Jacobsen & Jacobsen (No 2)
[2023] FedCFamC1F 789
•14 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jacobsen & Jacobsen (No 2) [2023] FedCFamC1F 789
File number: SYC 3701 of 2018 Judgment of: BRASCH J Date of judgment: 14 September 2023 Catchwords: FAMILY LAW – COSTS – Where the husband sought orders that the wife be liable for the husband’s costs of an interim hearing – Where no circumstances justify a departure from s 117(1) of the Family Law Act 1975 (Cth) – No costs order made – Each party to bear their own costs of the interim hearing. Legislation: Family Law Act 1975 (Cth), ss 79, 117(1), 117(2), 117(2A), 117(3), 117(4), 117(5), 117(6) Cases cited: Jacobsen & Jacobsen [2023] FedCFamC1F 669
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
PBF (as child representative for AF (Legal Aid Commission of Tasmania)) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Prantage & Prantage (Costs) [2014] FamCA 850
Stoian & Fleming (Costs) [2014] FamCA 944
Division: Division 1 First Instance Number of paragraphs: 52 Date of last submissions: 24 August 2023 Date of hearing: 7 August 2023 Place: Sydney Solicitor for the Applicant: Barkus Doolan Winning Solicitor for the Respondent: Lander & Rogers ORDERS
SYC 3701 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR JACOBSEN
Applicant
AND: MS JACOBSEN
Respondent
ORDER MADE BY:
BRASCH J
DATE OF ORDER:
14 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.The parties bear their own costs of the wife’s Application in a Proceeding filed 5 June 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
INTRODUCTION:
The parties have long been in dispute about property and parenting.
The matter came before me for interim hearing on 7 August 2023 with respect to the wife’s Application in a Proceeding filed 5 June 2023 where she sought orders including an interim release of funds to her, orders about the Australian Tax Office (“ATO”), and various, expansive orders and restraints allowing her to invigilate the data of and, essentially, veto the running of the business enterprise H Pty Ltd (“H Pty Ltd”).
The husband filed a Response to the Application in a Proceeding dated 21 July 2023, and provided a Minute of Order where he proposed joint releases of funds and that the Financial Years 2021, 2022, 2023 financial statements and returns for H Pty Ltd and the wife’s business be sent to the Single Expert for an updated report.
I delivered my Reasons for Judgment on 11 August 2023 (Jacobsen & Jacobsen [2023] FedCFamC1F 669) and made the following orders and notations:
THE COURT ORDERS:
1.The husband and wife forthwith do all acts and things necessary to sell the shares held in their joint names in [Company M] ("the [Company M] Shares").
2.That upon the sale of the [Company M] Shares, the husband and wife shall do all acts and things necessary and sign all documents necessary to disperse the net proceeds of sale equally between them and shall each be responsible for any capital gains tax arising with respect to the sale of those shares incurred in their individual names.
3.By close of business on the first business day of each week, the husband, in his capacity as director of [H Pty Ltd], shall cause an email to be sent to the wife with a list of transactions and journal entries ready for the wife’s review, along with the source documents supporting each transaction.
4.The need for compliance with the timeframe as required in r 7.25(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) is dispensed with.
5.The need for compliance with the timeframes as required in r 7.26(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) is dispensed with.
THE COURT NOTES THAT:
A. The parties were able to reach agreement at the hearing that the letter sent to [Ms P] would include a notation in the following terms “the wife does not necessarily agree with the accuracy of the financial statements, and it is anticipated she will want to put further documents if they become available and upon their receipt”.
B. The provision of further documents by the wife to the expert has been determined by the reasons accompanying this order.
In summary, orders were made for the sale of the Company M shares, an equal distribution of the proceeds, and for the weekly disclosure of H Pty Ltd’s transactions, journal entries and source documents by the husband to the wife.
On 17 August 2023, the husband filed written submissions seeking costs in the fixed sum of $52,070 payable by the wife to the husband upon final property orders being made.
On 24 August 2023, the wife filed written submissions opposing the making of a costs order, or in the alternative, that the issue of costs be reserved, noting the final hearing is listed to commence on 9 October 2023.
BACKGROUND:
The applicant wife was born in 1976, and the husband was born in 1975. The parties commenced cohabitation in 1999 or 2000 and were married in 2001. The parties dispute the date of separation: 7 September 2016 for the husband; or, 28 August 2017 for the wife.
The parties have two children, X born 2006 and Y born 2009. The parties are also in dispute about the parenting arrangements for the children, the eldest of whom will be almost 17 at time of trial.
The husband commenced proceedings on 13 June 2018. The wife added property orders to the dispute on 17 July 2018. The matter is listed for final hearing for ten days commencing 9 October 2023.
Material – costs
As said, both parties filed written submissions with respect to costs.
The husband relied upon:
·Response to Application in a Proceeding filed on 21 July 2023;
·Affidavit of Mr Jacobsen filed on 21 July 2023;
·Financial Statement of Mr Jacobsen filed on 21 July 2023; and
·Orders and Reasons for Judgment made on 11 August 2023.
The wife relied upon:
·Application in a Proceeding file 5 June 2023;
·Financial Statement of Ms Jacobsen filed 5 June 2023;
·Affidavit of Ms Jacobsen filed 3 August 2023l
·Pages 350 to 351 of the wife’s Tender Bundle (Exhibit 3); and
·Costs Notice filed on 7 August 2023.
Costs
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that each party will bear their own costs. That general rule is subject to s 117(2), which provides that a court may make such order for costs as it considers just if “…the court is of opinion that there are circumstances that justify it in doing so…”.
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the court may give such weight as it considers appropriate to any relevant factor (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]).
It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient; Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; PBF (as child representative for AF (Legal Aid Commission of Tasmania)) & TRF & LKL (2005) 33 Fam LR 123 at [41]. It is not necessary to establish extraordinary or exceptional circumstances, however there must be circumstances which, at the absolute discretion of the Court, justify a costs order (Stoian & Fleming (Costs) [2014] FamCA 944 at [19]).
The first issue to address is has the husband established any circumstances which justify departing from the position that each party pay their own costs and the making of a costs order in his favour. If there are circumstances justifying a departure from s 117(1), then, the next issue is on what basis should the wife should pay the husband’s costs.
Has the husband established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in his favour
(a) the financial circumstances of each of the parties to the proceedings;
The husband submits both parties have significant assets in their joint and individual names. However, he also contends they both are in weekly deficits in relation to expenses over income. Nevertheless, the husband concludes the wife has the means to pay a costs order upon final orders being made in this proceeding.
In contrast, the wife submits the husband is in a stronger financial position than the wife, and this should be considered in favour of the wife against the making of a costs order as sought by the husband.
The wife also submits in relation to the husband’s contention that he also has expenses that exceed his income:
Each party has sworn and filed Financial Statements in the proceedings. The Wife deposes she has a gross annual income of $205,192. The Husband deposes that he has a gross annual income of $526,188. Each party deposes that their expenses exceed their income, however the Husband's discretionary expenses at Item 32 of his Financial Statement dated 21 July 2023 are recorded at $319,800 per year, being over 60% of his income. When the Husband was asked to particularise this expenditure, his response was that he was not required to do so. The Wife, and the Court, were therefore left with no ability to verify the Husband's true financial position.
(Footnote omitted)
(Wife’s Written Submissions filed 24 August 2023, paragraph 10)
The dispute between the parties regarding their financial situation was discussed in Jacobsen & Jacobsen [2023] FedCFamC1F 669 at [30]–[31], for example:
31.The wife deposed, “[t]he inequity of access to funds between [Mr Jacobsen] and me has been oppressive and has damaged my relationships with the children. I have not had funds to sufficiently run my household and have lived frugally” (Wife’s affidavit filed 3 August 2023, paragraph 71). That “oppression” to which the wife speaks is in circumstances where the wife says that in, “FY2017 to FY2023 (being a period of 7 years), I calculate I received $872,074 in rent from properties in my sole and our joint names, and have earned $656,617 by way of income from my [company], a total of over $1,528,000” (Wife’s affidavit filed 3 August 2023, paragraph 67). That “oppressive” living is an average of almost $220,000 per year. In addition, both parties have each received “almost $800,000 (before capital gains tax) from the sale of a property, and $200,000 in withdrawals from our home loan” (Wife’s affidavit filed 3 August 2023, paragraph 70).
32.Conversely, the wife says the husband has received “$2,906,286 in salary and $285,966 in fringe benefits from [H Pty Ltd], $1,098,730 in rent from properties in his sole and our joint names, and removed at least $188,900 in cash from our safe, a total of over $4,479,000” (Wife’s affidavit filed 3 August 2023, paragraph 68). Accepting those figures for argument’s sake, that is about $640,000 per year. Plus, the $800,000 and $200,000 referred to above.
On an interim basis, both parties appear to be in blessed financial positions, albeit both contending to be asset rich but income poor. Nothing really turns on this on an interim basis other than to say the parties will have a s 79 property alteration either by my imposition, or the unlikely event of an agreement between the parties. I was told at the interim hearing the pool at one point was thought to be around $16 million.
(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;
This consideration is not relevant as neither party is in receipt of legal aid.
(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;
Submissions by the husband indicate that the wife’s solicitor was put on notice that costs would be sought in the event the wife brought an interim application, as they submit the relief sought in the interim application could be dealt with by consent. I do not accept that submission. The matter was hotly contested, with both parties retaining Silks. The husband also outlines the remaining orders were better suited for determination at final hearing. I also do not accept that submission, as some of the orders sought by the wife were beyond my jurisdiction and power whether on an interim or final basis.
On the other side of the coin, the wife maintains that the husband has failed to comply with his disclosure requirements relating to the source documents for the financial records of H Pty Ltd.
Orders to that effect were made on 11 August 2023 that require such documents to be provided each week by the husband to the wife. However, for the reasons given, I did not make the much broader orders sought by the wife which would have allowed her to turn up at H Pty Ltd anytime, and invigilate data as she saw fit.
With respect to the husband’s assertion that the Application in a Proceeding filed by the wife was not necessary and could have been dealt with by consent, the wife submits:
The Husband asserts in his submissions that the Wife's application could have been "dealt with by consent." Nowhere in the correspondence from the Husband's solicitors are the Wife's concerns in relation to [H Pty Ltd] and the documents to be provided to the single expert addressed, noting orders to this effect were made by the Court at and following the hearing of the Wife's application.
(Footnotes omitted)
(Wife’s Written Submissions filed 24 August 2023, paragraph 18)
The parties in this proceeding have engaged in long, protracted litigation in which they have both incurred significant legal fees to date. The looming 10 day hearing set down to commence in October 2023 will be a further significant impost. But that is a consequence of how the parties have chosen to address their differences.
Indeed, it appears both parties have limited ability to reach agreement about very much at all, especially with respect to procedural issues. An example of this was evident at the interim hearing before me on 7 August 2023, where the parties reached agreement regarding the letter to Ms P (really via a ‘judicial to-and-fro’ at the hearing), however, the parties could not agree on the documents to be provided to her. Similarly, the parties also could not reach a resolution regarding the contents of a proposed letter to the Australian Taxation Office (“the ATO”) regarding a tax debt in the wife’s name. My many suggestions to the wife and the husband did not achieve consensus, despite it seeming to be in either or both parties’ interests to stave off any enforcement action by the ATO. So be it.
No doubt much of the 10 days of trial will be taken up with each party’s allegations about the other’s conduct. On hearing the evidence, I will then be in a position to make findings, but cannot resolve these disputed allegations on an interim basis.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
The husband submits that the wife breached Order 14.1 of the orders made on 21 November 2022 in relation to the preparation of a joint letter of instruction to Ms P, to provide updated valuations.
The wife rejects this assertion, and submits it was the husband’s lack of disclosure that caused the delay to the joint letter. The husband’s lack of disclosure, from the wife’s perspective, is something which has plainly irked her for a number of years.
It must be said though that the wife’s application was much broader than just the letter of instructions to Ms P.
Nothing really turns on this factor.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
Section 4(1) of the Act defines proceedings as follows:
proceedings means a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
(Emphasis added)
The husband submits the wife was wholly unsuccessful in her application. He further submits:
…The Wife did not succeed in obtaining any of the orders sought by her, noting that the orders sought by the Wife, particularly in respect of the injunctive orders, were oppressively wide in the extreme and entirely unnecessary to protect the Wife’s legitimate interests. The Wife did not adduce any probative evidence that explained why such an extraordinarily invasive orders were reasonable to protect her interests in [H Pty Ltd], a company operated solely by the Husband.
(Husband’s Written Submissions filed 17 August 2023, paragraph 3.9.5).
The wife rejects that submission on the basis she succeeded in having orders made to address her concerns in relation to the husband’s disclosure of documents in relation to H Pty Ltd and reliance on those documents by the Single Expert. She also persuaded me to make interim distribution orders on her alternate funding proposal, being the sale of the Company M shares, although I ordered an equal distribution. Whilst I was against the wife on many of the orders she sought, it cannot be said she was wholly unsuccessful.
(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
The husband submits the wife at no time during the proceedings put an offer of settlement to the husband. The husband however, submits he made two offers with respect to the wife’s concerns set out in the Application in a Proceeding filed 5 June 2023, and provided a copy of that correspondence between the legal representatives for both parties in the submission, marked as Annexure A.
The wife rejects this assertion and submits the following:
The Husband contends in his submissions that the hearing could have been avoided if the Wife had "engaged in meaningful negotiations" with the Husband. Nowhere in the Husband's offers to resolve the Wife's application, nor in any correspondence from his solicitor, does he engage with or properly address the Wife's concerns in relation to the financial records of [H Pty Ltd] and/ or the Husband's failure to provide even one source document to the Wife.
(Wife’s Written Submissions filed 24 August 2023, paragraph 21).
It seems the husband’s offers relate to the money side of the Application, but the wife sought much more.
To that end, the wife’s submissions referred to her affidavit in support of her Application in a Proceeding filed 3 August 2023, where the wife says she provided extensive evidence of her attempts during the course of these proceedings to seek responses from the husband to address her concerns, and submits specifically in relation to the financial records of H Pty Ltd, that:
…The husband made clear those aspects of the Wife’s Application in a Proceeding referable to the financial records of [H Pty Ltd] would need to be dealt with by the Court, and they were.
(Wife’s Written Submissions filed 24 August 2023, paragraph 22).
It appears both parties believe they have made previous attempts to resolve the issues. Both parties believe the other party has not responded or engaged in meaningful discussions. Nothing turns on this factor.
(g) such other matters as the court considers relevant.
Timing of application
The husband takes issue in his submissions filed 17 August 2023 with the wife’s decision to bring the Application in a Proceeding when she did. He submitted:
The Wife waited until 5 June 2023, 4 months prior to the final hearing and 5 years after the commencement of the proceedings, to file an application in effect seeking to self-audit [H Pty Ltd]. This is despite the parties having engaged [Ms P] on December 2020 to prepare a valuation report, and the Wife having over 2.5 years to address or even raise any issues with the reliability of the financial statements with [Ms P].
(Husband’s Written Submissions filed 17 August 2023, paragraph 3.9.8.1).
The wife did not respond to this consideration raised by the husband.
Given the broad reaching orders sought by the wife to essentially self-audit H Pty Ltd on the eve of trial, there is some force in the husband’s submission. Nevertheless, the wife’s application brought the letter of instructions to Ms P to a head. Had that festered any longer, the trial may well have been doomed.
The orders sought by the wife
The husband submits he was put to significant expense by having to engage Senior Counsel to defend the number of orders sought by the wife, many of which he submits were without jurisdiction.
The wife did not respond to this consideration raised by the husband. I do not accept Senior Counsel was required to defend some of the orders which were plainly beyond power. Nevertheless, little turns on this as the wife engaged Senior Counsel too.
That said, I was amply assisted by both Silks.
Subsections 117(3)-(6) have no application in this matter.
The upcoming final hearing
The wife submitted the Court take into account the upcoming final hearing, and in the event I did not dismiss the husband’s costs, costs be reserved and dealt with at the final hearing.
Justifying circumstances
I do not see any circumstances justifying a departure from s 117(1). The parties will each have an entitlement to a likely substantial property pool; each complain about the conduct of the other; each says the other has not complied with orders; both believe they tried to settle the application but the other would not come to their table; the wife was not wholly unsuccessful.
Each party will bear their own costs of the Application in a Proceeding filed 5 June 2023.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 14 September 2023
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