Kalantari and Maine (No 3)
[2021] FamCA 183
FAMILY COURT OF AUSTRALIA
| KALANTARI & MAINE (NO. 3) | [2021] FamCA 183 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Application by the husband’s former solicitor to intervene in the costs proceedings between the husband and wife – Where the court found the completed section 79 property proceedings render the court functus officio – Leave to intervene refused. FAMILY LAW – COSTS – Competing applications for costs by the husband and wife – Orders made in favour of the wife. |
| Family Law Act 1975 (Cth) ss 79(2), 79(10), 92, 117 Family Law Rules 2004 (Cth) r 6.05) |
| Bailey v Marinoff (1971) 125 CLR 529 Guinness and Guinness (No. 2) [2008] FamCAFC 100 McDonald and McDonald (1976) FLC 90-047 Vadisanis v Vadisanis (2015) FLC 93-671 |
| APPLICANT: | Ms Maine |
| RESPONDENT: | Mr Kalantari |
| INTERVENOR: | SS Pty Ltd t/a SS Company |
| FILE NUMBER: | SYC | 8 | of | 2016 |
| DATE DELIVERED: | 7 April 2021 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | Dealt with by written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Rugendyke |
| SOLICITOR FOR THE APPLICANT: | Georgia Seaton Family Law and Mediation |
| COUNSEL FOR THE RESPONDENT: | Mr Ford |
| SOLICITOR FOR THE RESPONDENT: | Owen Hodge Lawyers |
| COUNSEL FOR THE INTERVENOR: | Ms Carnell |
| SOLICITOR FOR THE INTERVENOR: | SS Company |
Orders
Insofar as is necessary, the application of SS Company for leave to intervene in these proceedings is refused.
Within 28 days the husband pay to the wife a sum of $20,000 on account of her costs in the proceedings for alteration of property interests.
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 Kalantari & Maine 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 SYDNEY |
FILE NUMBER: SYC 8 of 2016
| Ms Maine |
Applicant
And
| Mr Kalantari |
Respondent
And
| SS Pty Ltd t/a SS Company |
Respondent
REASONS FOR JUDGMENT
The proceedings
Ms Maine (the wife) and Mr Kalantari (the husband) were parties to litigation in respect of property settlement and parenting issues. The proceedings originally were listed for trial for five days commencing on 10 February 2020. On 13 February 2020 the parties consented to final parenting orders in relation to their two children.
A substantial issue in the property proceedings was the wife's post-separation use of funds drawn down on mortgage accounts. The husband sought that an amount of $622,179 be "added back" to the list of assets and/or taken into account pursuant to section 79(2)(o) of the Family Law Act 1975 (Cth) ("the Act"). At the commencement of the trial on 10 February 2020, counsel for the husband objected to the admission into evidence of schedules of the wife's post-separation expenditure which had been prepared by an assistant to her solicitor. These schedules were served on the husband's solicitor on 29 January 2020, purportedly in reliance upon section 50 of the Evidence Act. In my view the husband's objection was soundly based, as he and his lawyers had not been provided with "reasonable notice" for the purposes of this section.
Accordingly, the proceedings were bifurcated and, as noted, I made final parenting orders by consent on 13 February 2020. Also on 13 February 2020 I heard competing applications for interim orders in relation to the sale of two parcels of real estate. I delivered judgment and made such interim orders on 21 February 2020. Also on 21 February 2020 I listed the property settlement proceedings for trial on 29 and 30 June 2020 and made directions in preparation for this hearing. There was no suggestion whatsoever from the husband's then legal representatives that two days would be an insufficient amount of time to deal with the property settlement proceedings.
The husband failed to comply with directions for the filing of his affidavit evidence by 25 March 2020 and obtained an extension of time until 1 May 2020. In March/April 2020 the husband terminated his retainer agreement with SS Company and engaged Owen Hodge Lawyers. The husband and his former solicitor were and continue to be in dispute as to unpaid legal costs.
On 8 May 2020 the husband filed an Application in a Case, by which he sought to vacate the trial dates of 29 and 30 June 2020. The husband relied upon the change in his legal representation and asserted that the trial would occupy four days. The husband complained that no directions had been made to enable the trial to proceed by way of Microsoft Teams. The husband and his lawyer apparently elected to disregard my practice of making all such necessary directions, in a standard form, in preparation for trials by way of Microsoft Teams.
The application to vacate the trial dates was opposed by the wife but, nevertheless, I allocated a fresh hearing for four days to commence on 13 July 2020. I was unpersuaded that any disadvantage would flow to the wife by such a delay of approximately two weeks.
On 16 July 2020 SS Pty Ltd filed an Amended Statement of Claim against the husband in the Local Court. SS Pty Ltd sought payment from the husband of a sum of $103,312 on account of unpaid legal costs. In his affidavit of 22 December 2020 Mr VV deposed that his company was statute barred from filing an application for assessment of costs. Mr VV deposed that a hearing was listed in the Local Court on 2 March 2021 but this court has not been advised of the outcome.
On 18 May 2020 SS Pty Ltd filed an application for assessment of costs in the Supreme Court. The amount sought by SS Pty Ltd was $91,189. A Certificate of Determination of Costs dated 23 October 2020 by the Supreme Court specified that costs due to Mr VV's firm from the husband amounted to $92,101.
On 29 October 2020 I delivered judgment and made final orders for alteration of property interests. On 26 November 2020 the wife's solicitor forwarded to the court an Application in a Case, whereby she sought an order that the husband pay to her a sum of $52,110 on account of her costs in respect of the property settlement proceedings. This application was sealed on 7 December 2020 and served on the solicitor for the husband, together with a supporting affidavit, on 8 December 2020.
In accordance with my standard practice in relation to costs applications, I made directions in chambers for the filing of material by each of the parties. I reject the contention of the solicitor for the husband that he "was not afforded procedural fairness" in respect of the making of these directions.
On 23 December 2020 SS Pty Ltd filed a Notice of Intervention by Persons Entitled to Intervene, together with an affidavit of Mr VV sworn on 22 December 2020. On 8 February 2021 I directed that SS Pty Ltd serve this Notice and affidavit on the husband and the wife. I directed also that SS Pty Ltd file and serve written submissions which set out the basis of the claim for intervention in the costs proceedings between the husband and the wife.
I received such written submissions from counsel for SS Pty Ltd on approximately 12 February 2021. Counsel for the husband provided written submissions in reply on 22 February 2021 and the solicitor for the wife advised by letter dated 22 February 2021 that she did not wish to be heard on this issue.
In his Response to Application in a Case filed on 21 December 2020 the husband sought a dismissal of the wife's application for costs. Additionally, the husband sought leave to make an application that the wife pay his costs of $50,000 incurred in respect of the bifurcation of the proceedings and $20,000 with regard to her Application in a Case.
The standing of SS Company to intervene in the costs application
Section 92 of the Family Law Act provides as follows:
92 Intervention by other persons
(1)In proceedings (other than divorce or validity of marriage proceedings), any person may apply for leave to intervene in the proceedings, and the court may make an order entitling that person to intervene in the proceedings.
(1A)In divorce or validity of marriage proceedings, a person in relation to whom an order has been made under subsection 69W(1) requiring a parentage testing procedure to be carried out may apply for leave to intervene in the proceedings, and the court may make an order entitling the person to intervene in the proceedings.
(2)An order under this section may be made upon such conditions as the court considers appropriate.
(3)Where a person intervenes in any proceedings by leave of the court the person shall, unless the court otherwise orders, be deemed to be a party to the proceedings with all the rights, duties and liabilities of a party.
It is immediately apparent that the granting of leave to SS Pty Ltd involves an exercise of discretion. As such, SS Pty Ltd should have filed an Application in a Case in accordance with Rule 6.05 of the Family Law Rules, assuming that he has standing to intervene in the costs application.
In my view, SS Pty Ltd lacks standing to intervene in the costs application between the husband and the wife. Further, I consider that there are matters which militate against SS Pty Ltd in the exercise of discretion.
Standing
The written submissions filed by SS Pty Ltd placed reliance on section 79(10) of the Family Law Act which provides as follows:
(10)The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):
(a)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;
(aa) a person:
(i)who is a party to a de facto relationship with a party to the subject marriage; and
(ii)who could apply, or has an application pending, for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship;
(ab)a person who is a party to a Part VIIIAB financial agreement (that is binding on the person) with a party to the subject marriage;
(b)any other person whose interests would be affected by the making of the order.
Relevantly, the wording of this sub-section makes clear that a creditor of a party is entitled to intervene in extant proceedings pursuant to section 79 if an order for alteration of property interests would prevent that person from recovering his or her debt. In the present case, the section 79 proceedings between these parties were finalised by way of Orders made on 29 October 2020. Those Orders have been entered into the court record and carried into execution.
In Bailey v Marinoff (1971) 125 CLR 529 at 530 the High Court of Australia, (per Barwick CJ) said:
Once an order disposing of the proceedings has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed ...
In Vadisanis v Vadisanis (2015) FLC 93-671 the Full Court identified limited exceptions to this rule, in the following terms:
34.Notwithstanding the principles above, there are some limited circumstances in which a court may reopen its own orders. For example in DJL v Central Authority, Callinan J acknowledged a narrow class of exceptions that may warrant the reopening of a matter following judgment and perfected orders:
189.The decisions of the majority in [Bailey v Marinoff] and [Gamser v Nominal Defendant] confirm that intermediate appellate, and certainly other statutory courts (absent clear provision to the contrary) lack inherent power to re-open perfected orders disposing of proceedings. Those authorities have not been doubted in this Court. The stated exceptions to this general rule are few and rarely found in practice. On the current authorities they are confined (statute apart) to the correction of formal errors and the like, fraud, or failure to give a party a hearing. ...
35.It must be noted that the exceptions to the general rule are rare. In State Rail Authority (NSW) v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29; 42 ALR 289 the High Court held at CLR 38; ALR 296 that although there is "no doubt" that there is a power to vacate its own orders, "it is a power to be exercised with great caution" and that "the circumstances that will justify a rehearing must be quite exceptional." This was echoed in Burrell v R (2008) 238 CLR 218; 248 ALR 428; [2008] HCA 34, where the High Court stated that when considering whether perfected orders can be reopened, the "underpinning consideration" is the principle of finality of litigation [15].
In Guinness and Guinness (No. 2) [2008] FamCAFC 100 the Full Court (Coleman, Boland and Thackeray JJ) said:
17.The principles relevant to this application are subject of well settled law. The Court is functus officio when it has determined a case and orders are regularly entered. However the doctrine has well recognised exceptions. It has long been recognised that an accidental slip or omission or an ambiguity or infelicity of expression in an order can be amended under the so called "slip rule" (see now r 17.02 of the Family Law Rules 2004 ("the rules")). The other exception to the doctrine is if a consequential order (referred to as a machinery order) is required to give effect to the orders made. A court is not at liberty to amend orders if the new order would affect substantive rights (a substantive order).
Their Honours referred to the decision of the Full Court in McDonald and McDonald (1976) FLC 90-047 and quoted with approval the following passage:
However, in McDonald and McDonald (1976) FLC 90-047, the Full Court held that "there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party". This view was followed in Kaljo and Kaljo (supra) and more recently in Molier and Van Wyk (1980) FLC 90-911. The Court derives such power from sec. 80 of the Family Law Act. An application might be made for the Court to exercise the power even though liberty to apply had not been reserved expressly.
In my view the Orders sought by SS Pty Ltd far exceed what might reasonably be regarded as "machinery" or "consequential" orders which are necessary to give effect to the Orders made pursuant to section 79 on 29 October 2020. The Orders sought by SS Pty Ltd would affect substantive rights of the husband, as determined by the Orders of 29 October 2020.
SS Pty Ltd may well have had a basis for seeking leave to intervene in the section 79 proceedings between the husband and the wife. He made no such application, however, and cannot now intervene in completed proceedings which render the court functus officio. The present proceedings between the husband and the wife are brought pursuant to section 117 of the Act.
It may well be the case that SS Pty Ltd has an equitable lien over the funds payable to the husband from the sale proceeds of the Suburb H property. SS Pty Ltd carried out legal work for the husband for which he is yet to be paid and, as such, may well hold a "fruits of litigation" lien over those funds. In my view, however, this court lacks jurisdiction to make the orders sought by SS Pty Ltd in support of his equitable lien.
The exercise of discretion
As set out above, SS Pty Ltd has instituted proceedings in both the Local Court and the Supreme Court so as to obtain payment of his costs from the husband. As such, SS Pty Ltd has made two elections as to venue and now seeks to pursue his claim in a third jurisdiction.
Further, the husband disputes the quantum of legal costs properly payable by him to SS Pty Ltd. This court cannot predict the outcome of contested proceedings in the Local Court or the Supreme Court, yet the orders sought by SS Pty Ltd purport to prevent payment to the husband of the maximum amount of his costs claim. Significantly the orders sought by SS Pty Ltd would result in a sum of $198,016.11 being held by the Registry Manager, in some unspecified capacity, for an indefinite period.
Finally, SS Pty Ltd withheld his files after the husband terminated his instructions and caused inconvenience to both the wife and the court. It was open to SS Pty Ltd to seek leave to intervene in the section 79 proceedings at that point but he elected not to do so and, instead, withheld his files.
The competing costs applications of the husband and the wife
It is clear that neither party is yet prepared to move past their acrimonious approach to the breakdown of their relationship and to this litigation. Their affidavits and written submissions were replete with criticisms of the other party and include dissections of the evidence adduced at trial. The husband and his legal representatives purported to advise me of my intentions when I made the Orders on 29 October 2020. In short, the parties approached the competing applications for costs through the prism of suspicion which characterised the substantive litigation.
Approach to these proceedings
Applications for costs are to be determined by reference to section 117 of the Family Law Act. Section 117(1) provides that each party shall bear his or her own costs, subject to certain exceptions which have no relevance for present purposes. Section 117(2) provides that a court may make such an order for costs as is considered just, if it is of the opinion that circumstances exist which would justify such an order.
Section 117(2A) sets out the matters which a court must consider in determining whether circumstances exist which justify an order for costs. This sub-section provides as follows:
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings
The wife holds sessional employment as an educator. At trial she gave uncontradicted evidence that her anticipated income from this employment would be $60,000 to $70,000 per annum. In her Financial Statement of 25 March 2020 the wife deposed to an average weekly income of $1,389 and expenses of $2,290. The wife's weekly income included $327 by way of Centrelink benefits.
In my Reasons for the Judgment I concluded that "the husband's financial position remained unclear at the conclusion of the trial". I noted, however, "whatever may be the actual level of his current income, he holds qualifications and experience which equip him well to take on employment or establish a business". The husband's true financial circumstances remain unclear at the present time.
The husband relied upon the fact that the Suburb B property sold on 19 October 2020 for $725,000, whereas this asset was found to have a value of $575,000. This finding was based on an agreement between the parties and not on my conclusions. I heard no competing evidence as to the valuation of this property.
The result is that the wife received from this sale a gross amount of $150,000 in excess of the value of the property as agreed by the parties. The wife deposed that these sale proceeds were applied to the reduction of D Bank debts.
There was no evidence as to the net amount which the wife received from this sale in excess of the agreed value for this property. The fact is, however, she alone gained the benefit of this greater sale price for the Suburb B property.
The wife deposed that the C Town property had sold at a price of $100,000, subject to an exchange of contracts. This property was found to have a value of $141,500 pursuant to an agreement between the parties.
Section 117(2A)(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
Neither party was in receipt of a grant of legal aid.
Section 117(2A)(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
Each of the parties relied heavily upon alleged conduct of the other in support of the respective applications for costs. I did not understand the submission on behalf of the husband, to the effect that the wife is unable to rely upon his conduct for present purposes because I made no findings as to the matters of which she now complains in my Reasons for Judgment. Section 117(2) mandates that the court have regard to the conduct of the parties when considering whether it is just and equitable in all the circumstances to make an order for costs.
The wife complained of the husband's conduct in relation to the following issues:
1.the sale of the Suburb B and C Town properties
2.full and frank disclosure
3.allegations of extravagant spending on her part after separation
4.an allegation that she transferred matrimonial funds to her daughter Ms M and/or her daughter and her ex-husband Mr M
5.an allegation of apparent improper conduct in relation to the D Bank mortgage refinance
6.the application to vacate the hearing dates of 29 and 30 June 2020
7.the orders sought in the Amended Initiating Application filed on 19 December 2018 and the Case Outlined dated 10 July 2020.
The sale of the Suburb B and C Town properties
Orders were first made in relation to the sale of these properties on 12 March 2018. Inter alia, these Orders provided a mechanism for resolution of disputes in relation to the appointment of selling agents and the sale price.
The husband raised issues with the selling agents and sale price in respect of both of these properties. He refused to adhere to the dispute resolution process provided by these Orders and, instead, elected to initiate further litigation by filing an Application in a Case. Ultimately these properties were sold pursuant to further interim orders which I made on 21 February 2020, following another contested hearing.
In my Reasons for Judgment of 29 October 2020 I noted that a number of orders have been made for the sale of the Suburb B and C Town properties. I observed that "each party blamed the other for non-compliance with these Orders". It may be that the husband was more recalcitrant in this regard than was the wife but, in my view, neither party can escape criticism for the delay in the sale of these properties.
2. and 3. Full and frank disclosure and allegations of extravagant spending by the wife after separation
Each of the parties alleged that the other failed to make full and frank disclosure. I have noted above my conclusion in relation to the husband's true financial position and no greater clarity exists at the present time. On the other hand, the wife attempted to provide a breakdown of her post-separation expenditure from mortgage drawdowns only by way of schedules served upon the husband's solicitor twelve days prior to the February 2020 trial dates. The husband and his solicitor were permitted only twelve days, including weekend time, to examine and verify these schedules.
In my view, the wife's contention that the husband could have conducted his own analysis of the relevant bank statements and other documents is no answer to his complaint of late service of these schedules. The wife withdrew and spent these funds and, accordingly, it fell to her to explain the fate of this money.
The husband's deep suspicions in relation to the wife's post-separation expenditure led to the preparation of two reports from forensic accountants and the issue of multiple subpoenae. Ultimately, the husband reduced the amount which he sought to be included as an asset from $622,179 to $59,000 plus "a portion of $101,000". The wife spent $59,000 from funds drawn down on mortgage accounts for the purposes of her legal fees. The sum of $101,000 was the total which she spent in department stores after separation. I set out in my Reasons for Judgment the basis upon which I declined to add back any part of this amount of $101,000.
The husband was served with the schedules more than five months before the July 2020 trial dates but persisted with his allegations of inappropriate spending of an amount of $622,179 until final submissions. I extend credit to his counsel for the proper concessions which were made finally at that time.
I am not prepared to trawl through the myriad of correspondence between the parties' solicitors in relation to the production of documents and disclosure of information. In my view, it is sufficient to observe that there was tardiness on the part of both.
Allegation of transfer of matrimonial funds to Ms M and Mr M
The husband persisted with this allegation until the end of the trial, despite an effective absence of evidence of any such transfer of matrimonial funds. The wife adduced evidence from both her daughter and Mr M and the husband required both of these witnesses for cross-examination. They both clearly denied the husband's allegations in their affidavits and were entirely unshaken in
cross-examination. It seemed to me to be highly unlikely that Mr M, as a solicitor and officer of the court, would provide false evidence in support of the case of the mother of his ex-wife.
Allegations of impropriety in relation to the D Bank mortgage refinance
Effectively, the husband accused the wife of improperly and deceitfully obtaining his consent to a mortgage advance far in excess of the amount agreed by the parties. The husband elected not to cross-examine the mortgage broker who arranged this refinance and who had provided an affidavit.
This allegation was abandoned only in final submissions. Counsel for the husband said words to the effect:
A curious document was sent from the university at the time of the refinance but it does not track into the section 79(4) exercise.
Again, credit is due to counsel for the husband for this appropriate concession.
The husband's application to vacate the June 2020 trial dates
As noted, I vacated the dates of 29 and 30 June 2020 and allocated a fresh fixture for four days commencing on 13 July 2020. It is hardly the fault of the wife that the husband elected to enter into a dispute with his former solicitor and terminate his instructions. To state the obvious, the wife had no control whatsoever over the decision of the husband's former solicitor to retain his files.
Nonetheless, the husband's new solicitor apparently expected the wife to sacrifice the two-day trial fixture which had been agreed by his former lawyer. In my view the husband was unreasonable in requiring such a concession from the wife, in circumstances where his alleged difficulties had no connection whatsoever with any action on her part.
The case conducted by the husband
These proceedings commenced in the Federal Circuit Court in 2016 and Amended Applications and Responses were filed by each of the parties prior to the final hearing. It was never made clear to me how "the shift in the [the husband's] position" increased the legal costs incurred by the wife.
Section 117(2A)(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
The written submissions on behalf of the wife relied upon the husband's Application in a Case of 10 April 2018, whereby he sought inter alia the discharge of an Order made on 12 March 2018. This Order required him to repay a sum of $31,000 which he withdrew from a bank account in the name of the wife on 5 October 2017. The husband also sought orders to vary the provisions for sale of the Suburb B and C Town properties.
The husband never repaid the sum of $31,000 and delays with the sale of the properties persisted until 2020. It is difficult now for me to identify the consequences of this Application in a Case in the overall outcome of the proceedings and the costs incurred by each of the parties.
Section 117(2A)(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
Neither party was wholly unsuccessful in the proceedings. Section 117(2A) prescribes as a relevant consideration "whether any party to the proceedings was wholly unsuccessful in the proceedings". In my view this subsection does not mandate a consideration as to whether a party was wholly unsuccessful in relation to a particular issue in the proceedings.
Section 117(2A)(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
Each of the parties relied upon written offers of settlement. The wife relied upon an offer contained in a letter dated 12 July 2019 and the husband on a proposal dated 26 June 2020.
The wife's offer of 12 July 2019 provided essentially as follows:
1.the parties effect the sale of the Suburb H, Suburb B and C Town properties
2.each of the parties receive 50% of the net proceeds of such sale
3.the husband receive a splitting order of $81,749 in respect of the wife's Z Super benefit.
The written submissions on behalf of the husband stated that he rejected this offer for the following reasons:
1. in July 2019 he was unaware of the net pool of assets
2. he considered that the wife had failed to make full and frank disclosure
3.this proposal "did not take into account the substantial sums removed by the wife post-separation"
4.he was unaware of the balance of "the cross collateralised mortgages secured over the Suburb H property"
5.he was unaware whether a debt of $168,329 to the wife's former solicitor was secured over the Suburb H property.
In his affidavit of 21 December 2020 the husband deposed as follows:
13.On 19 July 2019, I instructed SS Company to respond to Ms Maine's offer that such offer was rejected because I was not in a position to establish what the nett pool of assets were due to Ms Maine's failure to make full and frank disclosure. Exhibited hereto at page 17 to 18 of KALANTARI-02 is a copy of this letter.
14.I say that the effect of the offer made 12 July 2019 was not a 50/50 offer. It was only a 50/50 offer if I was to ignore the material issue of the unaccounted funds unilaterally withdrawn and expended that remained unexplained as at July 2019. It was not until Ms Maine's affidavit of 26 March 2020 that admissions by her were made as to this expenditure.
15.The offer of settlement from Ms Maine provided for provisions that I could not accept, namely:
(a)Proposed order 3.2 – "to discharge the mortgage and any other encumbrances affecting the Suburb H property". This concerned me at the time as I had no knowledge of the balances of mortgages cross collateralised over the Suburb H property. I later learned that a caveat for her legal fees was secured over Suburb H.
(b)Proposed order 4.1.1 – "all interest charged to the D Bank loan accounts BSB … number …35 and BSB … NUMBER …02". These loans are cross collateralised and Suburb H was security for the loans in Ms Maine's sole name, balances of which were unknown by me at the time due to Ms Maine's lack of full and frank disclosure.
(Emphasis in original)
In a letter dated 3 September 2019 the husband's solicitor indicated that he was "unable to fully consider this offer" because the wife had failed to provide certain financial information. The husband complained that the wife had not provided her tax returns, land tax assessments, TT Credit Card and WW Credit Card statements, UU Frequent Flyer information and "benefits received since 2015 as a property owner of the property at J Street/C Town".
As submitted on behalf of the wife, the husband was tardy in providing to her his tax returns and at no point did he advance clear evidence of his true financial position. Further, there was no evidence that any land tax was payable or that the wife held a TT Credit Card or WW Credit Card. I am at a loss to understand how "benefits received since 2015 as a property owner" of the C Town property would be a material consideration in his decision to reject or accept this offer.
The husband deposed that he signed D Bank mortgage documents in 2007, when all of the parties ANZ bank loans were refinanced and cross collateralised with the three properties as security. The husband gave no satisfactory explanation as to why he could not make his own enquiries as to the extent of the parties' indebtedness with D Bank in 2019.
The husband saw fit to make no further enquiries of the wife in relation to the specifics of this offer. He responded only that he "was unable to fully consider this offer", as set out above. It appears that he elected to make no enquiries himself, particularly in relation to the level of the parties' debt to D Bank.
On 26 June 2020 the husband made an open offer of settlement as follows:
1.That there be property adjustive orders made pursuant to section 79 of the Family Law Act 1975 (Cth) to the effect that the wife receive 60% of the net pool and the Husband receive 40% of the net pool.
2.This position is subject to the Court Adding Back the sum of $622,179 (or such other sum as ultimately determined by the Court or agreement between the Husband and Wife) or alternatively dealing with this issue by providing to the Husband an additional adjustment under section 75(2)(o) of the Family Law Act 1975 (Cth).
3.It is therefore proposed that cross examination at the Trial due to commence on 13 July 2020 be limited to the Add Back issue.
4.Otherwise the Trial could be further contained with submissions being made and directed to the real issues.
As noted above, I included a sum of $59,450 as an asset, being legal costs paid by the wife from funds drawn down on mortgage accounts. The wife's motor vehicle and household contents were also purchased from this source and appeared as assets in the Balance Sheet. Accordingly, a total amount of $79,450 from mortgage drawdown funds ultimately appeared in the Balance Sheet. That amount fell far short of the sum of $622,179 to which reference was made in the husband's open offer of settlement.
While the husband's offer allowed for judicial determination or agreement as to the treatment of these drawn down funds, he had pursued a substantial sum by way of addback doggedly for a considerable time. Such was the husband's determination that the wife had secreted funds after separation that he commissioned reports from two forensic accountants. The husband was prepared to make appropriate concessions only at the conclusion of the trial.
In my view, it is thus highly improbable that the parties would have reached agreement as to the treatment of these drawn down funds. That being so, acceptance by the wife of the husband's offer would not have prevented the matter from proceeding to trial.
Leave to the husband to lodge a costs application out of time
The wife's application for costs was sealed on 7 December 2020 and served upon the husband on 8 December 2020. On 21 December 2020 the husband filed a Response to Application in a Case, by which he sought inter alia an order that the wife pay his costs of $50,000 being "his costs of bifurcation of the proceedings".
In his written submissions the husband's counsel stated "had the husband been aware that the wife was agitating for a costs order, then he would have filed his application in time". It is thus clear that the husband's application for costs was brought only in retaliation to that of the wife.
By letter dated 14 December 2020 the husband made an open offer to settle the costs issue as follows:
1.That the Husband pay to the Wife a sum of $15,472.74 from his entitlements following the sale of the Suburb H property.
2.That the Wife's Application in a Case filed 26 November 2020 be withdrawn and dismissed with no order as to costs, with the intent that the parties pay their own costs of the Application.
3.Otherwise there be no orders as to costs.
4.That the parties hereby mutually release and indemnify each other from all claims, they have had or otherwise would have of any kind whatsoever.
Section 117(2A)(g) such other matters as the court considers relevant
In my view, there are no additional matters which are relevant to the costs issue.
Conclusion
Doing the best I can at this point to sift through and weigh up the parties' various complaints against each other, it seems to me that the following matters ultimately are relevant to the exercise of discretion pursuant to section 117:
1.the husband's failure properly to consider and pursue the wife's offer of settlement made on 12 July 2019
2.the husband's dogged post-separation pursuit of allegations of improper spending by the wife; transfer of matrimonial funds to Ms M and Mr M and irregular activity in relation to the D Bank mortgage refinance until the end of the trial
3.his seeking of leave to bring a costs application out of time, apparently only as a retaliatory move against the application of the wife
4.the offer of the husband to pay a sum of $15,742.74 on account of the wife's costs
5.the Suburb B and C Town properties yielded sale proceeds respectively in a greater and lesser sum than their values as found in the Reasons for Judgment.
Having regard to these matters, it seems to me that circumstances exist which justify an order for costs in favour of the wife. I do not regard the wife to be in a position whereby she is beyond all criticism in the overall conduct of the proceedings, for reasons to which I have referred above. Accordingly, I conclude that the husband should make a contribution to the costs of the wife. I will fix this amount at $20,000 and allow 28 days for payment by the husband.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 7 April 2021.
Associate:
Date: 7 April 2021
0