HUBER & OVESEN (No.4)
[2019] FCCA 3394
•27 November 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HUBER & OVESEN (No.4) | [2019] FCCA 3394 |
| Catchwords: FAMILY LAW – Costs. |
| Legislation: Family Law Act 1975 (Cth), s.117 Federal Circuit Court Act 1999, s.86 |
| Cases cited: Penfold v Penfold (1980) 144 CLR 311 |
| Applicant: | MR HUBER |
| Respondent: | MS OVESEN |
| File Number: | SYC 4336 of 2012 |
| Judgment of: | Judge Kemp |
| Hearing date: | In Chambers |
| Date of Last Submission: | 29 October 2019 |
| Delivered at: | Sydney |
| Delivered on: | 27 November 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Cohen |
| Counsel for the Respondent: | Mr Friedlander |
THE COURT ORDERS THAT:
The wife be granted leave to make an application for costs in this matter.
The husband pay the wife the sum of $7,188.00 within 2 months of the date hereof.
Payment of the sum referred to in order 2 above, be a continuing charge against and on the husband’s member balance in any superannuation fund (including his interest in the Mr Huber Superannuation Fund) until such payment is made in full.
The matter is, otherwise, removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Huber & Ovesen (No.4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4336 of 2012
| MR HUBER |
Applicant
And
| MS OVESEN |
Respondent
REASONS FOR JUDGMENT
Introduction
The husband’s Initiating Application in this matter was filed on 29 August 2012. This matter has had a very lengthy history in this Court, as outlined below.
Contravention application
On 10 February 2014, the husband filed a Contravention Application which related to an asserted breach by the respondent wife of a consent order made on 2 September 2013. That order was made when both parties were legally represented and was to the following effect:
That the wife do all things necessary to instruct her accountants to prepare taxation returns and financial statements for her personal self-managed superannuation fund for the years 2010, 2011, 2012 and to pay all moneys to the accountant for release of same within 60 days and provide the returns 2009, 2010, 2011, 2012 to the husband.
The wife had filed a Contravention Application on 2 September 2013 in relation to an asserted breach by the husband of a parenting order whereby it was alleged that the husband had contravened an order when he had removed the child, X born in 2002 (“X”) from her school and kept her for a weekend not being his designated weekend and had refused to communicate with the wife.
When the matter came before the Court on 25 August 2014, the wife withdrew her Contravention Application which was dismissed on that day by Judge Walker with no order as to costs being made.
On 25 August 2014, Judge Walker also heard the husband’s said Contravention Application and found that a prima facie case had been made out as against the wife. The husband’s costs of that day were reserved to the next occasion being 25 November 2014.
On 25 November 2014, Judge Walker found that the wife had provided no reasonable excuse for the contravention so established and, accordingly, found the contravention proved. The wife was ordered to enter into a bond pursuant to the provisions of s.112AF of the Family Law Act1975 (“the Act”). Further, the matter was adjourned for a call-over for the purpose of listing a hearing date in relation to the substantive property matters dispute. The Court notes that there was no order made referable to the reserved costs issue of 25 August 2014, referred to in paragraph 5 above.
The husband, in his written submissions filed 3 June 2019, sought that he recover all of his costs being $13,005.00 on an indemnity basis for attendances from 19 June 2013 to 20 November 2014, which, it was said, related to those contravention proceedings. Attached to the husband’s submissions was a copy of the costs agreement he had in relation to his direct access brief with Ms Cohen of Counsel. The husband has also provided the Memorandum issued by Ms Cohen for the costs relevant to work carried out from 19 June 2013 to 20 November 2014. There were 19 items of work, totalling $15,750.00. There is no explanation as to how the husband quantifies the $13,005.00, as sought in his submissions. An examination of that Memorandum also indicates a number of items not referrable to work carried out in terms of the husband’s Contravention Application (for example drafting letters, drafting an application and affidavit in relation to disclosure, conference with client to take further instructions which all occurred prior to the filing of the husband’s Contravention Application together with items referrable to the conduct of the substantive proceedings and a conference to review child support findings) and a number of items referrable to work carried out in respect of the wife’s Contravention Application or towards work which could not be identified as referrable to either the husband’s or the wife’s said Contravention Applications. It would, further, appear that no time was charged by Ms Cohen for the appearance on 25 November 2014 which was outside the period identified by the husband. Ms Cohen did charge what appears to be 0.5 which the Court takes as being a half day of $1,500.00 for an appearance on 25 August 2014. Doing the best the Court can, in terms of the other costs charged in respect of the husband’s said Contravention Application, the Court is of the view that the husband would be entitled to seek 2 hours of drafting of $780.00, preparation for the hearing of 3 hours in the sum of $1,170.00, preparation of a case outline for the husband’s Contravention Application of 30 minutes of $195.00, totalling in all $3,645.00. Of course, this is applying an indemnity rate. The Court would be minded to reduce that sum by one third to a figure of $2,430.00 to reflect costs on a party/party basis. The Court notes that the current Schedule 1 of the Federal Circuit Court Rules2001 (“the Rules”) if applicable, by comparison, would allow for fees applied at item 10 of $948.00 together with a half day hearing $1,120.00 plus a 50% advocacy loading of $560.00 totalling $2,628.00. Accordingly, the husband will be entitled to a costs order of $2,430.00 in his favour, in this regard.
The husband referred in his submission to the Division of the Act (namely Division 13A) which related to contravention proceedings affecting children. That provision did not, relevantly, apply to the husband’s Contravention Application.
The wife submitted that, to the best of her recollection, the husband’s Contravention Application related to her not providing audited copies of the Ms Ovesen Superannuation Fund (“Ms Ovesen fund”) for the years ending 30 June 2010 onwards.
As events transpired, the Court found, in the substantive proceedings, that the wife had not been able to produce the financial records referred to above due to a number of reasons, but, in particular, as a result of the husband’s then accountant refusing to produce financial records to the wife or her accountant, Mr B, together with the wife’s financial inability to pay for the costs of their generation. It took Mr B some time to produce the returns, himself. The wife maintained that as a first step in preparing the financial returns for her fund, being the Ms Ovesen Fund, the husband had to supply audited returns for his fund, the Mr Huber Superannuation Fund (the “Mr Huber fund”), which contained the wife’s member balances.
Alive to the matters identified in paragraph 10 above, the Court, subsequently, moulded orders directed to ensuring compliance by both parties to have generated the financial statements and then the tax returns for the Ms Ovesen Fund. The Court is, nevertheless, of the view that the husband should be compensated for some of his costs in seeking to obtain from the wife the financial statements and returns which, he believed, she should have been able to produce. The Court is of the view that there should be a discount in terms of such costs noting that some of the matters raised by the wife as to her difficulties in obtaining those statements and returns were found to be within the husband’s control. In those circumstances, the Court will reduce the sum, referred to in paragraph 7 above, by half to $1,215.00.
Substantive Proceedings
As referred to previously, these proceedings have been protracted due, substantially, to the conduct of the parties, themselves. Orders have been made by the Court on the following occasions: 29 August 2012, 26 October 2012, 18 December 2012, 14 March 2013, 16 April 2013, 6 June 2013, 21 August 2013, 2 September 2013, 25 November 2013, 11 April 2014, 30 April 2014, 25 August 2014, 25 November 2014, 26 February 2015, 10 April 2015, 21 May 2015, 9 June 2015 (divorce), 7 August 2015, 30 October 2015, 3 November 2015, 29 December 2015, 23 February 2016, 2 May 2016, 3 May 2016, 23 June 2016, 10 January 2017 (orders made in accordance with a judgment, as set out in paragraph 14 below), 24 February 2017, 12 July 2017, 2 August 2017, 30 October 2017, 1 December 2017, 26 February 2018, 7 March 2018, 29 March 2018, 4 May 2018, 22 May 2018, 6 June 2018, 8 August 2018, 5 September 2018, 7 September 2018, 21 September 2018, 4 February 2019, 8 February 2019 (orders made in accordance with a judgment, as set out in paragraph 15 below) and 7 May 2019 (being the final judgment and orders (the “final orders”), as set out in paragraph 16 below).
There have been: 9 Applications in a Case and 1 Appeal lodged. This matter has taken some 7 years to finalise. The reasons for the same are as set out in the final orders.
An interim decision was delivered on 10 January 2017, with orders made to the following effect:
(1)The parties do all acts and things and execute all documents reasonably necessary to bring the wife’s superannuation fund being the Ms Ovesen fund into statutory compliance with the Superannuation Industry (Supervision) Act 1993 (Cth), including, but not limited to:
(a)appointing an accountant being Mr B of C Solicitors;
(b)appointing an auditor as agreed, but failing agreement, as nominated by Mr L (“Mr L”) of L Accountants (the single joint expert);
(c)having the said accountant liaise and assist the said auditor to prepare and lodge an auditor’s contravention report with the Australian Taxation Office (“ATO”);
(d)approaching the ATO to seek a determination as to:
(i)the necessary mechanism to ensure the Ms Ovesen fund is compliant;
(ii)the calculation of any tax outstanding including penalties and general interest charges applicable; and
(iii)whether the ATO would exercise its discretion to either not apply or to waive any penalties and general interest charges which may have arisen for any non-compliance;
(e)complying with any actions as determined by the ATO in terms of (d)(i) above, including taking all steps to establish and ascertain the members account for the wife in the husband’s superannuation fund, being the Mr Huber fund for the period from November 2008 to November 2011 so as to determine the nature of the payment of $320,000.00 made by the wife on 4 November 2011 out of the Mr Huber fund and into the Ms Ovesen fund; and
(f)attending to pay to the ATO any sum determined by the ATO to be liable to be paid for the Ms Ovesen fund to be made compliant;
(2)The parties are permitted to access funds held in a controlled monies account with Bank FF for the parties being account no. #1 (“the controlled monies account”) in order to effect payment of any sums determined to be owing by the ATO in terms of order (1)(f) above and to pay the costs of the accountant and the auditor referred to in order (1)(a) and (1)(b) above.
(3)Upon compliance with order 1 above, the parties cause Mr L to file and serve a valuation report for the Ms Ovesen fund with his costs of doing so to be paid by the parties out of the controlled monies account.
(4)The wife to cause a sealed copy of this order to be served on the ATO and to file an affidavit deposing to compliance with this order 7 days prior to the adjourned date.
(5)The matter be listed on 24 February 2017 at 9.30am for mention.
(6)Leave is granted to the parties to vacate the adjourned date if the report of Mr L is not available by the adjourned date and a further date will be provided to the parties by way of a Chamber’s order.
A further interim decision was delivered on 8 February 2019, with orders made to the following effect:
(1)By consent, all necessary requirements for the hearing of a child support departure application in terms of the child, X, with respect to her school fees are, otherwise, dispensed with.
(2)The parties do all things and sign all documents and authorities reasonably necessary for the monies held in the controlled monies account to be disbursed as follows:
(a)$12,980.00 to Mr B of C Solicitors;
(b)$14,850.00 to Mr D of E Super;
(c)$35,256.88 to F Ltd (being the F School).
(3)The wife’s application in a case filed 29 August 2018 (sealed on 3 September 2018) be, otherwise, dismissed.
(4)The husband’s application in a case filed 21 December 2018 be, otherwise, dismissed.
(5)The wife’s response to an application in a case filed 3 January 2019 be, otherwise, dismissed.
The final orders were to the following effect:
(1)The parties do all things and sign all documents and authorities reasonably necessary for the monies held in the controlled monies account to be disbursed as follows:
(a)81.7% to the husband; and
(b)18.3% to the wife.
(2)The parties do all things and sign all documents and authorities reasonably necessary to cause the funds in the Ms Ovesen fund, to be disbursed as follows:
(a)$850.00 plus GST to Mr D in respect of his audit fees to effect the winding up of the Ms Ovesen fund;
(b)$2,500.00 plus GST to Mr B in respect of his accountancy fees to effect the winding up of the Ms Ovesen fund; and
(c)The balance then remaining to be rolled over into an industry fund, being the Y Super Fund (“the Fund”), at the wife’s election.
(3)Paragraphs 4-8 (inclusive) of these orders are binding on the trustee of the Fund.
(4)The base amount of $146,632.81 (or 52% whichever is the greater) of the wife’s member balance of the Fund be then allocated to the husband out of the wife’s interest in the Fund and the parties do all such acts and things and execute all such documents as may be reasonably necessary to facilitate and implement that.
(5)Pursuant to s.90XT(1)(a) of the Act whenever a splittable payment becomes payable in respect of the wife’s interest in the Fund, the husband shall be entitled to receive by payment to the Mr Huber fund an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001(“the Regulations”) using the base amount and that there be a corresponding reduction to the entitlement the wife would have had in the Fund but for these orders.
(6)Order 5 has effect from the operative time.
(7)The operative time for the purposes of order 6 above, is 4 business days after the date of service of these orders upon the trustee of the Fund.
(8)Until such time as the superannuation split to the husband, pursuant to these orders is effected then:
(a)The wife direct and authorise the trustee of the Fund to communicate with the husband and/or any person authorised by him in writing:
(i)To answer any reasonable enquiries as may be made by him or on his behalf from time to time in relation to his entitlement in the Fund; and
(ii)To provide to the husband and/or his authorised representative with a copy of any notice of any application or request by the wife which seeks the release of entitlements in the Fund insofar as that release may affect the husband’s entitlement in the Fund pursuant to these orders.
(b)The wife by herself, her servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the husband, his heirs, executors, administrators or nominees from receiving the benefits in the Fund to which he is entitled pursuant to these orders.
(9)To the extent that if the husband is recorded as a trustee of the Ms Ovesen fund or the wife is recorded as a trustee of the Mr Huber fund, the parties will each do all things reasonably necessary and sign all documents reasonably required to effect a resignation as trustee in terms of the other parties fund and the appointment of some other person nominated by the other party to be a joint trustee with him or her, if so required.
(10)By consent, that the parties do all things necessary and sign all documents to transfer a Motor Vehicle N to the parties’ daughter, Ms A Ovesen.
(11)The parties forthwith do all things reasonably necessary to cause one half of any M Ltd shareholdings held in the I Bank Account No. 2, in the name of the husband and the wife to be transferred to each of the husband and the wife either by the creation of separate accounts with I Bank in the name of each of the husband and the wife or as, otherwise, directed by the parties in writing.
(12)In the event the husband receives any monies (“the settlement sum”) by way of settlement or judgment in the proceedings between O Pty Ltd and the husband as plaintiffs and the H Bank and I Bank as defendants in the Court G (proceedings number …), then the husband shall forthwith notify in writing the wife of the settlement sum and that sum (after taking into account the payment of any reasonable costs and disbursements as incurred by the husband in those proceedings), shall be divided 65% to the husband and 35% to the wife. The wife be permitted to provide a copy of this order to the legal representatives of the H Bank and I Bank in the said Court G proceedings.
(13)The husband be declared the owner of the following, to the exclusion of the wife:
(a)His interest in the Mr Huber fund; and
(b)All other assets including bank accounts, vehicles, art works, furnishings and household contents in his possession.
(14)The wife be declared the owner of the following, to the exclusion of the husband:
(a)The property at Street P, Town Q, NSW;
(b)Her shareholding in Z Pty Ltd;
(c)Her shareholding in R Pty Ltd;
(d)Her interest in S Pty Ltd;
(e)Her interest in the Ovesen Unit;
(f)Her shareholding in T Pty Ltd; and
(g)All other assets including bank accounts, vehicles, sports equipment, jewellery, art works, furnishings and household contents in her possession.
(15)By consent, in default of either party doing all acts and things and executing all documents to give effect to these orders within 14 days of the date on which the obligation to do so is set under these orders and on the Registrar being satisfied of such failure or neglect or default by way of Affidavit evidence only, a Registrar of this Court is appointed pursuant to s106A of the Family Law Act 1975 (Cth) to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders and the party in default shall pay to the other party to such application that partys costs and disbursements on an indemnity basis.
(16)The parties costs (including any earlier reserved costs) be reserved pending determination/assessment.
(17)If any party seeks costs, an appropriate written application may be made within 28 days of today’s date, (supported by any documentary material) to be filed and served within that time period and a copy forwarded to my chambers. The Court will then deal with that matter by way of written submissions, unless the parties wish to be heard orally. If no such application is made within the time period specified, there will be no order as to costs.
(18)All outstanding applications be, otherwise, dismissed.
(19)Subject to orders 16 & 17 above, the matter is, otherwise, removed from the active pending cases list.
The husband, in his written submissions filed on 3 June 2019, sought that he recover his costs being $37,022.00 on an indemnity basis for attendances from 27 January 2017 to 24 September 2018, which, it was said, related to the substantive proceedings. The husband claimed that he had incurred fees to Ms Cohen for the proceedings, totalling $167,790.23.
On 4 June 2019, the wife emailed Chambers (with the husband and Ms Cohen included) requesting an extension of time to file her Responsive Costs submission by 14 June 2019. No response was received from the husband (or Ms Cohen) to oppose that course (save for that referred to in paragraph 20, below). The wife’s application was forwarded to Chambers on 14 June 2019 and included an Application in a Case (together with an affidavit in support) which sought orders to the following effect:
a)That the wife be granted leave to make an application for costs in this matter.
b)That the husband pay to the wife her costs and disbursements of and incidental to this matter in the sum of $30,000.00 and that payment of such sum be a charge against any asset of the husband including his member balance in any superannuation fund and or claim against the H Bank and I Bank, until the judgment amount (including interest, if any) is paid in full.
Notwithstanding the orders sought by the wife in paragraph 18 above, her written submissions sought an order that the husband pay the whole of her costs from 25 June 2016 on an indemnity basis. The wife, further, submitted that if the Court was not minded to make such an order, then costs should be ordered on a party/party basis.
On 19 June 2019, the Court wrote to the parties advising that as no-one had requested an oral hearing, the matter would proceed on the papers alone. No direct response was received to this email.
On 21 June 2019, the husband, through Ms Cohen, forwarded his written submissions in response to the wife’s costs application and her submissions.
The husband, in his submissions, stated that:
a)He had made submissions on 3 June 20[19] within the time limit imposed by order 17 of the final orders. No leave had been sought to make submissions out of time. The Court notes paragraph 18 above. In the circumstances and given the length of time that this matter has been before the Court and the lack of any prejudice identified, (noting (c) below), leave will be granted.
b)The wife’s submissions made on 14 June 2019, which were asserted to be submissions in reply to the husband’s submissions were, in reality, made in support of her own costs application. The Court accepts that position and notes the leave granted in (a) above.
c)He had made submissions in reply to the wife’s submissions and, accordingly, it would appear to the Court that he suffered no prejudice by their lateness.
On 29 October 2019, the wife forwarded a copy of a judgment from the Court G handed down on 28 October 2019. That judgment was made in favour of the defendants to the said proceedings commenced by the plaintiffs (one of which was the husband) with the plaintiffs ordered to pay the defendant’s costs. Those costs were said to be such as were agreed as “costs that ought follow the event in accordance with the general rule”. There has been no quantification of the costs so ordered. This Court was aware, in the substantive proceedings of the Court G proceedings as it provided in the final orders (at order 12) for a split of any settlement sum, if awarded to the husband in those proceedings.
The Court’s determination on the parties’ competing costs applications is based, therefore, only on a study of the documents before it, including affidavits lodged and the written submissions of the parties. Neither party has sought to adduce oral evidence or to cross-examine the other.
Both parties were, substantially, self-represented on the record but received legal assistance from time to time by Counsel briefed. Rule 19.01 of the Family Law Rules2004 states that a self-represented party is not entitled to recover costs for work done on a case (except work done by a lawyer) but, if so ordered, may be entitled to recover some costs. The parties in their written submissions have provided documents supporting, to some extent, the costs incurred by them to their respective Counsel retained.
The Law
The Court’s general power to award costs is found in s.86 of the Federal Circuit Court Act 1999 and, in particular, pursuant to Rule 21.02 of the Federal Circuit Court Rules2001 (“the Rules”).
Pursuant to Rule 21.02(1) of the Rules, an application for an order for costs may be made:
a)At any stage in a proceeding; or
b)Within 28 days after a final decree or order is made; or
c)Within any further time allowed by the Court
Pursuant to Rule 21.02 (2) of the Rules, in the making an order for costs in a proceeding, the Court may:
a)Set the amount of the costs; or
b)Set the method by which the costs are to be calculated; or
c)Refer the costs for taxation under part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
d)Set a time for payment of the costs, which may be before the proceeding is concluded.
In relation to costs, s.117 of the Act states:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(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), (4A) 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.
(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 that 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 facts, 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.
(3) To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children's lawyer for a child has been appointed, if:
(a) a party to the proceedings has received legal aid in respect of the proceedings; or
(b) the court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children's lawyer;
the court must not make an order under subsection (2) against that party in relation to the costs of the independent children's lawyer.
(4A) If:
(a) under section 91B, an officer intervenes in proceedings; and
(b) the officer acts in good faith in relation to the proceedings;
the court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children's lawyer has been appointed, the court must disregard the fact that the independent children's lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.
Section 117 of the Act was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311, where it was said:
“Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions, which imposes any additional or special onus on an applicant for an order for costs”.
In Latoudis v Casey(1990) 170 CLR 534, the High Court of Australia stated as follows:
"…in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".
Section 117 of the Act, provides for a discretionary power in the Court. The Court must examine each of the factors, set out in the section, in turn, in relation to justifying a costs order. A costs order can be made on the basis of one or a combination of those factors: see Brown v Brown [1998] FamCA 115. The discretion to award costs is a broad discretion: see for example Collins & Collins (1985) FLC 91-603.
The wife submits that there are more than adequate circumstances to justify the Court making a costs order in her favour pursuant to s.117(2) of the Act, with the primary matters the Court should have regard to as being the offer made in writing by her to the husband on 25 June 2016 and the conduct of the husband in the proceedings, generally.
Application of the Law
Section 117(2A)(a) The financial circumstances of the parties
The wife submitted that:
a)She is, currently, in arrears of approximately $60,000.00 in respect of her mortgage secured over the Street P, Town Q property as the bulk of her settlement monies were tied up in superannuation and she was having difficulty in meeting her mortgage commitments. The wife said that she had used part of the monies previously released from the controlled monies account to try and secure accommodation for herself and X. By doing so, she said that she had retained those monies for inclusion in the asset pool out of which the husband was to receive 50% and that, therefore, the monies released from the controlled monies account and used towards the purchase of the Street P, Town Q property of $50,000.00 had, effectively, been double counted for the benefit of the husband. By contrast, the wife said that the husband had spent monies, previously, released to him on a lengthy trip to Country AA. The Court accepts that those are matters which, substantially, were the subject of the Court’s final determination in terms of the final orders.
b)She has the day to day care, control and expense of caring for X, who will turn 18 years in 2020.
c)She is likely to have some financial responsibility for X who she expects to remain with her after she turns 18 years of age.
The husband made no submission in relation to this factor.
The Court has assessed the parties’ financial circumstances in terms of the final orders, including the matters set out in paragraph 34(b) & (c) above. The Court relies on that assessment, as if fully set out herein. The Court is, therefore, of the view that any costs order has the potential to, negatively, impact on each of the parties’ financial circumstances and that a modest order, if made, should be contemplated by the Court given the paucity of those circumstances.
Section 117(2A)(b) If any party in receipt of legal aid
The parties submit and the Court accepts that this factor is not, relevantly, applicable.
Section 117(2A)(c) The conduct of the parties in relation to the proceedings
The husband submitted that:
a)The whole of the costs of the proceedings after the Court’s interim decision, referred to in paragraph 14 above, on 10 January 2017 related to the wife’s Ms Ovesen fund and its value.
b)The hearing would not have been necessary if the wife had complied with earlier orders and, in particular, disclosure orders. This was also caused by the failure of the wife to lodge Taxation Returns since 2010 for the Ms Ovesen fund and, by the fact, that the wife had failed to comply with Superannuation Rules and had used her superannuation, as if it was her own money. The husband, again, set out the various withdrawals of the wife, referred to in Mr D’s affidavit. Again, these are matters which the Court considered in the final orders.
c)The wife should be sanctioned (not compensated) for any costs reliant on the principles in terms of her non-disclosure as set out in Trang & Kingsley (2017) FLC 93-786, where the Full Court of the Family Court of Australia delivered a stark reminder about its wide powers to deal with litigants who have failed to provide full and frank disclosure of their financial affairs in property settlement proceedings.
The wife submitted that:
a)A significant portion of the hearing and the single expert evidence concerned the husband’s assertion that the wife had no interest in the Mr Huber fund and what flowed therefrom. At least 2 full days of the hearing were taken up in relation to this issue noting that the husband had refused to make any concession, notwithstanding the evidence of the single experts, to which he led no contrary expert evidence.
b)The single expert, Mr L, rendered a bill and his report addressed this issue.
c)The single expert, Mr D, addressed this issue with invoices paid, totalling $50,160.00.
d)Mr B, accountant, also addressed this issue. He also generated significant expert costs in trying to ascertain the value of the wife’s member balance in the Mr Huber fund. Mr B rendered a bill for $12,980.00 on 17 September 2018. Of that invoice, $10,250.00 related to matters concerning the wife’s member balance in the Mr Huber fund and responding to the husband’s subpoena issued and directed to himself.
e)Mr B issued an earlier invoice on 5 April 2018 for $27,940.00 which included further work to ascertain the wife’s member balance in the Mr Huber fund.
f)The husband caused numerous emails to be forwarded to Mr D which increased the costs as rendered by Mr D.
g)The wife’s original solicitor, Mr J, had rendered Tax Invoices to the wife in the sum of $34,454.50 with more Tax Invoices said to follow. The wife maintained that, of this sum, many units of charge related to perusing emails received from the husband which commenced “in volume” from about March 2016 and which, she said, caused her to be put into a position whereby she could no longer afford to retain the services of Mr J and, thereafter, became a self-represented litigant (see attachment 3 of the her affidavit sworn 14 June 2019 being Tax Invoice #2 which records, for example, 4 emails from the husband on 3 March 2016; 6 emails on 23 March 2016; 7 emails from 2-3 April 2016; 8 emails from 15-19 May 2016). Each email received incurred a charge of $40.00 to the wife.
h)A significant amount of hearing time was spent in relation to assessing the party’s respective superannuation funds and their values.
i)The husband was ordered, on 22 May 2018, to provide to Mr D copies of the Financial Statements for the Mr Huber fund, as well as the approved Auditor’s Reports, for the years ended 30 June 2010 to 30 June 2017, within 7 days. He never did this. The Court has found that Mr U, the accountant for the Mr Huber fund, was in the husband’s camp. See the final orders.
j)The fact that the final hearing made it clear that it was the husband to a large degree and his accountant, Mr U, who were instrumental in the wife not being able to provide her audited superannuation financials for the Ms Ovesen fund in a timely fashion.
k)The fact that the Court found that both the husband and the wife had responsibility in relation to their superannuation funds and it was not the sole responsibility of the wife.
l)The fact that the husband had, again, sought to make misleading submissions as to the monies withdrawn by the wife from the Ms Ovesen fund, totalling $1,493,501.56.
m)The Court has also found that it was the husband who managed the family finances. See the final orders.
n)The husband opposed (but the wife was successful in obtaining) payment of X’s school fees from the controlled monies account. See the final orders.
o)The husband advanced calculations in relation to both of the parties’ superannuation funds which took up Court time and which were not accepted by the Court. See the final orders.
p)The husband, steadfastly, refused to accept or acknowledge that the wife had made any contributions to the Mr Huber fund, notwithstanding evidence from experts and supporting documentary evidence to the contrary.
q)The husband had refused to consent to any of the wife’s interim applications for the payment of school fees from the parties’ joint funds. The Court found that the parties were equally responsible for such fees. Notwithstanding this finding, there are, currently, $9,454.50 in school fees outstanding for X. See attachment 4 of the wife’s affidavit. The husband has refused to pay one half of the outstanding school fees to date.
r)The wife, presently, has no funds from which to pay school fees. All the monies received by the wife pursuant to the final orders went towards the payment of her legal fees and paying off part of the outstanding arrears of the mortgage secured over the Street P, Town Q property.
s)The husband is over 65 years of age and has immediate access to funds in the Mr Huber fund.
t)The wife is 56 years of age and is unable to access her superannuation in the Ms Ovesen fund until she attains the age of 65 years. The effect of the final orders is that the husband has immediate access to all judgment monies and the wife must wait another 9 years before she can access the bulk of her entitlement. The wife relies on the decision of the Full Court of the Family Court of Australia in D & D (2006) FLC93-256, as referred to in the final orders. The effect of this is that the wife has been left with no liquid funds but the husband has, approximately, $365,000.00 gross which he can, immediately, access.
u)Pursuant to s.75(2)(o) of the Act, the Court should have regard to X who is still under 18 years of age. X is a current elite athlete. She was also selected in the 3 person Australian team to compete in the 2019 Queensland Sports Team Tour which involved teams from Australia, Country V and Country BB. She has also been invited as the sole Australian representative to the Country W Sports Tournament in 2019. The wife has requested that the husband contribute one half of her airfares but he had not responded to this request. As noted in the final orders, the husband was involved in X’s sporting activities. Any costs order made against the wife may, effectively, result in X not being able to continue with her sports career.
The husband submitted in reply:
a)The wife asserted that a lot of Court time was taken up over the issue as to whether the wife had a beneficial interest in the Mr Huber fund. The husband maintained that this was irrelevant in the proceedings as a whole. The husband stated that it was common ground that both parties had contributed to their assets and that it did not matter whether the wife’s income went into the Mr Huber fund or whether it was used for the support of the parties and their family. It was the Court’s duty to ascertain the assets of the parties at the time of the hearing and decide pursuant to s.79 of the Act, as to how they should be divided between the parties. The Mr Huber fund was valued and there was no need to raise the issue for the purposes of deciding the final outcome of the proceedings.
b)The wife’s Ms Ovesen fund must have had a value. When the wife, finally, disclosed the full facts of that fund it was found by her own expert accountant and auditor that since 2011, the wife had made withdrawals from the fund, in the sum, referred to in paragraph 39(l) above.
The Court relies on its judgment (being the final orders) as if fully set out herein in relation to the matters referred to above. The parties have raised the same submissions as, substantially, referred to in the substantive proceedings. The Court gives no weight to each of the parties’ allegations of misconduct under this factor.
Section 117(2A)(d) Proceedings necessitated by the failure of a party to comply with previous orders
The parties submit, and the Court accepts, that this factor is not applicable save as to the costs sought by the husband in respect of his Contravention Application, referred to above.
Section 117(2A)(e) Whether any party wholly unsuccessful in the proceedings
The parties submit and the Court accepts, this factor is not, relevantly, applicable.
Section 117(2A)(f) Any offers in writing
The wife submitted that:
a)She had made an offer in writing to the husband on 25 June 2016. The wife offered the husband “50/50 of [the] house and 60% of [the] CC shares left in [her] Super Fund and [she would] take responsibility of [her] super with the Tax Office.” The offer was not limited in time for acceptance by the husband. If he had accepted that offer, he would have received:
i)Fifty percent of the net value of Street DD, Suburb EE (“the former matrimonial home” (being the ultimate sale price $2,590,000.00 less mortgage $1,317,161.63 less rates, adjustments, agents commission and disbursements and legal fees totalling $126,237.80) being $1,146,601.20. Therefore, fifty percent equating to $573,300.60
ii)CC shares in the Mr Huber fund with an estimated value (see paragraph 136 of the final orders) of $1,000.00
Sixty percent of the CC shares in the Ms Ovesen fund valued at $286,317.62; (See paragraph 136 of the final orders) equating to $171,790.57
Totalling: $746,091.17.
b)As a result of the final orders, the husband received:
i)Monies from the controlled monies account: $219,664.20
ii)Monies from the Ms Ovesen fund: $146,632.81
iii)Interim payments from the controlled monies account: $165,000.00
Totalling: $531,297.01
c)If the husband had accepted the wife’s offer he would have been $214,794.16 better off.
d)As a direct consequence of the husband not accepting the wife’s offer, she has incurred substantial costs.
The husband submitted that:
a)The offer of 60% of the CC shares is proof of the fact that the Ms Ovesen fund held shares worth $286,000.00, at the time of the making of the offer. Those shares were not there at the time of the final hearing and had been sold and taken by the wife prior to the division of the assets of the parties. The Court does not give this submission weight as the husband could have accepted that offer, at the time it was made.
b)Notwithstanding the wife’s offer, it was not unreasonable for him not to settle, at that stage of the proceedings, when he was aware of substantial contributions being made to the Ms Ovesen fund in excess of $900,000.00 including the $320,000.00 taken from the Mr Huber fund and he was not aware, at the time, that the wife had withdrawn all those funds from the Ms Ovesen fund putting it into deficit.
c)The alleged offer was not repeated to the husband, at any time, after 24 June 2016.
The Court is of the view that the offer made by the wife was an open ended offer that could have been accepted by the husband, at any time. There was no evidence that it had been withdrawn. While the husband submitted that the wife’s offer was an “alleged” offer, the email containing it appears, on its face, to have been forwarded to the husband on the date and time provided. The Court accepts that that offer was made in the terms, as set out above.
A written offer of settlement is “highly relevant” to the question of costs. Such offers provide litigants with an incentive to settle and, thereby, avoid or reduce the costs of litigation (see Robinson & Higginbotham (1991) FLC 92-209). This is, particularly, the case, as the wife in her offer asserted to the husband the following:
“You are not listening to your barrister or as usual your greed and blind arrogance gets in the way of common sense where the only winners are lawyers and accountants.”
The wife goes on to state:
“Do the right thing for the family once in your life and stop this nonsensical pursuit of yours to prove some deluded point.”
The Court accepts that the wife wrote the above offer as a self-represented litigant. The agitation of the matters, as referred to, outside the formal offer were not conducive to having the husband reflect unemotionally on the offer, itself. Nevertheless, the husband had a direct access brief to Ms Cohen. The Court is of the view that the husband had been, at times, in conflict with Ms Cohen which, to an extent, impacted negatively on the presentation of his case and, indeed, the more efficient and timely resolution of these proceedings. Notwithstanding these matters, the Court is of the view that the husband should have given appropriate consideration to that offer and that he did not do so.
As Justice Nygh stated in In the Marriage of Murray (1990) FLC 92-173, a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs:
“If one considers the issue as a matter of policy, that is, on the basis of what the Parliament's objective and purpose was in enacting the legislation, it is clear that the Parliament wished to encourage settlements thereby reducing the cost of litigation to the parties and to the community. That must mean that a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs. At the same time a party cannot sit tight and postpone a decision as to acceptance until a matter is at the door of the court. By that time an offer which might have been acceptable to the offeror because of savings in time and preparation costs, may have become unattractive. In this case the offer was left open for a reasonable period, was clear and capable of acceptance which would have saved the parties considerable costs....”
The Court accepts that it is important for it to give proper consideration to written offers of settlement which have been made. These offers enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to enable proper consideration to be given to it is something to which “very significant weight” ought normally be given. See Browne v Green (2002) FLC 93-115.
The Court is of the opinion that the terms of the wife’s offer were not ambiguous or unclear, were expressed with precision and were objectively capable of being clearly understood. See In the Marriage of Harris (1987) FLC 91-822.
The Court is of the view that the wife’s offer weighs in favour of a costs order in her favour, as referred to, further, below.
Section 117(2A)(g) Such matters as the Court considers relevant
The wife submitted that:
a)Her solicitor’s fees and disbursements since 25 June 2016 totalled between $3,000.00 and $5,000.00 but that she was still awaiting a final Tax Invoice.
b)Her Counsel’s fees totalled $21,193.31 for work performed after 25 June 2016, not including fees for settling her costs submissions (attachment 6 of the wife’s affidavit).
c)The work performed by her solicitor and Counsel, generally, before 25 June 2016 responding to the husband’s contentions that she had no member balance in the Mr Huber fund involved many hours which she was, presently, unable to quantify but which, she believed, would be in excess of $10,000.00.
d)She sought an order that the husband pay to her the sum of $30,000.00 in respect of her costs of the proceedings or such other amount or quantification as the Court deems fit.
The Court has also had regard to the husband being now exposed to a costs order (not quantified at this stage) in favour of the defendants in the Court G proceedings, referred to in paragraph 23 above and the fact that the outcome of those proceedings would appear to indicate that there will be no settlement sum available to the parties. The Court notes that the decision handed down on 28 October 2019 is still within any appeal period.
Indemnity Costs
In Munday v Bowman (1997) FLC 92-784 Holden CJ. of the West Australian Family Court noted:
“some of the circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis. Some examples which may be of relevance to the present case are as follows:
a. Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
b. Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
c. Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
d. The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
e. An imprudent refusal of an offer to compromise.
In the matter Kohan & Kohan (1993) FLC 92-340 the Full Court of the Family Court of Australia (Strauss, Lindenmayer and Bulley JJ) held:
“The power to order costs on an indemnity basis…
…that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties.
This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under sec 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The proper exercise of the discretion
The intent of sec 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules… The Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind…
Indemnity costs orders are still an exception in this and other jurisdictions… Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income… no more than party and party costs have been awarded.
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them.
However, the Full Court of the Family Court of Australia in Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029 (Lindenmayer, Holden & Mullane JJ) stated:
"All that is required is that the Court asked to exercise the discretion be satisfied that some "particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis": per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 223".
In JEL & DDF (No.2) (2001) FLC 93-083, the Full Court of the Family Court of Australia (Kay, Holden & Guest JJ) stated:
“the category of cases in which it would be appropriate to make an order for indemnity costs does not appear to be fully defined.”
The Court held that the failure to accept an offer to compromise was, without more, insufficient to justify the making of a costs order on an indemnity basis. The Court stated:
“In our opinion, the failure to accept an offer which in retrospect, perhaps should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis. The rejection of the offer must be at the very least imprudent. We express no opinion as to when the rejection of an offer may be so classified…”
The Full Court has made plain that access to justice considerations play a significant part in the continuance of this doctrine even as costs at scale depart ever more from the costs charged by lawyers. In Prantage v Prantage [2013] FamCAFC 105 the Full Court of the Family Court of Australia (comprising Thackray, Ryan & Murphy JJ) concluded:
“94.We recognise that the Rules now expressly refer to orders for costs on an indemnity basis. We recognise also that the rules in this Court are not precisely the same as those in other courts; however, there is nothing in the Rules which indicates that the fundamental principle applied in other jurisdictions should not also be applied in this jurisdiction. Indeed rule 19.18 makes clear that the "default" position is that costs are awarded on a party/party basis.
95. As we have pointed out, the "usual rule" relating to the basis upon which costs are ordered in this jurisdiction is well entrenched. We consider it would be most unsettling if we purported to depart from the existing practice. Furthermore, we would not consider it desirable to do so ... "
96. In particular, we respectfully agree with Cooper and Merkel JJ that there are "two seemingly irreconcilable objectives" at stake. Placing great emphasis on the importance of one objective, namely "relieving a successful litigant from the burden of costs which that litigant should not have been required to incur" will inevitably lead to insufficient emphasis being placed on the importance of the other objective of "protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis”.
The Court is of the view, however, that neither party would be entitled to seek costs on an indemnity basis on the bases outlined in their submissions. See Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.
Costs in a fixed sum
The Court accepts that the wife’s costs can be fixed in a specific sum. This is supported by the decision of the Full Court of the Family Court of Australia in Braithwaite & Braithwaite [2007] FamCA 468, (Kay, Warnick and Boland JJ ) where it was said:
“We accept the practicality of the submission that, in an appropriate case, a judicial officer should make an order in sum certain, rather than put the parties to the expense and stress of further proceedings to assess costs.”
and in Bolinger v Ivy [2008] FamCA 274, where the Court stated:
“There is much to be said for fixing costs. The process of assessment of costs is in itself time consuming and expensive. There is also of course, the possibility of a later review”. The wife submitted that in Independent Children’s Lawyer SS and Anor [2009] FamCA 519 it was said “I have the power to order specific amounts of costs”.
The Court proposes to apply Schedule 1 of the Rules. This Schedule was designed to effect the remit of this Court to deal with matters as efficiently as possible in the exercise of its judicial power.
The Court applies Schedule 1 of the Rules, in particular item 13, as being the daily hearing fee applicable to the events concerned, as follows:
Hearing – 29 October 2015
$2,241.00
Hearing –30 October 2015
$2,241.00
Hearing – 2 May 2016
$2,241.00
Hearing – 3 May 2016
$2,241.00
Hearing – 23 June 2016
$2,241.00
Hearing – 7 September 2018 (half day)
$1,120.00
Hearing – 21 September 2018
$2,241.00
Hearing – 4 February 2019 (half day) - no costs will be allowed as the parties were self-represented on that day
$0
TOTAL
$14,566.00
The calculation of costs referred to in the above schedule has the first 4 items being conducted prior to the wife’s offer of settlement. These will not be allowed. No costs have been allowed in respect of the item on 4 February 2019 when the parties appeared self-represented. All other items had appearances for the parties by Counsel.
The Court is of the view that the remaining items in the above schedule totalling $5,602.00.00 should be allowed in favour of the wife. In addition, the Court would provide under item 12 of Schedule 1 of the Rules for an advocacy loading of 50% of that sum which would be $2,801.00 totalling, therefore, $8,403.00. The Court is of the view that these costs could have been avoided if the wife’s offer had been accepted by the husband and are in a modest sum.
The Court has had regard to the particularisation of the wife’s costs as referred to in paragraph 53 above which are so unclear and non-specific as to be incapable of proper assessment. The Court, therefore, has had regard to the hearing dates only, as referred to above.
Given the costs order referred to in paragraph 11 above, the Court will reduce the figure in paragraph 65 above by that sum ($1,215.00) which will mean that the husband will be ordered to pay the wife’s costs assessed in the net sum of $7,188.00. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
The Court has received no specific assessment from the parties as to their costs in preparing their written cost submissions. There will be no allowance in respect of this.
Time to pay
There has been no time limit sought for any payment of costs. The Court is of the view that it will allow the husband some time to pay due to his financial circumstances as referred to above and will order such payment be made within 2 months of today’s date.
Given the outcome of the Court G proceedings and the Court’s finding as to the quantum of the Mr Huber fund at the hearing, the Court will make a charging order as against (and on any) self-managed superannuation fund of the husband, including the Mr Huber fund, being the recipient of the funds paid from the controlled monies account pursuant to the final orders and noting that the Mr Huber fund is a self-managed fund operated for the benefit of the husband. That charge will continue pending the payment of the costs so ordered and will be extinguished upon full payment.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Kemp
Date: 27 November 2019
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