Jellett and Jellett (No.2)
[2012] FMCAfam 983
•14 August 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JELLETT & JELLETT (No.2) | [2012] FMCAfam 983 |
| FAMILY LAW – Rulings as to form of final orders and as to costs. |
| Federal Magistrates Court Rules 2001 Family Law Act 1975, ss.117, 117(2A)(a) Family Law Act (Superannuation) Regulations 2001 |
| Prantage & Prantage [2012] FamCA 661 Re Wilcox Ex parte Venture Industries Pty Ltd (No.2) (1996) 72 FCR 151 |
| Applicant: | MS JELLETT |
| Respondent: | MR JELLETT |
| File Number: | MLC 7550 of 2011 |
| Judgment of: | Burchardt FM |
| Hearing date: | 14 August 2012 |
| Date of Last Submission: | 14 August 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 14 August 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Smallwood |
| Solicitors for the Applicant: | Macgregor Solicitors |
| Counsel for the Respondent: | Mr Williams |
| Solicitors for the Respondent: | Pearsons Barristers & Solicitors |
ORDERS
THE COURT ORDERS THAT:
Pursuant to Rule 13.04 of the Federal Magistrates Court Rules 2001, orders are made in accordance with the attached minutes of orders proposed by the Applicant wife, as amended and including Order 2 of the Orders made 2 August 2012, which are placed on the Court file.
The Respondent husband pay the Applicant wife’s costs fixed at $33,265.00.
There be a stay for payment of seven days.
THE COURT DIRECTS THAT:
Service of these Orders on the Respondent husband be effected by Counsel telephoning the Respondent husband, if practicable.
The solicitors for the Applicant wife file three clean typed copies of these orders within seven days.
FINAL ORDERS:
That the husband pay to the wife the sum of $639,957.00 on or by 4.00pm on Wednesday, 21st August, 2012 (“the due date”).
That in default of payment by the due date the husband’s interest in [omitted] Superannuation account number [omitted] (“the fund”) is to be split between the husband and wife (the wife being a non member) and 100% of the fund be specified as the base amount for the purposes of Section 90MJ(1)(c)(i) of the Family Law Act 1975 (as amended) in relation to the superannuation held by the husband in the fund.
That pursuant to Section 90MT(4) of the Family Law Act a base amount of 100% be allocated to the wife from the husband’s interest in the fund.
That pursuant to Section 90MT(1) of the Family Law Act 1975, whenever the trustee of the fund makes splittable payment out of the husband’s interest in the fund, the trustee shall:
(a)Pay to the wife or her administrators, executors and beneficiaries, heirs or assigns, the entitlement calculated in accordance with part 6 of the Family Law Act (Superannuation) Regulations 2001; and
(b)Make the corresponding reduction in the entitlement the husband would have had from the persevered amount in the fund but for this paragraph.
That paragraphs 2, 3, and 4 of these orders have effect from the operative time and the operative is seven (7) days from the date of these orders.
That the trustee of the fund shall do all such acts and things and sign all such documents that may be necessary save that, in accordance with the obligations set out in the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the trustee can calculate the entitlement of, and make payment to, the wife in accordance with paragraphs 3, 4 and 5 of these orders, with such payment to be made to the wife’s nominated superannuation fund.
That until the happening of any:
(a)Establishment of a separate account in the name of the wife and the fund;
(b)Transferring rolling over into another superannuation fund of the payment created by paragraphs 3,4, and 5; or
(c)The wife satisfying the following conditions of release, being paid the payment created by paragraphs 3, 4 and 5; or
(d)The wife executing a waiver of rights within the meaning of section 90MZA of the Family Law Act 1975 in relation to the payment created by paragraphs 3, 4 and 5 hereof;
the husband be, and is hereby restrained by himself, his servants or agents, from executing a death benefit nomination in favour of any other person or doing any other act or thing which would render any part of his interest in the fund “no splittable payment”, within the meaning of regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001.
That in default of payment by the due date the husband’s interest in the [Mr Jellett] Superannuation Fund – 100% self managed fund (“the fund”) is to be split between the husband and wife (the wife being a non member) and 100% of the fund be specified as the base amount for the purposes of Section 90MJ(1)(c)(i) of the Family Law Act 1975 (as amended) in relation to the superannuation held by the husband in the fund.
That pursuant to Section 90MT(4) of the Family Law Act a base amount of 100% be allocated to the wife from the husband’s interest in the fund.
That pursuant to Section 90MT(1) of the Family Law Act 1975, whenever the trustee of the fund makes splittable payment out of the husband’s interest in the fund, the trustee shall:
(a)Pay to the wife or her administrators, executors and beneficiaries, heirs or assigns, the entitlement calculated in accordance with part 6 of the Family Law Act (Superannuation) Regulations 2001; and
(b)Make the corresponding reduction in the entitlement the husband would have had from the preserved amount in the fund but for this paragraph.
That paragraphs 8, 9 and 10 of these orders have effect from the operative time and the operative is seven (7) days from the date of these orders.
That the trustee of the fund shall do all such acts and things and sign all such documents that may be necessary save that, in accordance with the obligations set out in the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the trustee can calculate the entitlement of, and make payment to, the wife in accordance with paragraphs 3, 4 and 5 of these orders, with such payment to be made to the wife’s nominated superannuation fund.
That until the happening of any:
(a)Establishment of a separate account in the name of the wife and the fund;
(b)Transferring rolling over into another superannuation fund of the payment created by paragraphs 3,4, and 5; or
(c)The wife satisfying the following conditions of release, being paid the payment created by paragraphs 3, 4 and 5; or
(d)The wife executing a waiver of rights within the meaning of section 90MZA of the Family Law Act 1975 in relation to the payment created by paragraphs 3, 4 and 5 hereof;
the husband be, and is hereby restrained by himself, his servants or agents, from executing a death benefit nomination in favour of any other person or doing any other act or thing which would render any part of his interest in the fund “no splittable payment”, within the meaning of regulations 12 or 13 of the Family Law (Superannuation) Regulations 2001.
That the wife retain for her sole use and benefit the property known as and situate at Property B being more particularly Certificate of Title [omitted].
That otherwise each party retain all assets otherwise controlled by them or in their respective possession.
That in the event of the husband refusing or neglecting to comply the Registrar of the Federal Magistrates Court, Melbourne Registry, forthwith execute the documents necessary to give effect to all paragraphs of these orders in the name of the husband MR JELLETT and do all acts and things necessary to give validity and operation to them.
That the husband forthwith execute a Transfer of Land transferring all his right title and interest in the real estate known as and situate at Property B, Victoria Certificate of Title [omitted] to the wife before 4.00pm on 3 August, 2012.
The husband pay to the wife the sum of $33,265.00 towards her costs such payment to be made on or by 21st August, 2012.
That unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:
(a)Each party be solely entitled to the exclusion of the other to all other property including choses-in-action in the possession of such party as at the date of these Orders (the furniture, personal possessions and like chattels in the real property being deemed to be in the possession of the husband);
(b)Insurance policies remain the sole property of the beneficiary named therein;
(c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(d)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
That all extant applications are otherwise dismissed.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of Federal Magistrate Burchardt delivered this day will for all publication and reporting purposes be referred to as Jellett & Jellett (No.2).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 7550 of 2011
| MS JELLETT |
Applicant
And
| MR JELLETT |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
On 26 July 2012, I delivered my Reasons for Judgment. Most unfortunately, it was a case in which it was not possible to avoid making the most severe criticisms of one of the parties as a witness. In essence, I ordered a 50/50 division of the pool but the pool included almost $1 million of money that had been expatriated by the husband immediately after he, in effect, found out that the marriage was coming to an end. That was not the only thing he did. He also drew down on a line of credit, from some trivial amount in hundreds of dollars to its maximum amount in hundreds of thousands of dollars.
It was part of the wife’s case that she was being put in a position where she would be as disadvantaged as possible and in my Reasons for Judgment, I think I made it clear, but if I did not it was certainly implicit, that I accepted the force of that proposition. The dispute has now refined itself to quite a fine point. It is agreed that the sum that the husband needs to pay the wife to satisfy the spirit, so to speak, of my Judgment is some $639,957. It is also agreed that in default of payment, there would be a vesting order in terms of certain superannuation interests.
The matter that is the subject of dispute is how much time should be provided to the husband to satisfy the order. There is no dispute, or at least I have been informed without relevant challenge, that the wife wishes to keep the family home but is in great difficulty in doing so. The difficulty arises solely out of the conduct of the husband. She desperately needs to either get the sum of some $639,000 paid to her or the superannuation vested in her own control if she is to be able to keep the bank at bay.
The bank has already obtained judgment and will doubtless move on that judgment relatively shortly in the event that time is expanded. Ms Smallwood seeks, in effect, that the amount of time to be provided for payment be very much limited to just a few days; counsel for the husband seeks that it be extended to 60 days or failing that, 30 days. Counsel for the husband is correct to submit that, ordinarily, relatively substantial amounts of time are given to parties to pay sums of this order in matrimonial proceedings such as these, but there are a number of matters that cause me to take the view that the time provided should be much shorter.
The first is that I have no doubt that the husband will not pay the capital sum he is ordered to pay. It is entirely consistent with his position in his case that he does not have that money available to him, even though I believe he does. I am told that he will appeal and I have no doubt he will not, so to speak, destroy the appeal by proving that my Judgment was correct by paying the sum of this order out in the meantime. So, in one sense, there is no utility in giving him a lot of time to pay because I have no doubt whatsoever that he will not do so in any event.
Secondly, the wife desperately needs resolution as urgently as possible. Her position is one with merit and in the particular circumstances of the case, in my view, the amount of time I should give to the husband should be seven (7) days from today, so the date in the proposed order 1 will change from 15 August 2012, as is presently written, to the 21st. That order takes account of the fact that the husband, I am told, is in Singapore for two weeks. Singapore has excellent communication and banking facilities; there is no reason to suppose if he wants to pay, he would be in any way inhibited from doing so.
It is impossible not to note that the husband has conducted his affairs in a somewhat labyrinthine way, even since Judgment. It seems that his former solicitor is not retained, new solicitors are. The counsel briefed, in what I say in his presence are rather difficult circumstances for him, is not in fact to be retained in the appeal. Some $20,000 has appeared in circumstances where I was told he had no money. I was also told last week that he was ill for several days but he apparently went overseas on one of those days. All of these things are, while certainly not proved in any final sense, relevant background considerations to reinforce the conclusion I have already expressed.
So there will be final orders in terms of the minutes proposed by the wife, as amended in relation to the date for payment.
RECORDED : NOT TRANSCRIBED
There will be service of these orders on the respondent by telephone by counsel, if practical, otherwise presumably they will just go to Messrs Pearsons, and then that leaves the question of the foreshadowed application for costs. I am minded to hear that application.
RECORDED : NOT TRANSCRIBED
In this matter, the applicant applies for indemnity costs in the sum of just over $47,000 being effectively the costs for the trial of the proceeding. The husband resists and in the alternative, submits that if there is to be any order for costs, it should be on a party/party basis. As all are aware, s.117 of the Family Law Act 1975 (“the Act”) provides, essentially, that there are no orders as to costs but the Court may “if there are circumstances that justify it in doing so” order costs. That brings me to the approach to indemnity costs.
The wife submits that once the circumstances that justify the Court in “doing so” are established, then, so to speak, ordinary rules as to indemnity costs and party/party costs apply and it is just a matter within the Court’s discretion according to established principles. No case that is really absolutely on point has been quoted to me and that reflects the fact, no doubt, that costs arguments always take place very much on the basis of the particular facts of a particular case. I do accept, however, that the general thrust of the decision of Cronin J in Prantage & Prantage [2012] FamCA 661, a decision so recent it has not yet got a citation number, from last Friday, does seem to support that proposition.
As to what is meant by indemnity costs more generally, I would quote what Black CJ of the Federal Court said in Re Wilcox Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at [152], where his Honour said:
“it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless the court has an absolute and unfettered jurisdiction in awarding costs, although that discretion must be exercised judicially. So, indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the court exercising its discretion in that way.”
I interpolate and say that Cronin J did point out, in Prantage, the various difficulties that might be said to pertain in relation to the practice of Family Law and the commercial developments that have taken place over time of restricting parties to scale costs.
Turning now to consideration of the matters the Court would be required to consider if it felt there were circumstances that justified it in doing so. Section 117(2A)(a) requires the Court to consider the financial circumstances of the parties.
Here, the husband has almost $1 million in cash available to him; the wife has the family home but at present it is by no means unencumbered and its future, that is to say, the wife’s future as the owner of it, remains uncertain because of bank debts which the husband has contrived and failed to assist in ameliorating. The husband has significant earning capacity, whereas the wife’s job is paid at $51,000 a year and will expire next February. She has the care of two young children, both of whom have significant health problems.
No child support has ever been paid; it was purported to be offset against rent for at least part of the time during which the husband was not paying the mortgage, even though that is what he was purporting to charge the wife. Sub-section (b) as to Legal Aid is irrelevant, as is sub-section (d), whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court. Sub-sections (c) and (e) in the circumstances of this case, as counsel acknowledged, to an extent, overlap. They refer to the conduct of the parties to the proceedings (putting the matter broadly), and whether a party has been wholly unsuccessful in the proceedings.
At this point, I propose to refer to some extracts from my Reasons for Judgment. In paragraphs 1 and 2, I said as follows:
“This is a property case in which it can fairly be said that there is an enormous amount of factual dispute. Perhaps the most important matter in contention is whether the property pool is slightly over $2 million or slightly over $1 million, depending upon the view taken as to the almost $1 million sent by the husband to his sister in [omitted] between 15 February 2011 and 18 March 2011.
For the reasons that follow, I think that the money sent to [omitted] does form part of the pool of property available for division between the parties and that the pool should be split equally between the parties.”
At paragraph 14, I said:
“Much of the argument in this case concerned the Jellett Family Trust. This is not surprising given that between 15 February 2011 and 18 March 2011 a total of just under $1 million was transferred to the husband’s sister, Ms J, in [omitted] allegedly to repay obligations to her arising out of the operation of the trust. It was the husband’s position that these moneys were properly so transferred and that the amounts concerned were simply not his. It was the wife’s position that the moneys were in fact his and/or should in any event be included in the pool.”
At paragraphs 32 and 33, I said:
“Putting the matter shortly, it is the husband and his sister’s case that those moneys owing, together with the very substantial amounts that came to be owed by way of distribution, were not paid to her over the years (although she could have demanded them at any time) because of the sort of apprehensions about banking referred to in the affidavit material as to her personal security and also because of related difficulties with the banking structure in [omitted] (which would presumably have dissipated upon the ending of sanctions in 1996).
I should make it clear that I just do not believe a word of it. It is a completely untruthful description of what in fact has happened.”
At paragraph 53, having already expressed reservations about the necessity to make such findings, I said:
“While I approach demeanour findings with caution, it has to be said that the husband was as unconvincing a witness as I have seen in all the many decades I have been listening to and seeing people give evidence. He was aggressively unresponsive, domineering and he bordered on the discourteous to counsel. His evidence was in some instances extremely unconvincing and in relation to his endeavours to explain how it was that he was still living in the property owned by his superannuation fund in [C], it had every appearance of being made up on the run. When pressed as to how he could still be living there when he had earlier asserted he was unable to do so as it would involve a breach of the law, his answer to the effect that the tax officers had advised him it was a technical breach only and that he would be moving out soon but had no idea where, I have no doubt was being made up impromptu to explain away an awkward circumstance.”
In other words, I found that he was lying to me.
At paragraphs 64 to 66, I said:
“In February 2011 the wife, having sought advice, lodged caveats over the property in [B] and the property in [C], which she thought until that time were jointly owned by her and the husband. It appears that she discovered for the first time that she was not on title to the [B] property and that the [C] property was in fact owned by the husband’s superannuation fund. A letter was sent to the husband dated 7 February 2011 informing him of these caveats and annexing copies (see exhibit A20).
It is the husband’s case that he did not receive notice of those caveats until about 16 February 2011. That is not probable. The post does not take that long.
I have absolutely no doubt that the drawing down on the Viridian line of credit to $350,000 on 14 February 2011 was done as a direct result of the husband finding out about the caveats. He knew at that time, as I find, that his relationship was at an end and took the first of a number of steps to ensure that the wife would be significantly financially disadvantaged.”
Turning to the submissions of the parties which, of course, I paraphrase to an extent, the wife’s submissions concentrate, in the first instance, on a number of offers made which are exhibited to the affidavit of
Ms G and are referenced in that affidavit. The wife also pointed to the husband’s conduct, his denials of knowledge of the caveats and necessity to file a subpoena to find out when they had been posted to him, the interrelated drawing down of the mortgage and the failure of his arguments in relation to Centrelink and alleged customer debts.
It was strongly submitted that a lot of time had been spent on the evidence of the husband in these regards and that this was a loss of time in Court. The husband’s submissions pointed, correctly in my opinion, to the mere fact that the husband having been found to have lied does not lead to an entitlement to all costs. Counsel referred to paragraph 26 of the decision of Cronin J in Prantage and in my view, correctly so. It was submitted that I should judge to what extent the case had been protracted by these various unsatisfactory aspects of the husband’s conduct and I accept once again, that is also the case.
Counsel submitted that the husband had been successful, for example in relation to the issue of contributions which I assessed at 60/40 in his favour. It was submitted that he could not be said to have been wholly unsuccessful. It was also submitted that the offer made on 24 May, referred to in Ms G’s affidavit, was only made between counsel and was not a Calderbank letter. Once again, I accept the force of that submission. It was submitted that exhibit SG2 to Ms G’s affidavit, being the 7 June offer from Lander & Rogers on behalf of the husband, would have presented the wife with an unencumbered dwelling, this being not so far from the wife’s offer and indeed, it was submitted that is how matters remain.
As I earlier indicated, it was submitted that if I was ultimately against the thrust of these submissions, scale costs should be ordered from the date of the first Calderbank letter on 6 June, from the wife’s solicitors.
I make the following points:
a)As I have already indicated, the husband is better off by far. He has over $900,000 clear, whereas the wife has significant financial problems. In saying this, however, I note that the orders I originally had in mind were to do justice and equity between the parties and one cannot, as it were, reward the wife twice on that account. Nonetheless, s.117(2)A does make this a relevant consideration.
b)I am afraid there is no avoiding it; the husband’s conduct has been outrageous. The entire story about the trust was, as I have found, untruthful and he must have known this; there is no escaping the fact. Likewise, the issue of the receipt of the caveats, which he denied, just begs commonsense. One only has to look at what happened when he got them; the house debt was up to $350,000 and over $900,000 was expatriated in a matter of a few weeks, if not days. He made up evidence on the run about living in [C]. His conduct of the proceeding, looked at in an overall sense, was truly outrageous and it took up most of the trial in terms of time but not all of it, as I accept.
So far as the offers made are concerned, I have already indicated I think there is force in the submission of counsel for the husband. First of all, while discussions between counsel of the character evidenced by Ms G, not on a hearsay basis, are not irrelevant, they are not a Calderbank offer. They were only made at the start of the trial and the authorities show that for an offer to bite, so to speak, the party has to have a reasonable opportunity to consider it. Discussions between counsel immediately before or during the conduct of the first day were not, in my view, of that character.
Nonetheless, it is clear that the final outcome for the wife, in dollar terms, has been far better than the offers that she made from time-to-time and I do not think it is necessary to say more than that. The ultimate outcome has been very substantially better than what she was prepared to accept on 6 June and the counter-offer on 7 June was plainly, in the circumstances of the parties, not one that she would ever be in a position to accept. I accept that the husband’s failures in respect of the Centrelink debt and the customer debt are not of any great significance and that he did have some measure of success in relation to the contributions issue but that did not in fact take up an inordinate amount of time.
Properly balancing all these relevant considerations, in my view, the husband should pay an indemnity costs order but only for 80 per cent of the trial, with some adjustments. Although the Calderbank offer was not put until after the first day of trial, the husband’s case, with its untruths, occupied the whole of the trial. So far as quantum is concerned, I am going to fix the amount myself. This is not a case like Prantage where the debt in costs was in hundreds of thousands and the matter self-evidently had to go to a Registrar. In the scheme of things, the costs order sought is relatively modest and it is inappropriate to put the parties to the extra time and expense of taxing it, especially in circumstances where my own familiarity with costs schemes in this area is now, after some six years, quite well developed.
So far as I am concerned, the times claimed in the bill for $280 for a solicitor, which I take it to be Ms Macgregor and $180 for a junior solicitor are not unreasonable. However, the bill for counsel’s fees for four days of trial was $19,250. While that is certainly less than the sum charged by senior counsel for the husband, it seems to me excessive and I will allow $3,500 a day, inclusive of GST, totalling $14,000. To that figure, however, I will add both the fees charged by Ms Smallwood for the two subsequent mentions; one of which, it should be noted, had to be adjourned because the husband said he was ill on the same day that he apparently went to Singapore, together with the $600 charged by Ms Macgregor in the total sum of $3,100.
Likewise, I am going to adjust the bill by deleting the sum of $1,954.48 for all due care and responsibility. In circumstances where there is already a highly detailed bill set out, an additional sum of this sort does not seem to me to be justified. The arithmetic of these is that the total bill, less the deductions I have made, is $47,532. I have taken off $4,000 in respect of counsel’s charges and $1,950 rounded out to the care and responsibility, which produces a figure of $41,582, of which 80 per cent is $33,265.60. So, I will direct that the husband pay the wife’s costs fixed in that amount.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Date: 13 September 2012
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