JACKSON & SHEA
[2013] FamCA 692
FAMILY COURT OF AUSTRALIA
| JACKSON & SHEA | [2013] FamCA 692 |
| FAMILY LAW – PRACTICE AND PROCEDURE – where the wife seeks leave to adduce further evidence – where the husband opposes the wife’s application – where the additional evidence that the wife seeks to adduce is relevant and probative – orders made granting the wife leave to adduce further evidence. |
| Family Law Act 1975 (Cth) s 117 |
| Murray v Figge (1974) 4 ALR 612 Gelley v Gelley (No 1) (1992) FLC 92-290 Smith v New South Wales Bar Association (1992) 176 CLR 256 Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 Weir & Weir (1993) FLC 92-338 Zschokke & Zschokke (1996) FLC 92-693 Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 Stevens and Stevens and Anor (Enforcement) (2009) FLC 93-425 Strahan & Strahan (interim property orders) (2011) FLC 93-466 |
| APPLICANT: | Ms Shea |
| RESPONDENT: | Mr Jackson |
| FILE NUMBER: | MLC | 5985 | of | 2011 |
| DATE DELIVERED: | 11 September 2013 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 29 August 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kirkham QC |
| SOLICITOR FOR THE APPLICANT: | Forte Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Strum |
| SOLICITOR FOR THE RESPONDENT: | Berry Family Lawyers |
Orders
That the trial be listed for further hearing for two days before Justice Berman on Monday 7 October 2013 and Tuesday 8 October 2013.
That leave be given to the wife to file and serve and rely upon the affidavit of Ms B Shea affirmed 23 August 2013.
That on or before 20 September 2013 the wife do pay to the Trust Account of Berry Family Lawyers for and on behalf of the husband the sum of TWENTY SEVEN THOUSAND AND SIXTEEN DOLLARS ($27,016) by way of interim costs order pursuant to Section 117 (2) of the Family Law Act 1975 (as amended).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jackson & Shea has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: MLC 5985 of 2011
| Ms Shea |
Applicant
And
| Mr Jackson |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings commenced in the Melbourne Registry by amended initiating application of the husband seeking orders for settlement of property and parenting orders in respect of the infant child of the marriage C born in February 2004. The orders sought by the husband are opposed and by further amended response filed 1 March 2013 the wife seeks orders opposing the application of the husband that the property of the parties be considered pursuant to Section 79 of the Family Law Act 1975 (as amended). The wife seeks declarations that the husband and the wife have the sole ownership to the exclusion of the other of property in their possession, power and control.
The trial commenced before me on 22 July 2013 and was adjourned part-heard on 25 July 2013 and again listed for two days commencing on 15 August 2013 with the intention that the evidence would be completed and if there was sufficient time then final submissions would be made orally, but if there was insufficient time then counsel would submit their final submissions in writing.
On the last day of hearing namely 16 August 2013, counsel for the wife foreshadowed that at the conclusion of the cross examination of the wife by the husband’s counsel, an application would be made for leave to call evidence from the wife’s mother, Ms B Shea.
At the conclusion of the cross examination and re-examination of the wife, a formal application was made in the terms as foreshadowed.
The application was made late in the day and was strongly opposed by the husband’s counsel.
As will be apparent hereafter, the issue of the lack of any evidence from the wife’s mother was a matter of critical comment by the husband. A short summary of the husband’s position is that the financial affairs of the wife were so inextricably linked to those of her mother that it was incumbent upon the wife to adduce evidence from her. Failure to do so would potentially leave significant uncertainty as to the property that might be held by the wife and also as to her financial circumstances generally.
It was said on behalf of the husband that the failure to produce evidence from the wife’s mother might well cause a finding that there has been a deliberate non-disclosure in respect of her property. The husband’s counsel made reference to the comments of the Full Court in Weir & Weir (1993) FLC 92-338 at page 79,594:-
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non- disclosure as there was here, the court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator in (O’Ryan & Broadfoot, Fifth National Family Law Conference Handbook page 249, the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess Section 75 (2) factors.
Accordingly, it would be uncontroversial to find that whilst the wife was not prepared to accept the proposition of non-disclosure, the issue of the absence of evidence of the wife’s mother was live.
At the conclusion of the last day of evidence I was not prepared to hear and determine the matter on an oral application. I did not consider that it was appropriate to consider whether leave should be given in circumstances where the proposed evidence from the wife’s mother was not known. Furthermore, the husband’s counsel submitted that given the issue of the evidence of the wife’s mother had been raised from the beginning of the proceedings, there should at least be some explanation as to why it was that the evidence was not provided as part of the normal trial preparation. I considered that there was merit in the submission of the husband’s counsel but also that a determination of the application could not be undertaken without a consideration of the proposed evidence.
Accordingly, I adjourned the application for argument by video link to 29 August 2013 and made the following order:-
1. That the proceedings be adjourned for argument on any application in a case as may be filed by the wife seeking leave to file an affidavit from [the wife’s mother], with such application to be filed by 4pm on 23 August 2013.
The wife filed an application in a case on 23 August 2013 and sought the following order:-
1.That leave be granted to the file to file and serve and rely upon the
affidavit of [the wife’s mother] affirmed 23 August 2013 and attached to
the wife’s affidavit filed contemporaneously herein.
The wife filed an affidavit in support of the application on 23 August 2013 which set out some of the background to the matter and annexed thereto it was the proposed affidavit of the wife’s mother.
The husband opposed the orders sought by the wife and in addition sought the following orders:-
2. That the wife pay the husband’s costs of and incidental to the said application in a case on an indemnity basis.
3. That in the event that the application in a case is not dismissed, the wife pay to the husband the sum of $50,000 by way of litigation funding or alternatively, to be characterised.
That response was supported by an affidavit of the husband’s solicitor which set out the fee arrangement between the husband and his solicitor Berry Family Law, the tenor of which was that the husband had significant unpaid costs due to his solicitors, had paid a substantial sum including counsel fee prior to the trial, and whilst the solicitors were prepared to conduct the proceedings on behalf of the husband up to and including the last day of hearing being 16 August 2013 (my interpretation) the husband was:-
Unable to continue to finance the legal fees and disbursements associated with these proceedings nor…able to borrow any funds from a financial institution to meet the costs of these proceedings.
In short, the husband’s solicitors were prepared to cover the husband to the end of the anticipated trial namely 16 August 2013, but the husband would be financially embarrassed thereafter for whatever period of time might be required to conclude the proceedings if the wife’s application in a case to lead further evidence was successful.
Accordingly, there are two matters to be decided namely:-
(1)Whether leave should be granted to receive the proposed affidavit from the wife’s mother; and
(2)If leave is granted then whether, a costs order should be made pursuant to Section 117 (2) of the Act and if so, the quantum of sum order.
Background
At the commencement of the trial each of the parties presented the following documents:-
As to the husband:-
(1)A list of applications and affidavits to be read
(2)A list of the parties’ assets and liabilities
(3)A short form summary of argument
(4)Minutes of Order as to the parenting orders sought and as to the property and other orders sought.
As to the wife:-
(1)Applications and affidavits to be read for the wife’s case
(2)A Minute of final orders sought by the respondent wife
(3)A Summary of Argument for the wife
(4)Table of legal and equitable interests prepared on behalf of the wife for trial commencing 22 July 2013
Some little time was spent at the commencement of proceedings reviewing the property of each of the parties according to each of the separate asset and liability documents tendered on their behalf. It was apparent that there was likely to be significant agreement, firstly in respect of the identity of the property held by each of the parties and then, as to the value to be attributed to each item of property save as to those items of property about which it was clear there would need to be a judicial determination.
On the husband’s list the following appears:-
·[D1] Trust - not known;
·[D2] Family Trust (aka …) Family Trust - not known;
·[D] personal account - not known.
On the wife’s list of property held by her she records the following:-
·Net [D] personal account (overdrawn) minus $179,168 [D] personal account ledger. A footnote discloses that:-
Source of funds used to pay $85,000 of interim property settlement to husband and wife’s legal fees.
In the husband’s short form summary of argument the following references are made to the property or interests of the wife connected to or controlled by the wife’s mother:-
Financial and non-financial contributions within the scope of Section 79 (4) (a) – (b) of the Family Law Act 1975 were made directly and indirectly by the husband to the acquisition, conservation and improvement of the property of the parties to the marriage, including an indirect contribution to the wife’s WA property and her shareholding in S [D] & Co Pty Ltd which she has been able to retain and not realise during the marriage. Further, she was able to accumulate the rent received by her from the WA property, as well as the distributions received by her from the [D2] Family Trust.
It is submitted that over the course of the parties’ long marriage of approximately 14 years, their overall respective contributions should be accessed at 30 per cent (approximately $1,156,000) in the case of the husband and 70 per cent (approximately $2,696,000) in the case of the wife. By way of cross check only, if the wife’s WA property and her shareholding in S [D] and Co Pty Ltd (totalling approximately $1,561,099) were considered separately and hypothetically “quarantined”, it is submitted that the parties respective contributions to the remaining assets should then be assessed equally (approximately $1,146,000) each.
She is a beneficiary of the [D2] Family Trust and the [D1] Trust. She has received annual income distributions from the [D2] Family Trust between 2000 and 2012 of between $20,000 and $113,008, totalling $987,731.00 and averaging $75, 595 per annum. From 2003, the distributions increased annually to $113,008 in 2010 (the year prior to separation), after which they decreased to $67,505 in 2001 and $20,000 in 2012.
As at 30 June 2011, the balance sheet of the [D2] Family Trust discloses assets with book values of $3,215,277 and the balance sheet of [D1] Trust discloses assets with book values of $3,540,128.
Further from financial statements and taxation returns produced upon subpoenae it appears that [C] has a loan account owing to her of $350,780 in the [D1] Trust as at 30 June 2012, having received distributions as follows…
As at 30 June 2011, the wife had a credit balance of $321,619 in the [D] Personal Account which she now asserts has since been depleted entirely and, indeed, now has a debit balance of $179,168.
The only references in the wife’s summary of argument to her interest in property central to the application are as follows:-
The wife has interests in real estate and a minority interest in a family company in Perth and has since well before the marriage.
The husband made no contribution to the wife’s Perth assets.
It certainly cannot be said that the husband is entitled to the benefit of any adjustive order over the property of the wife from her family in Perth.
During the course of the proceedings and consequent upon my request, I was provided with a list of the property of each of the parties identifying the said property and the value where agreed. Other than those areas which were clearly understood to require judicial determination as to the value, there only remained uncertainty as to the wife’s property generally in Western Australia and the extent to which either she held money personally or it was held for and on her behalf by entities under the control of her mother.
I do not propose to canvas the cross examination of the wife in detail but it became obvious towards the conclusion of the wife’s evidence that there was significant uncertainty in the property entitlement of the wife in respect of the entities controlled by her mother and only she could provide the evidence that would bring either clarity to the property of the wife or would at least enable a judicial determination to be made with some level of confidence.
It became clear during the wife’s cross examination that to the extent she was unable to answer questions about her property holdings, her mother would be able to do so. This topic is perhaps best encapsulated in the affidavit of the wife filed in support of her application as follows:-
3.My mother’s evidence is relevant to the proper assessment of the assets and liabilities of the marriage in light of assertions made on behalf of the husband during trial.
4.I have disclosed the balance of my [D] personal account throughout these proceedings, including the first financial statement that I affirmed and was filed on my behalf on 14 September 2011.
5.By letter from the husband’s solicitors, Berry Family Law, dated 9 July 2013 I was asked for the first time by the husband to provide a copy of the ledger (or other documents) for that account. I hold no documents in relation to the [D] personal account, and until these proceedings was not aware that such an account existed. Annexed hereto and marked with the letters GS2 is a true copy of that letter.
7.A further letter from the husband’s solicitors was sent to my solicitors on 17 July 2013 requesting copies of bank statements and any other documents or ledgers in relation to the [D] personal account, with that letter being corrected by a subsequent letter sent by the husband’s solicitors to my solicitors on 18 July 2013. The effect of that further request was to seek a copy of the ledger from 1 July 2006 rather than 1 July 2007. I made a further request that my mother provide to me the ledger for that extended period, and she agreed. I am informed by my solicitors and verily believe that they provided the copy of the ledger from 1 July 2006 to 4 July 2013 to the husband’s counsel on the first day of trial.
In summary, whilst the wife asserts that she has made full and frank disclosure of all relevant documents certainly in respect of any requests made on behalf of the husband, she acknowledges that her mother’s evidence is relevant to “the proper assessment of the assets and liabilities of the marriage in light of assertions made on behalf of the husband during the trial”.
The proposed affidavit of the wife’s mother affirmed 23 August 2013 is comprehensive.
The document sets out the history and genesis of the entities namely S.[D] & Co Pty Ltd, the [D2] Family Trust and [D1] Trust.
To the extent that the history and structure in respect of the three above mentioned entities has apparent relevance, I consider that it is also potentially of probative value. Obviously, some of the proposed contentions may be the subject of cross examination on behalf of the husband, but at first instance the proposed evidence would be of significant assistance to the court in reaching a decision with a level of certainty and confidence that may not otherwise have been the case. Under the heading of the wife’s financial affairs, the following paragraphs are informative:-
[28][The wife’s] financial affairs, with the exception of her employment income earned from [Company E], her Bendigo Bank Account, her day to day trading Westpac Bank Accounts and shares which she owns in her own name, are managed from the office of S. [D] and Co Pty Ltd. Funds are paid to/from the office on her behalf and the details required for her taxation returns are prepared each year by the office staff.
[29] [The wife] has been the recipient of funds paid to her or held for her from various sources over the years. The source of funds paid to her or held for her are trust distributions, rental from her property at [F Street], her share of the rental from residential flats in [Suburb G] and [Suburb H] and interest from the Westpac Term Deposits taken out by me in her name in Perth.
[30] All of the income paid to [the wife] is included in [the wife’s] annual taxation returns. I hold [the wife’s] Power of Attorney and I have signed many documents for [the wife] as her Attorney, including her personal tax returns.
[31] With one exception, my children and grand-children have not been given any information about the source of funds paid to them or held for them. The exception is my daughter [Ms J] who works for the business. Prior to [Ms J] becoming involved in the family business, I had not told her about the source of funds paid to her. She is only aware now, as a result of working in the business as a qualified accountant.
[32] …
[33] Prior to the commencement of these proceedings:-
(a)I did not inform [the wife] about the Trusts or S. [D] and Co Pty Ltd or the source of funds I paid to her or held for her;
(b)I did not inform [the wife] that in additional to rental income from [F Street], her income came from trust distributions from [D2] Family Trust, her share of the rent from residential flats in [Suburb G] and [Suburb H], and interest from the Westpac Term Deposits taken out by me in her name in Perth; and
(c)I did not inform [the wife] about distributions made to [C] from the [D1] Trust.
[34] I have caused funds to be forwarded to [the wife] from time to time over the years. I am able to state from my own knowledge that [the wife] did not know the source of those funds paid to her apart from the rent for [F Street]. [The wife] knew about the source for income from [F Street] because she knew that [F Street] was owned in her sole name and she received rent from [F Street] on a more or less monthly basis.
[35] In summary, my children and grand-children are not consulted about the operation of the [D2] Family Trust and the [D1] Trust. I intend to continue with the practice of not informing family members of the source of the funds paid to them in the absence of circumstances requiring me to do so.
The affidavit provides detail of trust distributions to the wife from the D2 Family Trust between the years 2000 and 2012 and a ledger of the wife’s interest in the D Personal Account.
A significant topic of cross examination of the wife was directed to the extent of drawings from the D Personal Account and the Westpac Term Deposits held in the wife’s name. It is uncontroversial that the wife was not able to provide any significant insight to the manner in which the wife’s interests generally in the entities controlled by the mother were conducted, but in particular, the extent of her entitlement and drawings in relation to the D Personal Account and also the manner in which the Westpac Term Deposits in the wife’s name had been dealt with.
The beneficial entitlement of the child C arising out of distributions made to her from the D1 Trust was a significant issue that arose in cross examination of the wife and about which the wife was unable to provide any clear assistance. If the proposed evidence from the wife’s mother is accepted, the wife’s inability to assist the court in respect of matters relating to her various entitlements in her family controlled entities may well not be so much a matter of deliberate non-disclosure, but rather evidence and information resident with her mother.
The Law
Helpfully, written submissions were presented on behalf of each of the parties.
The submissions on behalf of the wife relied upon the decisions of Urban Transport Authority of New South Wales, the Nweiser (1992) 28NSW LR471, Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR175 and Stevens and Stevens and Anor (Enforcement) 2009 FLC93-425 in particular paragraphs 272 – 274.
Counsel for the husband cited Murray v Figge (1974) 4ALR612, Jelley v Jelley (No 1) (1992) FLC92-290 and Smith v New South Wales Bar Association (1992) 176CLR256 at 32.
The cases referred to by counsel were not controversial, and generally the submissions were not directed to any differing interpretation of the common law principles that apply when a court is required to consider either an application for leave to adduce further evidence or to re-open a case.
The overarching principle is that to grant leave to adduce further evidence is an exercise of discretion, guided and tempered by the interests of justice.
Whilst it is true that the wife had not formally closed her case and the application to adduce further evidence had been foreshadowed, the application was made on behalf of the wife in circumstances where she had understood and indeed, it was how her case was presented, that her evidence would be the last witness and that the proceedings would conclude on 16 August 2013.
Notwithstanding some uncertainty as to whether the wife’s application is to re-open her case or she simply seeks leave to adduce further evidence is in my view a distinction without a difference. The common thread through the case law can be summarised by Murphy J in Aheb and Aheb (No 3) [2009] FamCA 524 at para 35:-
In a case involving an application for settlement of property, it can be said that common law principles govern applications to re-open in this court (eg Gelley v Gelley (1992) FLC 92-290 and the case there discussed). Those principles make it clear that the granting of leave to open is discretionary. That discretion is guided by the interests of justice. The essential question is; is the Court more able to do justice in the facts and circumstances of the particular case if the application is granted (see eg. Smith v New South Wales Bar Association (1992) 176 CLR 256; Urban Transport Authority v Nsuiser (1992) 28 NSWLR 471 at 478 and EB v CT (No 2) [2008] QFC 306.
Perhaps of significance to the application at hand, the High Court in Smith , above cited, stands for the proposition that an application brought in a timely fashion (albeit towards the end of the evidence) will raise the primary consideration of the extent of any prejudice such an application may cause if granted. In this case the antidote may be remedied by a costs order.
In Stevens & Stevens and Anor (Enforcement) above cited, there is a convenient and apposite summary:-
273.We observe that in Australian Securities and InvestmentsCommission v Rich (2006) 235 ALR 587 Austin J set out at 593 what he described as a “useful statement of relevant discretionary factors” to the exercise of discretion to permit a beginning party in a civil penalty proceeding to adduce further evidence after it had closed its case. The factors included:-
·The nature of the proceedings;
·Whether the occasion for calling further evidence ought reasonably to have been foreseen;
·The importance of the issue on which the further evidence is sought to be adduced;
·The degree of relevance and probity value of the further evidence;
·The prejudice to the other party;
·The public interest in the timely conclusion of litigation;
·The explanation offered for not having called the evidence.
It may also be relevant to consider what the High Court recently said in Aon Risk Services Australia Limited v Australian National University (2009) 239CLR175.
274.Authorities also make it clear that if the application to re-open is to call evidence which was not called earlier because of a deliberate tactical decision that factor will ordinarily be relevant:- see Smith v New South Wales Bar Association (No 2) at 266 and Joyce v GIO (New South Wales) (unreported Supreme Court of New South Wales, Shephard J, 21 July 1976).
I have had careful consideration to the various factors that are likely to be influential on the success or otherwise of the wife’s application to adduce further evidence.
Whilst I do not comment on the veracity of the proposed evidence to be led from the wife’s mother, I am satisfied that it has relevance to the proceedings and is probative. If it had been led as part of the wife’s case in the ordinary course there could have been no objection taken by the husband. Indeed, the probative value of the evidence is recognised by the husband in the sense that his counsel (very properly) foreshadowed in his submissions to the court at the commencement of the proceedings that there would be criticism of the wife for not calling her mother. As the evidence progressed, in particular the cross examination of the wife, the initial intimation of the wife’s counsel seemed to be prophetic.
Whilst there was some criticism of the wife both inherent in her cross examination but also in submissions to me in opposition to her application to adduce further evidence, it was submitted that the failure to call evidence from the wife’s mother against the backdrop of a clear warning from the husband’s counsel was indicative of “a deliberate tactical decision”. That is denied by the wife and rather, she summarises her position in her affidavit in support of the application, but essentially, she was keen to not involve her mother in the litigation. At this stage, and before the evidence is concluded, I am not prepared to find that the wife engaged in a deliberate tactic in order to avoid her obligation to make full and frank disclosure. In any event, whilst it is obviously important, the explanation for not having called the evidence and whether it amounts to a deliberate tactic or there is another more benign explanation, is but one of the matters that must be weighed up.
In all the circumstances, I consider the more important issue is the extent of prejudice, if any, that would be occasioned to the husband if new evidence was adduced.
It seems to me that the risk of prejudice to the husband if I grant leave to adduce further evidence from the wife’s mother is at the low end of the spectrum. The evidence to be presented is not necessarily surprising and whilst the detail may not have been anticipated, the general tenor of the evidence from the wife’s mother was expected. There is no suggestion that the wife will refuse to discover and produce documents connected to and/or relevant to the proposed evidence and I am of the view that the evidence has a level of materiality which should require its admission. The principle prejudice to the husband (other than a further delay of relatively short duration in the conclusion of the proceedings) is the further costs of the litigation likely to be a further two days of court time.
Accordingly, I find that whilst there is prejudice to the husband it can be ameliorated by a costs order. I therefore propose to grant leave to the wife to adduce evidence from her mother limited to the matters raised in the document annexed to the wife’s affidavit filed in support of the application and marked with the letters “GS1”.
Costs
In response to the wife’s application the husband seeks the following order:-
3.That in the event that the application in a case is not dismissed, the wife pay to the husband the sum of $50,000 by way of litigation funding or, alternatively, to be categorised.
As is apparent, I propose to grant orders in terms of the wife’s application to adduce evidence from her mother but do so on the basis that the prejudice caused to the husband could be offset by proper regard to a costs order.
The affidavit of the husband’s solicitor provides the following summary (my words):-
(a)The husband’s costs to date are $129,315;
(b)The unpaid costs to date $96,687.34;
(c)The amount sought by the husband to conclude the proceedings (taking into account the costs incurred for the preparation and appearance on 29 August 2013) is $50,000.
The extent that the application for costs is framed as “litigation funding” the head of power must be pursuant to Section 117 (2) of the Family Law Act 1975 (as amended).
The Act provides as follows:-
Section 117 (2)
If, in proceedings under this Act, the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to sub-section (2A), (4), (4A) and (5), and the applicable rules of Court, may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the Court considers just.
Section 117 (2A)
In considering what order (if any) should be made under sub-section (2), the Court shall have regards 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 fact, production of documents and similar matters;
(d)Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
(e)Whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)Such other matters as the Court considers relevant.
An application for interim costs or “litigation expenses” was considered by the Full Court in Strahan & Strahan (interim property orders) (2011) FLC 93-466 at para 79:-
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable a payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”; Blue Seas Investments Pty Ltd v Mitchell [1999] FamCA 745; (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
The Full Court in Strahan also referred to the decision of Zschokke & Zschokke (1996) FLC 92-693 at page 83,217 as to the matters that are likely to be relevant to the success of an application for interim costs:-
There is no doubt that whether the matter was determined as an interim property settlement order under Section 80 (1) (h), or as an interim costs (or security for costs) order under Section 117 (2), or indeed a maintenance order, the last three matters identified by Her Honour (being a position of relative financial strength on the part of the respondent; a capacity on the part of the respondent to meet his own litigation costs; and an inability on the part of the applicant to meet her costs) would all be relevant.
At the commencement of the proceedings each of the parties filed a document setting out the legal and equitable interests held by each of them in property. The evidence has not yet concluded and in any event there are findings to be made in relation to some valuation issues. The short summary is that property under the direct control of the husband is likely to be not much more than $350,000, whereas on the wife’s case it is at least $2,800,000. Importantly, the wife has monies remaining in a Westpac Term Deposit in the sum of $87,000, shares standing to her credit and distributions from time to time via the entities under the control of her mother.
Given the matters raised in the affidavit of the husband’s solicitor, he has a significant outstanding liability in respect of his legal fees. The wife has been able to meet her legal fees as and when they have been incurred.
The best estimate is that there will need to be a further two days set aside to complete the evidence and now to hear final submissions. It is difficult to speculate as to whether the two days would have been required in any event if the wife had relied upon the evidence of her mother at first instance, but I accept that irrespective of those considerations, the manner in which the application in a case was brought and the interests of justice dictated that it was reasonable for the husband to oppose the application even if ultimately he was unsuccessful. Clearly, significant costs were incurred in hearing and determining the current application and as may be necessary, in concluding the proceedings.
In the circumstances, I consider it appropriate to make a costs order in favour of the husband.
Quantum
The husband seeks $50,000, the details of which are set out in paragraph 11 of the affidavit of Earnest Lewis Woolf. It includes costs for the preparation and appearance in respect of the application in a case and for the preparation and further hearing of the trial.
I consider it reasonable that the husband has or will incur the following costs namely:-
Counsel fee of preparation and appearance on 29 August 2013 - $3,850 (including GST);
Counsel fee for preparation (1 day) and an additional 2 days of trial - $11,550;
Solicitors costs in relation to hearing on 29 August 2013 - $1,936 (including GST);
Solicitors attendance at Court two additional days - $4,840;
Solicitors costs in relation the preparation of the additional 2 days - $4,840.
I do not consider that costs should be allowed for counsel fee for the preparation of written submissions given an intimation by the husband’s solicitor (and apparently on behalf of both counsel) that the preference of counsel is now to make oral submissions rather than in writing. I am also not persuaded that the additional costs item involving incidental costs, including subpoena and a retaining of an investigative accountant is any more than speculative at this stage in all of the circumstances of the case. The quantum of costs to be allowed is $27,016.
Conclusion
In order to ensure a timely resolution of the proceedings two further days have been allocated for trial recommencing Monday 7 October 2013.
Accordingly, I propose to make orders in the following terms as:-
(1)That the trial be listed for further hearing for two days before Justice Berman on Monday 7 October 2013 and Tuesday 8 October 2013.
(2)That leave be given to the wife to file and serve and rely upon the affidavit of her mother affirmed 23 August 2013.
That on or before 20 September 2013 the wife do pay to the Trust Account of Berry Family Lawyers for and on behalf of the husband the sum of TWENTY SEVEN THOUSAND AND SIXTEEN DOLLARS ($27,016) by way of interim costs order pursuant to Section 117 (2) of the Family Law Act 1975 (as amended).
I certify that the preceding sixty four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 11 September 2013.
Associate:
Date: 11 September 2013
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