Hodges and Hodges (No 3)

[2010] FamCA 536

FAMILY COURT OF AUSTRALIA

HODGES & HODGES (NO. 3) [2010] FamCA 536

FAMILY LAW – PROPERTY SETTLEMENT – COSTS – application for costs sought by the wife – application by wife for injunction restraining husband from disposing of $250,000 of the amount he is entitled pursuant to orders made on 12 March 2010 – application for injunction granted – costs application adjourned

Family Law Act 1975 (Cth)

APPLICANT: Ms Hodges

RESPONDENT: Mr Hodges

FILE NUMBER: ADF 3131 of 2002

DATE DELIVERED: 29 March 2010

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 29 March 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Pyke QC

SOLICITOR FOR THE APPLICANT: Norman Waterhouse

COUNSEL FOR THE RESPONDENT: Mr Howe

SOLICITOR FOR THE RESPONDENT: Howe Martin & Associates

Orders

1. That of the sum of ONE MILLION SEVENTY EIGHT THOUSAND TWO HUNDRED AND THIRTY SEVEN DOLLARS [$1,078,237.00] due to be paid to the husband pursuant to paragraph 1.3 of the order made on 12 March 2010 the husband immediately upon receipt of that money deposit TWO HUNDRED AND FIFTY THOUSAND [$250,000.00] into an interest bearing account in his name and until further order the husband be restrained and an injunction is hereby granted restraining him from withdrawing that sum from the said account.

2. That the husband forthwith upon compliance with paragraph 1 of this order provide complete details of the account into which the said money is deposited to the wife’s solicitors.

3. That each party file and serve any affidavits in support of their respective applications for costs by 4:00pm on 10 May 2010.

4. That the respective applications for costs made by the parties be listed for hearing commencing at 10:00am on 25 May 2010.

5. That paragraphs 2, 3 and 4 of the Application in a Case filed by the wife on 24 March 2010 and paragraph 1 of the Response filed by the husband on 29 March 2010 be dismissed and removed from the active pending cases list.

IT IS NOTED that publication of this judgment under the pseudonym Hodges & Hodges is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 3131 of 2002

MS HODGES

Applicant

And

MR HODGES

Respondent

EX TEMPORE REASONS

1. I have before me an application in a case filed by the wife on 24 March 2010 seeking an order for costs consequent upon the delivery of my judgment in this matter, that the wife have 45 days to file and serve her affidavit in support of that application, thirdly that in effect an injunction be granted restraining the husband from disposing of $250,000 of the amount to which he is entitled pursuant to the orders made on 12 March 2010, and further with that sum to be invested in an interest-bearing account pending final determination of the wife’s application for costs.  Now, today there has been a response tendered to that application by the husband in which he too seeks an order for costs, and he opposes the application for an injunction and/or that the $250,000 be placed in an interest-bearing account.  

2. The primary submission made on behalf of the wife through her senior counsel is that the husband, as is conceded, has no other funds, or property for that matter of any significant note available to him outside of the amount that he is to receive pursuant to the orders of 12 March 2010, and that amount is an amount of $1,078,237.  The wife, pursuant to that same order, is also to receive a sum of money and she retains certain items of real estate.  The money which is to be received by each of the parties is currently held in two bank accounts, but is about to be dispersed in accordance with the orders of 12 March 2010 and that is the reason for the application that is now before me.

3. Thus, the husband is due to receive in excess of $1 million, and the wife wants to have $250,000 of that held pending the finalisation of her application for costs.  She tells me in her affidavit in support of the application that an estimate of her costs is of the order of $650,000, including not only legal costs but accounting fees, valuation fees, and subpoena costs. The wife is concerned that the husband will use the money, to which he is entitled, such that by the time these applications for costs are heard there will be no funds available to meet any order for costs that might be made in the wife’s favour.

4. The husband opposes the application.  His position is that he should be entitled to the fruits of the judgment.  The affidavit in support of his response is an affidavit of his solicitor which has obviously been prepared on instructions from the husband, and in that affidavit I am told that the husband’s unpaid fees are approximately $210,000.  It is also pointed out that he is obliged to pay certain liabilities of in excess of $213,000 pursuant to the orders that have been made.  There are also other liabilities that he is obliged to pay pursuant to the order, and indemnify the wife in respect of them, and they are the liabilities set out in paragraphs 8, 12, 13, and 14 of the order of 12 March 2010.  Paragraph 8 provides for the husband to pay four liabilities to members of his family, paragraph 12 obliges him to pay money to two companies, paragraph 13 obliges him to pay moneys to a company by the name of F Incorporated, and paragraph 14 obliges him to pay moneys owing to a Mr MV.  Now, as Ms Pyke QC has pointed out though, those four debts are debts which, and particularly the larger of them, namely the alleged liability to F Incorporated, I found are not debts that the husband has to pay, but that if they were enforced for whatever reason then the husband would be the one, as between the husband and the wife, to pay them and indemnify the wife. 

5. I note that I am told for the first time today by the husband’s solicitor that the husband is looking to buy a house.  That is not referred to in the affidavit of his solicitor, and that raises a concern in my mind as to precisely what the husband proposes to do with the money he is to receive.  But of course, as Mr Howe puts to me, that should be a matter for the husband.  The order has been made, he is entitled to the money, and he should be able to use it in whatever way he sees fit. 

6. The application before me is framed in the terms of an injunction, as opposed to, for example, an application for security for costs.  However, the principles that apply to an injunction in these circumstances and an application for security for costs are relatively similar.  Looking at the case then on the basis that the application is for an injunction, there are a number of authorities, both in this court and in the High Court, in relation to injunctions in effect for the preservation of assets pending orders being made. The principles that apply are set out usefully in, for example, the Full Court decision of Waugh and Waugh (2000) FLC 93-052, and the principle emanating from that case is in effect that for an injunction for the preservation of assets to be granted one of the significant factors to be taken into account is whether there is any evidence of an intention of the husband to dispose of the assets to defeat any judgment that might subsequently be delivered.

7. Now, there have been subsequent decisions of the Full Court amplifying the principles in Waugh, and significantly indicating that what I have just referred to is in fact not the fundamental or threshold question, but is a factor to be taken into account along with a number of other factors, such as that an order to preserve assets, pending the delivery of judgment, for example, should not be lightly made.  However, those authorities are primarily in the context of pending property settlement applications.  That is not the case here, but the principles in my view can and should apply equally. 

8. Interestingly there is a case with which I am familiar of Stevens and Stevens (1991) FLC 92-250 where there was an order made that an amount of $500,000 be retained in an interest-bearing account pending the finalisation of not only costs orders but pending applications for costs. However, significantly in that case there was clear evidence of threats by the husband to dispose of assets, and that is not the case here.

9. Now, as I have said, the issue is akin to an application for security for costs, and the leading authority in that area is L and L [1998] FamCA 1394 where it was held or confirmed that an order for security for costs is to secure justice between the parties by ensuring an unsuccessful party does not occasion injustice to the other.

10. Both counsel have addressed me, and rightly so, as to the prospects of an order for costs being made because it goes without saying that if the prospects of a successful application are limited then that lessens the force of the application itself. Thus the merits of the costs application is a factor and needs to be addressed.  I do not know yet, of course, what the specific bases will be on either side for the respective applications for costs, but obviously having heard this matter over many days and then pondering and preparing many drafts of a judgment and finally reaching a decision and delivering a judgment, as I have, I am quite familiar with the history of the matter.  I understand though that the wife’s application for costs is, in effect, one that will be wider than just in relation to the hearing of the case, and the intention is to look at the lead up to the trial and the various applications that were made to this Court, in the sense of the requests for discovery and the like.

11. That history, and it is a lengthy history as I recall did not necessarily form part of my reasons for judgment.  Thus I have some difficulty in definitively addressing the merits of the applications for costs, and primarily the wife’s application.  However, if I concentrate for the moment on the trial and my reasons for judgment, it seems to me that there is arising from that a clear basis for the wife to seek costs, as indeed, in my view, there is a clear basis in many respects for the husband to seek an order for costs.  What the outcome of that will be I do not know yet.  I have not yet received the documents in support of the applications, nor heard the argument.

12. Thus my approach today, and concentrating on the wife’s position because that is the basis of the injunction, is that there are prima facie merits in the wife’s application for costs.  Whether she will ultimately be successful or not remains to be seen because there might be an offsetting exercise for example, there might be any number of approaches taken, and the outcome is uncertain.  However, at the level that I can look at it today, in my view the wife’s proposed application for costs prima facie has merit, and sufficiently to found and justify at least an application in the terms that I have before me today.

13. Therefore, the issue for me, in terms of the decision I make on the injunction application is whether the husband is looking to use all of these funds and how he is looking to use them, and, I must say, that given what I have referred to earlier, namely the apparent inconsistency at least in terms of what I am being told on behalf of the husband as to what his intentions are, I have serious concerns. There is also the prospect of the husband paying out liabilities which I have found are not genuine or bona fide.

14. Thus I am persuaded to grant the injunction sought, albeit, as I say, I am not entirely satisfied about the evidence that has been put before me.  By that I mean, it would have been useful to know at this stage precisely what was sought by way of the basis of the costs application was, but I do not have that luxury at the moment, and obviously I need to make a decision about this now.

15. I have also explored with counsel, given that I propose to grant the injunction, not to let this matter be delayed in anyway.  I am not suggesting either party would look to do that, but significantly there needs to be, as both counsel have put to me and I accept, a relatively substantial period of time for each party to prepare their cases, and that period of time is 45 days. 

16. What I have addressed with counsel is my ability and counsel’s ability to have the hearing as soon as possible after the documents have been filed, and I have looked at that and for my part I will make every effort to hear this matter on 25 May 2010 on the basis that the documents will be filed, and I will say at this stage, early in the week of 10 May 2010.  It seems to me that, given the length of time that this matter has been before the Court that that period of time is not unreasonable and also particularly if the husband is genuine in saying to me through his counsel that he is looking to buy a house, I do not consider that that delay would necessarily impact on that decision, and as Ms Pyke has pointed out the wife is not seeking to injunct all of the money that the husband is due to receive.

I certify that the preceding 16 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 29 March 2010.

Associate