the matter to be prepared, because Mr Ramsey said that he had just come into it.

4. With the solicitors Marshalls and Dent no longer being a party to the proceedings, although they had joined in proceedings to recover their costs and also as a result of the allegations made by the husband against their firm in relation to the way in which they conducted the litigation on his behalf, Mr Mort asked that I give leave to his solicitors to issue two subpoenas to Mr John McBride, who was the solicitor in the firm of Marshalls and Dent who acted for the husband, and to Mr Clive Rosen of counsel who was counsel briefed by him on behalf of the husband.  I gave that leave and at that time, I asked Mr Ramsey, because Mr Mort had queried whether there was going to be an issue about privilege, and Mr Ramsey indicated that there was no issue of privilege. 

5. Subsequently, when both Mr McBride and Mr Rosen gave evidence, I gave a ruling that privilege had been waived, not only by Mr Ramsey but by the conduct of the husband throughout the proceedings and the allegations that he made against both Mr McBride and Mr Rosen which in part seemed to be maintained right up till now because the husband has just addressed me, indicating that despite the evidence that he has heard, he did not sign the consent orders.

6. At the first hearing on 18 June 2007 on behalf of the husband, Mr Ramsey asked that I grant leave to the husband to inspect the signature on the consent orders that were on the file.  I granted that leave.  When the matter came on before me, Mr Ramsey then indicated that he and his instructing solicitor were withdrawing and that the husband would be representing himself on the adjourned date, being the following Wednesday, the 20th.

7. On 20 June 2007, the husband appeared in person and Mr Mort appeared for the respondent wife.  The husband sought leave to file and read an affidavit of Mr N sworn that day, 20 June 2007.  Mr N is a handwriting expert and the substance of the affidavit that he swore was that the copy of the minutes of the consent order on the court file showed that the husband's signature was a photocopy, although the probability was that it was in fact a photocopy of his signature, but nevertheless the evidence was that the minute on the court file was a photocopy.

8. I granted leave for the husband to file and read that affidavit in his case and Mr Mort did not seek to cross‑examine him. Perhaps as a result of that affidavit, perhaps not, the husband said in opening his case that there were two grounds that he relied upon under section 79A for setting these orders aside. They were nondisclosure of assets by the wife and that he did not sign the orders.

9. The issue of the signature on the orders I will deal with a little later but it is significant to note that when the husband first swore an affidavit in relation to this section 79A application, he made no mention of not signing the orders. There are, for reasons that are unexplained, two affidavits, and for the purposes of this issue, identical with regard to the husband's signatures on the minutes of consent orders.

10. The first was filed on 18 December 2006 and sworn on that date.  In it, the husband swears in paragraph 10 that:

    The agreement which formed the orders for her Honour Dessau J on 16 August 2006 received my signature only after five hours of pressure and duress and harassment from my solicitor and barrister and I was pushed to the edge of mental and physical exhaustion and near breaking point.

11. For reasons, as I say, that are unexplained, on 3 January 2007 a further affidavit sworn by the husband, on this occasion sworn on 24 December 2006, was filed and in paragraph 12 of that affidavit, it reads:

    The agreement which formed the orders for her Honour Dessau J on 16 August 2006 received my signature only after five hours of pressure and duress and harassment from my solicitor and barrister and I was pushed to the edge of mental and physical exhaustion and near breaking point.

12. As will be seen, they are both identical; no mention of not signing them, the allegation being he signed them but only signed them as a result of pressure and duress from his legal advisers. 

13. The orders that are sought to be set aside under section 79A were purported to be made on 16 August 2006. There are two sets of orders or minutes of orders that have been tendered. The first is the minute that actually appears on the court file with a pink cover sheet and became exhibit 11 in these proceedings. The document that was produced and identified in evidence prior to that became exhibit 3 in the proceedings. It was exhibit 11 that the expert witness examined, not exhibit 3. Both bear signatures and dates. One appears in part to be a photocopy, one does not.

14. To revert to how these orders came into being, the day previous to the date of the orders, 15 August 2006, was a judicial settlement conference date at which the parties appeared before Dessau J, both represented, the husband by Mr Clive Rosen of counsel, and Mr John McBride, solicitor.  It is common ground that it took the best part of the day for the judicial settlement conference to take place. 

15. The husband said in his evidence that he did not talk to the judge at all during this judicial settlement conference.  He denied being in court when the settlement was announced.  He denied knowing that the case had been settled when he left the court on that day.  He denied going to the solicitor's offices the next day.  He denied executing the consent orders the next day or ever.  He denied that it was his signature.  He said that Mr McBride had put a blank sheet of paper under his hand at court on 15 August 2006 and that he signed it at Mr McBride's request.  He said he had no direct evidence that the wife had $2 million in investments in Israel but that he had some indirect evidence as to that and that he was going to put it to the wife in her evidence.

16. His contention is that the wife has failed to disclose properly what she did with the proceeds of sale, which it is common ground occurred of a unit that she owned in Israel in 1989 for the sum of $US100,000.  When the affidavits that I have just referred to, exhibits 6 and 7, were put to the husband in cross‑examination and those allegations in relation to signing the minutes of consent order because he was subjected to duress and pressure from his legal advisers, he said that that was not true, that the allegations that he had previously sworn to twice, within six days, were false.

17. At the conclusion of his evidence and after cross‑examination, in my opinion his credibility was in tatters.  Things did not improve.  The wife was called.  She was cross‑examined by the husband.  He failed, in my opinion, to make any inroads into her evidence at all.  I accept her evidence without question.  I accept her explanation in relation to the sale of the unit in Israel and the disposition of the proceeds of sale.  I do not regard there has ever been a failure to properly disclose.  I do not believe she has in Israel or anywhere else undisclosed assets or funds.  I regard the allegation of that by the husband as farcical.

18. In any event, both Mr Rosen and Mr McBride gave evidence.  For reasons again that are unexplained, the husband chose not to cross‑examine either of them.  Each of them gave evidence that the issue of the property in Israel, the proceeds of sale from it, the disposition of those proceeds of sale was fully explored in the judicial settlement conference.  It was a live issue.  It was explored.  It was taken into account and a settlement was reached.  It was mentioned to the judge.  The husband spoke to the judge directly about it.  The fact that this was not alive, that this was not part of the settlement negotiations, that it was not taken into account, flies in the face of their evidence.

19. There was, before the settlement conference, two significant lots of discovery, including one which took the best part of a day.  Again during that period, this issue, together with other issues of alleged nondisclosure, some of which related to the husband and property it was said he had in Israel, were explored.  By the time the matter came before her Honour, all these matters were alive and dealt with during the settlement conference.  Both Mr McBride and Mr Rosen said that they did not overbear or pressure the husband into settling, that he was alert and quite well, not in any way distraught or disturbed during that day or at the end of it; that he was delighted with the settlement that had been achieved at the end of the day. 

20. Mr Rosen gave evidence that the husband had instructed him that he was no longer concerned about the matter of the nondisclosure by the wife in relation to the property in Israel after the matter had been explored during the settlement conference and that her Honour had actually indicated to the husband that it was not a matter that she regarded would have any significance in a trial.  Mr Rosen regarded the settlement as being exceptionally good, that he had advised the husband that it was probably a 50 per cent case.  He said that the husband was very pleased with the settlement that he had achieved. 

21. Mr McBride indicated that the husband was present, as did Mr Rosen, when the matter was mentioned before her Honour and she was told that the case had settled.  Her Honour had indicated that the orders were to be engrossed overnight and presented to her the next day, I think it was suggested, at 2.15. 

22. The husband was taken to the outside of the court. Because of his age, Mr Rosen told me that he wanted to call him a cab, but the husband was sturdy enough to indicate that he did not need a cab, that he was going to take a train or tram home. The husband, as I have said, denied that he came to Mr McBride's office the next day. Mr McBride has an attendance note that he was there. Mr McBride gave evidence that the husband came and in his presence signed the consent orders; that he then photocopied them and took them up to court. The matter was mentioned. They were signed by the wife at court and her Honour then made the orders sought to be overturned under section 79A.

23. Mr McBride indicated that he thought that the settlement was so advantageous to the husband that he was concerned that her Honour may not approve them. I, of course, there being no challenge by way of cross‑examination to their evidence, accept without question Mr McBride and Mr Rosen which means that I reject the evidence of the husband. The husband has failed to persuade me that there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, including failure to disclose relevant information, the giving of false evidence or any other circumstance which would justify me in setting aside the orders pursuant to section 79A of the Family Law Act 1975.

24. As a consequence, the husband's amended application dated 30 November 2006 to have the final orders made on 16 August 2006 set aside pursuant to the provisions of section 79A of the Family Law Act 1975 is dismissed.

25. During the course of the trial, the husband produced to the court the duplicate certificate of title and the lease agreement and the court is now holding them, so I propose to order that the court release to the wife the duplicate certificate of title, volume … folio …, produced by the husband, and that the court release to the wife the original lease between the husband and the tenant of Property P, in the state of Victoria, produced by the husband.

26. I will order that the amount held on trust by Klonis Kirby and Co in the amount of $8500 pursuant to the order of Young J made by consent on 29 March 2007 for security of rent owing be forthwith paid to the wife's solicitors on behalf of the wife.  That relates to unpaid rent and was an order made by Young J that that sum be held on trust pending further order and I now make that order.

27. An application has been made by the wife for costs and my power to order costs is pursuant to section 117 of the Family Law Act 1975 and in particular I have been referred to section 117AB, the amendment that was made, which came into force on 1 July last year. Insofar as relevant, section 117(1) reads:

    Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB and 118, each party to proceedings under this act shall bear his or her own costs.

28. Subsection (2):

    If in proceedings under this act the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court make such order as to costs and security for costs, whether by way of interlocutory order or otherwise as the court considers just.

29. Subsection (2A):

    In considering what order, if any, should be made under subsection (2), the court shall have regard to (a) the financial circumstances of each of the parties to the proceedings; (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and if so, the terms of the grant of that assistance to the party; (c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, production of documents and similar matters; (d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court; (e) whether any party to the proceedings has been wholly unsuccessful in the proceedings; (f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer and (g) such other matters as the court considers relevant.

30. It is convenient also now to read section 117AB which reads, subsection (1)

    This section applies if (a) proceedings under this act are brought before a court and (b) the court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.

31. Subparagraph (2):

    The court must order that party to pay some or all of the costs of another party, or other parties, to the proceedings.

32. In this case, I am aware of the financial circumstances of each of the parties to the proceedings.  The husband got more than two‑thirds of the asset pool after a long marriage; the wife got a third or thereabouts.  She has not been paid her full entitlement and is in, at the moment, difficult financial circumstances as a result.  She is unable to complete the contract for the purchase of a retirement village unit in Israel and has been unable to do because of the husband's recalcitrance.

1. The husband still has substantial assets, even after the section 79 property settlement.  Neither party is in receipt of assistance by way of legal aid to my knowledge.

2. The conduct of the parties to the proceedings in this case are significant. The wife has been unable to enforce these orders since August of last year. The husband has resisted at every turn the enforcement of these orders by simply inaction, by lodging caveats, by any means that he was able to employ to avoid complying with the orders made by Dessau J. It was only when resistance failed that he brought the proceedings under section 79A to try and set the orders aside. He has been wholly unsuccessful in the proceedings and in the circumstances of this case, I have absolutely no doubt that the circumstances justify an order for costs against him.

3. In addition, I have made a finding - or if I have not, I do now - that I am satisfied that the husband knowingly has made false allegations and statements in the proceedings. I refer to the matters that I have dealt with already in my reasons. So pursuant to section 117AB, I am required to make an order that he pay all or some of the costs of the wife.

4. The real question that I have to determine is whether I should make that order as indemnity costs. I have been handed a decision of Argyropoulos [2007] FamCA 323, but what is significant is that in it, there is reference to the leading case on indemnity costs which is Colgate-Palmolive Co and Anor v Cussens Pty Ltd (1993) 46 FCR 225. In that case, Sheppard J said:

   The ordinary rule is that where the court orders costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis. … This has been settled practice for centuries in England.  It is a practice that is entrenched in Australia.  Either legislation (perhaps in the form of an amendment to the rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it.  … In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than party and party basis. The circumstances of the case must be such as to warrant the court departing from the usual course. 

5. His Honour then said at page 233:

   Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion.  I instance the making of allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley and Cripps JJA), No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records).  Other categories of cases are to be found in the reports.  Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. 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.

6. This is a case in which in my opinion the application under section 79A was hopeless. It is a case in which the applicant husband has sworn false evidence. It is a case in which he has alleged forgery, plainly, falsely. It is a case in which he has sought by a war of attrition to disadvantage the respondent wife. I think that this case calls for indemnity costs and I propose to order them.

7. I will order that the husband forthwith pay to the wife's solicitors, Berger Kordos Lawyers, level 5, 224 Queen Street, Melbourne, all her legal costs, fees and disbursements on an indemnity costs basis which, having regard to the material provided to me, I fix at $82,419.92.  These costs include witnesses' expenses and the like, including the witnesses' expenses of Mr McBride and Mr Rosen and witnesses' costs of the respondent wife which have been substantial.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Monteith

Associate: 

Date:  28 June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as HIRSCHFIELD & HIRSCHFIELD