Ingles and Ingles and Ors (No 2)
[2019] FamCA 514
•1 August 2019
FAMILY COURT OF AUSTRALIA
| INGLES & INGLES & ORS (NO. 2) | [2019] FamCA 514 |
| FAMILY LAW – COSTS – Circumstances justifying order – Where the husband and the second and third respondents each seek their costs relating to the concluded property matter – Whether the wife was wholly unsuccessful – Weight to be given to offers – Quantum – Orders |
| Family Law Act 1975 (Cth) ss 117(2A)(a) 117(2A)(g) |
| Anison & Anison [2019] FamCAFC 108 Bant & Clayton (costs) [2016] FamCAFC 35 Brady & Brady [2012] FamCAFC 4 Dickson & Dickson (No 2) (1999) FLC 92-857 In the Marriage of Greedy (1982) FLC 91-250 Kohan & Kohan (1993) FLC 92-340 Prantage & Prantage (2013) FLC 93-544 Re Wilcox; Ex-parte Venture Industries Pty Ltd and Ors (No 2) (1996) 72 FCR 151 |
| APPLICANT: | Ms Ingles |
| 1st RESPONDENT: | Mr Ingles |
| 2nd RESPONDENT: | B Pty Ltd |
| 3rd RESPONDENT: | Ms Howard |
| FILE NUMBER: | DNC | 270 | of | 2017 |
| DATE DELIVERED: | 1 August 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 29 May 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Heinrich |
| SOLICITOR FOR THE APPLICANT: | Kajaliny Ranjith Legal |
| COUNSEL FOR THE 1ST RESPONDENT: | Litigant in person |
| SOLICITOR FOR THE 1ST RESPONDENT: |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Bonig |
| SOLICITOR FOR THE 2ND RESPONDENT: | Finlaysons Lawyers |
| COUNSEL FOR THE 3RD RESPONDENT: | Mr Bonig |
| SOLICITOR FOR THE 3RD RESPONDENT: | Finlaysons Lawyers |
Orders
That the wife pay the costs of Ms Howard in her capacity as Trustee of the Ingles Family Trust fixed in the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) within fourteen (14) days of the date of this order.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ingles & Ingles and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: DNC 270 of 2017
| Ms Ingles |
Applicant
And
| Mr Ingles |
Respondent
And
B Pty Ltd
2nd Respondent
And
Ms Howard
3rd Respondent
REASONS FOR JUDGMENT
Introduction
Competing applications for property settlement between Ms Ingles (“the wife”) and Mr Ingles (“the husband”) were heard in August 2018 and concluded by orders made 31 January 2019.
The proceedings were commenced by the wife’s Initiating Application filed 14 June 2017 which sought to particularise the orders she seeks following discovery and sought orders to prevent the husband or B Pty Ltd from attempting to cause her eviction from the former matrimonial home at C Street, Suburb D, Northern Territory (“the C Street property”).
The wife filed an Amended Initiating Application on 20 November 2017 seeking a settlement sum of $1,700,000 and a superannuation split of $200,000 in her favour.
On 22 December 2017 the wife filed a Second Amended Initiating Application which sought the same orders but provided that to give effect to the orders the husband was to take action as appointor and trustee of the Ingles Family Trust (“the Trust”) to sell assets to satisfy the settlement sum.
The wife filed an Amended Initiating Application on 9 March 2018 which joined the husband and his sister Ms Howard in their capacity as Trustees of the Trust. She amended the settlement sum she sought to a percentage of 65 per cent of the net assets of the husband and wife. She sought a declaration that the assets of the Trust were the property of the husband.
On 31 May 2018 the wife filed a Further Amended Initiating Application amending her position. She sought that the court “declare the assets of [the Trust] or such proportion thereof as the Court may determine are the property of the husband and form part of the matrimonial pool of assets”. In the alternative she sought a declaration that the husband and Ms Howard in their capacity as trustees of the Trust hold the assets of the Trust for and on behalf of the husband or the husband and the wife arising out of a resulting or constructive trust.
By Response filed 25 August 2017 the husband conceded that there should be a settlement of property and sought that the wife receive a settlement limited to the $50,000 she received by way of partial settlement of property orders. He conceded that an amount of $200,000 should be allocated to the wife by way of a superannuation splitting order.
By his Further Amended Response filed 25 July 2018 the husband proposed that in addition to the partial settlement sum of $50,0000 the wife should receive a further sum equal to 50 per cent of the husband’s interest in B Pty Ltd.
B Pty Ltd filed its Response on 21 September 2017 seeking that the wife vacate the C Street property being property held by B Pty Ltd and further, that she pay for her occupation of the property comprising rent and outgoings in the sum of $95,000.
Ms Howard responded to the wife’s application in a Points of Claim document filed 30 April 2018 opposing the orders sought by the wife against B Pty Ltd and the Trust.
The Judgment delivered 31 January 2019 sets out the following relevant issues for determination at [35]:-
(1) The husband’s interest in the Trust.
(2) Is the Trust the alter-ego of the husband?
(3) Do the trustees of the Trust hold the assets of the Trust for the husband or the husband and the wife arising out of an express or constructive trust?
(4) If the Court does not find that an express or constructive trust exists then does the husband have an equitable lien over the assets of the Trust?
…..
(11) What orders, if any, can be made requiring the trustees to sell Trust property sufficient to supplement any default by the husband in the payment to the wife of a settlement sum as may be ordered.
Short History
In 1981 the husband’s parents commenced a business. The husband and Ms Howard worked in the business.
The parent’s business was sold in 1994 and the husband and Ms Howard (together with her husband) went into business as a partnership and following incorporation in 1997 the business was conducted through a company.
The Trust was settled in October 1997. The husband was the sole appointor and only trustee.
In December 1997 the husband and the wife commenced a relationship.
At some time in 1997 the husband and Ms Howard purchased the shareholding of her husband such that they became the directors and equal shareholders of the company.
In August 1998 Ms Howard was appointed as a second trustee, however the husband remained as sole appointor of the Trust with a provision for Ms Howard to be appointed as the appointor upon the husband’s death.
The parties separated in April 2016. At the time of separation the parties lived in the C Street property. The wife remained in the property with the intention that she would vacate the premises upon the payment to her of a settlement sum.
The parties were assisted by single expert evidence as to value and whilst not able to reach agreement, as to the husband’s interest in B Pty Ltd, as against the wife’s value of $846,684, the wife conceded a value of $657,002.
The husband’s interest in the Trust was more problematic. The wife considered that the husband’s interest should be valued at $1,402,522, whereas he considered that he did not have an interest in the Trust. Moreover, he asserted a debt to the Trust of $393,718 which was not conceded by the wife.
As discussed, the parties remained in dispute as to whether the wife owed rent and other outgoings pertaining to the C Street property in the sum of $95,158.
The husband was prepared to treat his interest in the Trust at best as a financial resource and it should not therefore be treated as property.
An unfortunate aspect of the proceedings was the extent of costs to the parties generated by the litigation. The wife’s total fees were estimated to be in the sum of $484,277, the husband’s fees were $249,124 and the costs of the second and third respondents totalled $156,371, with the component for B Pty Ltd being $39,064 and for the Trust at $117,307.
Findings
I found that the Trust was not the alter-ego of the husband nor “that his control could have been considered absolute in the sense of both legal and actual control”.[1]
[1] Judgment delivered 31 January 2019 at [86].
The position of the husband and Ms Howard regarding the status of the Trust is set out in [23] of her Response to Points of Claim filed 30 April 2018. The treatment by the husband and Ms Howard is relevant to the question of costs and is repeated in full:-
23. In answer to the whole of the Claim insofar as it concerns [the Trust], Howard and B Pty Ltd, [I] say that:-
23.1The [Trust] is and has always been conducted as a joint endeavour, also known as a “quasi-partnership” between the husband and Howard, each having equal rights, powers and entitlements;
23.2[T]he [Trust] was established for the purpose of giving effect to the joint endeavour of the husband and Howard referred to in the preceding sub-paragraph;
23.3Howard has an equitable claim as against the trustees reflective of the joint endeavour;
23.4[I]rrespective of the legal form of the [Trust], capital and profits were and are to be made available to the husband and Howard in equal half proportions;
23.5[I]n consequence of the above, no order should be made against the trustees or the husband which would place the [Trust’s] trust assets or the interests of Howard at risk.
The wife’s position altered in that she conceded if the Court did not treat the entirety of the Trust as an asset of the husband then the Court should bring to account one half of the assets of the Trust.
Ms Howard did not speak against the Court considering one half of the value of the Trust assets being brought to account as between the husband and the wife, but resisted that in some way the assets of the Trust would be brought to account as opposed to a value attributed to the husband’s interest in the Trust.
The wife sought a declaration that the assets of the Trust are held upon trust for the husband or the husband and the wife by operation of a resulting or constructive trust.
I found that the evidence fell far short of that which was required to establish either a resulting trust or a constructive trust in favour of the husband and/or the wife. Such a finding would have adversely affected the interests of Ms Howard. I found that she came to the Court with “clean hands”.[2]
[2] Judgment delivered 31 January 2019 at [133].
The Court also considered whether the Trust assets were subject to an equitable lien arising out of the work undertaken by the husband and the wife in the day to day activities of the Trust.
I determined that the wife had not made or had any “significant or substantial direct involvement in the activities of the Trust”.[3]
[3] Judgment delivered 31 January 2019 at [140].
I found that it was proper to bring to account one half of the value of the Trust as property of the parties. That approach was conceded by the husband and not opposed by Ms Howard provided that it was effectively a notional value that was brought to account rather than the actual Trust property.
Value of the husband’s interest in B Pty Ltd
The parties were not agreed as to the value of the husband’s interest in B Pty Ltd. I accepted the evidence of the single expert that consequent upon the intention of B Pty Ltd to dispose of the C Street property, the value of the current and non-current assets in the company would be $1,664,910. The husband would be entitled to one half represented by his 50 per cent shareholding in the sum of $832,455, but taking into account the capital gains tax and other taxation considerations triggered by the winding up of the company, the net position to the husband was $657,002, not the higher sum as sought by the wife.[4]
[4] Judgment delivered 31 January 2019 at [176]–[181].
The husband’s interest in the Trust
Again, I accepted the evidence of the single expert that the husband’s interest in the Trust was $531,765 after bringing to account his debit loan of $393,718.
The total net assets of the parties were $1,200,726. I apportioned the property as to 60 per cent to the wife which represented a sum of $720,435, but after considering the minor items of property to be retained by the wife and bringing to account outstanding liabilities, the settlement sum was $720,496.
The husband has paid the settlement sum, however, the majority has been dispersed by the wife to the payment of her outstanding legal fees. By order made 29 May 2019 the wife was restrained by injunction from dealing with the sum of $100,000.
Default provisions
I considered that the husband had an equitable interest in respect of his interests in the Trust and whilst it was not open to the wife to pursue any proportion of the settlement sum that remains outstanding against the assets of the Trust, orders could be made that would require the husband to pursue a payment to him of up to $531,765 being the Court’s determination as to the value of the husband’s interest in the Trust.[5]
[5] Judgment delivered 31 January 2019 at [286].
The parties applications for costs
Pursuant to r 19.08(1) of the Family Law Rules 2004 (Cth) (“the Rules”), the husband, B Pty Ltd and Ms Howard have applied for an order that the wife pay their costs.
Neither party seeks an order that costs be paid on an indemnity basis.
The method of calculation of costs is referred to in r 19.18(1) of the Rules:-
The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
Rule 19.18(3) provides that in making an order under sub-rule (1), the Court may consider:-
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the case;
(c)the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)expenses properly paid or payable.
In considering what orders should be made, if any, in respect of costs claimed, s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) requires the Court to have regard to the following:-
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any parties 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 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 any 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.
Accordingly, I have a wide discretion in respect of matters relating to a potential costs order.
Should an order for costs be made in favour of the husband?
The husband seeks costs in the sum of $230,892.42. This relates to the fees that he incurred in the period November 2016 to January 2019. He relies upon his Affidavit filed 10 May 2019 and a further Affidavit filed 28 May 2019 which annexes a number of documents intended to support the husband’s claim that his costs be paid on an indemnity basis.
Rule 19.08(3) provides:-
A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.
The explanatory guide to the Rules has been accepted by the Court as an accurate definition of “indemnity basis”; namely:-
An entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.
The discussion of the Full Court in Prantage & Prantage (2013) FLC 93-544 is of assistance in determining whether and in what circumstances an order for indemnity costs should be made. The Full Court referred extensively to the decision of Kohan & Kohan (1993) FLC 92-340 in which it was noted that whilst there was nothing in the Act which in any way “inhibits” a consideration of indemnity costs, the following is said in Kohan at 79,605:-
…it is fundamental to the exercise of the 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 s 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.
In Re Wilcox; Ex-parte Venture Industries Pty Ltd and Ors (No 2) (1996) 72 FCR 151, Cooper and Merkel JJ said at 156:-
The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown.
The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is 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 second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur. These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of the court to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis. The principles were stated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 43 FCR 225.
In Prantage (supra) the Full Court said at 87,209:-
97.In our view, once it is recognised that ensuring access to justice is one of the key objectives of the “usual rule”, the claimed increasing disparity between scale costs and those being charged by lawyers becomes as much an argument against the awarding of indemnity costs as it is in favour of costs being ordered on that basis.
98.With respect to the trial Judge, we are not convinced that there is a great deal of difference between current “commercial realities” and those prevailing at the time Kohan was decided. It should be noted that the costs agreement in Kohan provided for a rate of payment three times in excess of the scale. However, even if there have been changes in the market place for legal services, we are not persuaded that this should have any impact on the application of the “usual rule”, which seeks to balance competing public policy considerations.
The husband contends that the wife should pay costs on an indemnity basis for the following reasons:-
·Made allegations which ought never to have been made and have prolonged the matter with groundless contentions.
·The husband adopts a submission by Ms Howard on 3 May 2019 in that regard, paragraphs 12 to 17 and annexures.
·Commenced or continued in circumstances where a party properly advised should have known that they had no chance of success. In such cases the action must be presumed to have been commenced or continued because of wilful disregard of the known facts.
·That the wife “made an imprudent refusal” of offers to compromise.
I am not whether the costs sought by the husband are calculated on a party/party basis. No scale has been provided. I accept that significant costs have been paid by the husband, but in circumstances where the discretion to award costs on an indemnity basis should be undertaken only in exceptional cases, the general practice is to adopt a costs assessment on a party/party basis.
The gravamen of the husband’s application is his contention that following a face to face meeting between the parties on 20 October 2016, an agreement was reached that the pool was $1,800,000 with superannuation of $270,000.
The husband then instructed his solicitors to write to the wife’s solicitors making an offer that each party be entitled to one half of the assets and superannuation entitlements to be adjusted to equality.
Consequence of the husband’s “offer”
On 26 October 2016 the husband’s offer of settlement was conveyed via his solicitors to the wife’s solicitors. The correspondence proposed to divide the “agreed” pool equally.
The offer was repeated on 31 October 2016 consequent upon a typographical error in the earlier correspondence.
The husband contrasts what he contends was the agreed value of the pool at $1,800,000 with the Court’s determination that the total net assets of the parties was $1,200,726. On the basis of an adjustment of 60 per cent in favour of the wife, she received a settlement in the sum of $720,435 which is significantly less than the amount that would have resulted from the wife accepting the husband’s offer of $900,000.
The wife neither accepted the offer nor did she make a counter-offer.
The husband refers to extensive disclosure made by him by 1 August 2017 comprising 281 documents.
As discussed, the husband’s Further Amended Response filed 25 July 2018 sought orders that the husband receive a settlement sum of $50,000 and a percentage as may be determined by the Court of the husband’s 50 per cent interest in B Pty Ltd.
It is conceded that the husband’s position at trial was significantly inferior to his initial offer.
The husband’s position at trial was consistent with the orders sought in his Response filed 25 August 2017 and the Amended Response filed 18 January 2018.
In Dickson & Dickson (No 2) (1999) FLC 92-857 the Court considered that an offer to settle made prior to trial can be a relevant consideration under s 117(2A)(g) namely “such other matters as the Court considers relevant”.
In Brady & Brady [2012] FamCAFC 4 the Court adopted the remarks of the Full Court In the Marriage of Greedy (1982) FLC 91-250where it was said:-
…There may be situations where refusal to negotiate, to make an offer or to put forward an alternative order may be a factor justifying an order for costs. The failure of a party to take part in negotiations in a genuine manner may contribute to delay and costs and obstruct the proper resolution of the matter.
In Brady (supra) the Court considered that whilst there were offers that had been made they lacked “the precision needed especially to support a costs order”.[6]
[6]Brady & Brady [2012] FamCAFC 4 [38].
The wife argues that the letter of offer was not capable of acceptance in that even if it had been accepted, the wife would not have known with precision what she would have received.
The husband’s evidence does not reveal whether his offer to settle was left open or whether by necessary implication the filing of his Response on 25 August 2017 had the effect of withdrawing the offer.
Whilst there is an initial attraction to the proposition that the wife presents no evidence of counter-offer or proposal to the husband, whilst the offer made by the husband on 26 October 2016 may with the wisdom of hindsight now seems generous, it was not unreasonable for the wife to reject the proposal given her position that the financial relationship between the husband and Ms Howard was a matter that the wife considered should be explored.
Accordingly, I do not consider that the husband’s offer represents a basis for a costs order in favour of the husband.
Was the wife wholly unsuccessful in the proceedings?
In Anison & Anison [2019] FamCAFC 108 the Full Court had to consider where proceedings as whole have been unsuccessful.
The trial Judge concluded that the husband was wholly unsuccessful in the proceedings.
The wife sought to include the husband’s son as a second respondent. The Court substituted a corporate trustee of a Trust as the second respondent and following an application by the trustee company to be removed from the proceedings the trial Judge struck out all aspects of the wife’s proceedings which sought orders against the company.
The gravamen of the wife’s application in Anison (supra) was not dissimilar to the present case namely, that the wife argued the Trust was a sham and that the corpus of the Trust should be considered as property of the parties and available for division and order.
The Full Court cited with approval the decision of Bant & Clayton (costs) [2016] FamCAFC 35 and adopted the following remarks:-
(e) The mother was wholly unsuccessful in the proceedings
21.The father submits that by filing a Notice of Discontinuance the mother has been wholly unsuccessful. The mother says that her application was never heard or determined, and thus it was not wholly unsuccessful.
22.There is an element of truth in both submissions, but it is apparent to us that this paragraph does not apply to the facts of this case; it is designed for cases where an application is heard and determined and the applicant is wholly unsuccessful.
23.Thus, this paragraph does not provide a circumstance justifying an order for costs.
It could not be said that the wife was wholly unsuccessful in respect of the orders sought against the husband.
The wife received a settlement significantly more advantageous than orders sought by the husband. Moreover, there were other aspects of the proceedings which necessitated the wife’s involvement and in particular the position adopted by B Pty Ltd in seeking the wife’s removal from the property and payment by her of a substantial amount by way of unpaid rent and outgoings.
Accordingly, I do not find that the wife was wholly unsuccessful as against the husband, nor does the wife’s conduct in not accepting the husband’s 2016 offer or her failure to put her own proposal to settle justify an order of costs.
Should a costs order be made in favour of Ingles Family Trust and Ms Howard?
The costs of Ms Howard and the Trust have been invoiced in the sum of $150,269.55 with disbursements of $16,232.
I am told by counsel that the costs have been calculated on a party/party basis. I accept the submission.
Whilst Ms Howard and the Trust also argue that the wife should have accepted a without prejudice offer made on 25 October 2017, I find that the terms of the proposed offer were not sufficiently specific that they were reasonably capable of ready acceptance by the wife.
Was the wife wholly unsuccessful as against Ms Howard and the Trust?
By her Further Amended Initiating Application filed 31 May 2018 the wife sought orders that had the effect of her receiving an adjustment equal to 65 per cent of the net assets of the parties including the corpus of the Trust.
The wife’s alternative position was that if the Court did not declare that the assets of the Trust were the property of the husband, then she sought a declaration that the husband and Ms Howard in their capacity as trustees of the Trust hold the assets of the trust on behalf of the husband and/or the wife arising out of an express or constructive trust.
The wife’s claim was better particularised in her Points of Claim filed 30 April 2018.
I determined that the Trust was not the alter-ego of the husband and that there was not a resulting or constructive trust over the assets of the Trust in favour of the husband and/or the wife.
I did find that for the purposes of a default provision in circumstances where the husband did not pay the settlement sum as ordered that he had an equitable lien in respect of his interests in the Trust.
At [286] of the Judgment the following appears:-
I do not consider that it is open to the wife to pursue any proportion of the settlement sum that remains outstanding and unpaid in respect of the assets of the Trust, but orders should be made that would require the husband to pursue payment to him of an amount up to $531,765 which represents the value of his accepted interest in the Trust.
No orders were made as a consequence of the wife’s claim that the assets of the Trust should be considered as property of the husband or the husband and/or the wife by reason of an express or constructive trust.
It is also a relevant consideration that the provenance of the Trust and its property could be traced back to proceeds from the sale of a business operated by the husband and Ms Howard.
The wife’s primary position was that the entirety of the assets of the Trust should be brought to account. The evidence supported an easy finding that the husband and Ms Howard had made substantial contributions to the Trust and its various commercial ventures.
I found that Ms Howard had not made a representation “which she understood was likely to be relied upon by the wife, or was reckless in that respect or whether the conduct of the wife was such that the detriment was so obvious that a constructive trust should be construed”.[7]
[7] Judgment delivered 31 January 2019 at [129].
Ms Howard was found to have come to the proceedings with “clean hands”. The wife’s argument that she had made a contribution to the Trust was rejected. Whatever discussions may have occurred between the parties, there was no basis for the joinder of the Trust and the involvement of Ms Howard.
I reject the wife’s contention that the wife was not wholly unsuccessful as against Ms Howard and the Trust.
As determined, there was little or no evidence capable of supporting the wife’s contention that the Trust was the alter-ego of the husband or that the trust property should be held on behalf of the parties by way of a Trust.
The wife was wholly unsuccessful against Ms Howard and the Trust. No order was made directly as between the wife and the Trust. Even if focus is cast upon the alternate position of the wife namely, that the husband be deemed to have a one half interest in the Trust, the Court brought to account a value not an interest in the trust property.
Quantum
I am obliged to consider the provision of s 117(2A) and in attempting to determine the extent of costs payable to Ms Howard and the Trust, I consider the financial circumstances of each of the parties to be relevant.
The wife’s Affidavit filed 27 May 2019 sets out her financial circumstances following the payment by the husband of the settlement sum of $720,496.
The sum was received by her solicitors on 30 April 2019 and she received an amount of $290,700.46 on 1 May 2019, with the further amount of $429,795.54 being retained in her solicitor’s trust account.
The wife and her former solicitors are in dispute and on 16 May 2019 they commenced proceedings seeking their fees in the total sum of $386,177.29.
The wife has since entered into a loan arrangement with a credit union to jointly borrow money to refinance her partner's current home loan standing in the sum of $552,278.81.
In addition to her solicitor’s fees, the wife has various liabilities in excess of $80,000.
The reality is that but for the order made on 29 May 2019 restraining the wife from disposing of the sum of $100,000 received from her solicitors, there is nothing left.
The position of Ms Howard and the Trust is that notwithstanding the total of their legal fees, they seek costs in the sum of $100,000.
In the circumstances, I consider that the amount as sought represents a reasonable quantification of the costs of Ms Howard and the Trust and I propose to make orders in those terms.
Conclusion
I make orders as appear at the commencement of these reasons.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 1 August 2019.
Associate:
Date: 1 August 2019
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