Kasun & Kasun (No.2)

[2021] FCCA 513

FEDERAL CIRCUIT COURT OF AUSTRALIA

Kasun & Kasun (No.2) [2021] FCCA 513

File number(s):	SYC 5874 of 2015
Judgment of:	JUDGE B SMITH
Date of judgment:	19 February 2021
Catchwords:	FAMILY LAW – COSTS – indemnity costs – property – obsessive and unreasonable defence by solicitor – wholly unsuccessful
Legislation:	Family Law Act 1975 (Cth)
Cases cited:	Knight v FP Special Assets Ltd (1992) 174 CLR 178 Lambert & Jackson [2010] FamCA 357 Penfold v Penfold (1980) 144 CLR 311 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Number of paragraphs:	40
Date of hearing:	19 February 2021
Place:	Sydney
Solicitor for the Applicant:	Mr O’Kane
Counsel for the Respondent	The Respondent appeared in person

ORDERS

SYC 5874 of 2015

BETWEEN:

MS KASUN

Applicant

AND:

MR KASUN

Respondent

ORDER MADE BY:	JUDGE B SMITH
DATE OF ORDER:	19 FEBRUARY 2021

THE COURT ORDERS THAT:

1.The Respondent (husband) is to pay the Applicant (wife) $75,000 by way of assessed lump sum costs within 28 days.

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 under the pseudonym Kasun & Kasun (No 2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUDGE B SMITH:

1. These are oral reasons for decision in respect of an application for costs.  Before I go on, I note that the respondent indicated he was going to send some more material.  He has sent through the transcript.  That does not assist me. 

2. This is a cost application by the applicant wife in respect of a property matter which was commenced by the wife on 7 September 2015 following separation in about April 2011 and divorce on 19 November 2015.  The final hearing in this matter did not occur until 20 and 21 August 2020. 

3. Judgment was delivered by me orally on 24 August 2020.  That judgment speaks for itself, and these reasons and the questions relating to costs should and must be read together with the findings and reasons and the orders therein.  Except where necessary, I will not refer to that again. 

4. The wife seeks costs of the proceedings on an indemnity basis or, otherwise, on a party and party basis, based both partly upon offers of compromise which she says she has substantially exceeded, but not merely on that basis.  She also relies upon the husband’s general conduct throughout the proceedings up to and including the hearing, and as I understand it, up to and including his position on this costs application.

5. The husband is a professional.  He was previously advised in the strongest terms prior to the hearing by the Court that he should consider having someone else act for him.  Nevertheless, he continues to act for himself.  I note that the husband’s case at final hearing, prior to final oral submissions, was that the wife should receive, in effect, no adjustment in her favour and that he should keep the former matrimonial home, all the other property in his name, and that she should keep the small amount of property in her name. 

6. A significant part of his reasoning was, as set out in the primary judgment at paragraphs 46 to 52, that when they were married, the wife agreed to pay one week of the mortgage repayments every four weeks, but when she got pregnant and then gave birth to their child, she ceased work and did not make those payments.  Now, I accepted that she may well have agreed to that arrangement prior to getting pregnant, but I rejected the argument that ceasing work and not making the payments post-childbirth amounted to deception which disentitled the wife to any property adjustment as if she had breached a fundamental term of a commercial contract.

7. I rely upon what I said in the judgment.  That is relevant for two reasons.  Firstly, as I found in the judgment, there were actually very few disputes about the fact.  I refer to paragraph 12:

   While this was a relatively high conflict piece of litigation, which has taken five years to get to hearing, there were, in the eventuality of the case as it ran ultimately, very few disputes about the primary facts.  The major disputes were about the proper interpretation of and application of the law to those facts.

8. The example of the husband’s argument above is an example of the kind of argument that he was running throughout. 

9. I am comfortably satisfied that the case was conducted over five years, and was not able to resolve because the husband, though he is a professional (and I give him the benefit of the doubt to this extent because it is the better alternative) has fixed verging on obsessional views which were, frankly, preposterous about the law.

10. I accept that he appears to have genuinely believed that he could run a commercial argument in a family law case, although I note that even in commercial law, given that he voluntarily contributed to her getting pregnant, it would have been not a good argument.

11. It is also relevant because the husband’s submissions in his defence against the wife’s applications for costs is based primarily on the premise that the primary Judgment is fundamentally flawed, and I note that the husband has, again, as I understand his written submissions, raised this argument about deception and I will not re-determine it, but the husband was never going to settle this case except on the one offer he made, which was that he keeps everything in his name including the former matrimonial home, which was the joint asset, and she gets $20,000.  That is the one offer he made. 

12. Now, the husband has appealed.  If I am wrong in my judgment, presumably my decisions on costs will also be set aside, but until then, my cost decision will proceed on the basis that my primary decision is correct.  The husband was informed of this fact during all submissions, but nevertheless, having acknowledged that, still proceeded to make his submissions primarily on the basis of attacking the Court’s findings and attacking the wife. 

13. In context, I note that the husband ran a case that the wife is fundamentally a liar, a fraud, and a cheat, and a deceiver who should get nothing, but the only adverse credit findings made were made against the husband, and I note they were serious adverse credit findings.

14. They included findings he had prima facie obtained financial benefit by deception from a bank and, having been given a section 128 certificate nevertheless was not willing to tell the truth.

15. So we have a man who is running a case incessantly and obsessively, alleging fraud when it seems that the only fraudulent conduct has been conducted by him, and that is relevant to the determination of costs, as I shall go back to later. 

16. The parties’ net positions at hearing were set out in the judgment, and I note what is at paragraph 24. 

17. Including superannuation and addbacks of $30,000, the net position was just over $2 million.  The former matrimonial home was valued by agreement at $900,000 with a then mortgage of $275,000.  The majority of the other assets were in the husband’s property empire accrued post-separation but using the former matrimonial home as security.  That did increase the assets significantly from 2011, but there is nothing surprising about that.  The Court’s orders were that the husband pay the wife $572,000, that he take over the mortgage or discharge her liability, and the wife transfer to the husband her interest in the former matrimonial home. 

18. Otherwise, she kept her part interest in a property and he kept his interest in many properties, and they otherwise kept their own possessions.  So the orders related to the former matrimonial home, and the dispute was largely about the former matrimonial home, as were the offers. 

19. In her initiating application filed on 7 September 2015, the wife sought the sale of the former matrimonial home.  After the payment of the then mortgage of $330,000, the remainder to go to her.  As the former matrimonial home was probably worth less than it is today and I note that even if it was worth $900,000, that remainder would still be just shy of what she got. 

20. Now, that is a bit of a complicated calculation and I do not give an enormous amount of weight to that, but on 1 November 2017, the wife offered to resolve the matter on the basis that the former matrimonial home be sold, and after the then $302,000 approximately that would have gone for the mortgage, that she get 55 per cent of the net, which would have been just around $300,000.  On 3 September 2018, she made an offer that she would get $400,000 and he gets the former matrimonial home.  Now, there was uncontested evidence at the conclusion of day 1 of the hearing, an open offer was made by the wife that she would receive $500,000 and the husband get the former matrimonial home with all else as it was.

21. The evidence before me is the only offer the husband made throughout the proceedings was $20,000, with him to get the house.  At the end of the hearing, his final position was that the wife should get $150,000 and he got the former matrimonial home, and that was in the context where he must have been aware he was in significant difficulty, given the comments I had made, the 128 certificate, and the fact that it is clear that he was not being honest in my view, and he knew it, and that it was clear that I was not going to accept his arguments.

22. Now, of course, if he thinks he is right and he wins an appeal, that is fine, but as I have said, I am giving him the benefit of the doubt and accepting that although a professional, he just has no idea what the law is, because the other alternative is that he has intentionally and maliciously abused the processes of this Court for five years to delay and gain additional advantage.  Now, as I have said, I have not made that finding and I give him the benefit of the doubt that he really has an obsession or fixation that he should get everything and she should get nothing.

23. Of course, whilst that is not the same as intentional abuse of process, when it comes to the question of costs, it is a highly relevant factor.  Now, the husband only raised two arguments that seemed to be potentially relevant to me.  He said it was not known what the former matrimonial home was worth when the offers were made, which meant, as I took it, that it could not be clear the wife had beaten her offers, and secondly, his argument was there was an inherent uncertainty about what the final pool would be, so he could not make a rational decision, and he also noted that the reason she got as much as she did was, in part, because he had done so well with property investing. 

24. Now, dealing with the second issue first.  Any uncertainty is an inherent risk in litigation.  The pools go up, the pools go down.  If uncertainty was a factor which meant that offers were irrelevant, then, since there is always uncertainty, that would defeat the provisions of the legislation which say that offers can and should be made in some circumstances, and should be taken into account.  The other fact is that the pool went up not through a random event but because of the husband’s actions, of which he was aware, and for which he received credit for in the judgment and orders. Most significantly, he was using the former matrimonial home as part of the basis or seed funding for what he was doing, and he knew what he was doing. 

25. I do not see that is a basis for saying these offers are not relevant.  I also note that for the wife to have not been better off on her offer of 55 per cent after the mortgage was taken off on 1 November 2017. The house would need to have been worth, as I calculate it, of 0.55 (value of former matrimonial home minus $300,000) equals $572,000.  Now, the best mathematics I can do, that means the house would have had to have been worth more than $1.34 million, and the husband agreed that was unlikely. 

26. Of course, the fact is if the house was worth less, the wife received more because the value of the house went up.  Now, these are all factors to be weighed.  This is not a jurisdiction such as a civil jurisdiction in New South Wales under the Uniform Civil Procedure Rules where, if you beat the offer by a few dollars, you get a special costs order.  These are all factors to be weighed, and I will say that I do give significant weight to those offers because receiving 55 per cent of the net after the mortgage was paid is less of a percentage than she has ended up getting, so I think it is a relevant factor.

27. But the more relevant factors are, in my view, is the husband’s conduct:  the husband’s conduct in clearly taking the view that she was entitled to nothing and he was going to fight this to the bitter end, and the husband’s decision to give what I consider to be false evidence during the hearing. 

28. I turn, then, to the power to make a costs order, which is, of course, entirely statutory.  I note Knight v FP Special Assets Ltd (1992) 174 CLR 178 in the High Court. I note the factors under section 117 of the Family Law Act 1975 (Cth). I note what was said in Lambert & Jackson [2010] FamCA 357 about it, and also noting Penfold v Penfold (1980) 144 CLR 311 in relation to giving of false evidence.

29. I turn now to consider the particular provisions of section 117 of the Family Law Act.  Prima facie each party would pay their own costs, there being no distinction between property and parenting matters in that regard.

30. I am required, then, to turn to the question of whether that normal position should be varied.  Pursuant to subsection (2):

31. If, in proceedings under the Act, the Court is of the opinion that there are circumstances that justify in doing so, the Court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of the Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the Court considers just.

32. Under section 117(2A)(a), it says: “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.”

33. I note the husband still has significantly more net assets than the wife and that there is no impediment whatsoever to him meeting a costs order.  There is no legal aid. Subsection (2A)(c) is very significant.  I read it onto the record in full:

    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.

34. In particular, also that:

    (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.

35. I note that the husband has, in my view, been entirely unsuccessful.  It is hard to imagine somebody being more unsuccessful, and his conduct has been conduct of the kind referred to in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.

36. As I have said, I have given the benefit of the doubt and assumed that it is some kind of obsessional issue, but he has not suggested that he is not competent, and having an obsessional belief that you should get what you want and the other party should get nothing does not relieve a party from the principles of Colgate-Palmolive Co v Cussons Pty Ltd.

37. I note, of course, that costs are not punitive.  The purpose of costs is provide compensation to the party who has had to pay costs for having incurred them.  It is not to punish the other party, but when one considers the extent to which there should be unrecovered costs, the conduct of the other party is highly relevant, and in this case, I consider that the husband’s conduct falls fairly and squarely into the kind of conduct considered in cases such as Colgate-Palmolive Co v Cussons Pty Ltd and once taking into account the offers and his conduct to these proceedings, in my view, there is absolutely no doubt this is one of those rare cases where not only should there be a costs order, but the costs should be for indemnity costs. 

38. The wife has set out a figure for indemnity costs in the material provided by her of $83,445.  Given the length of the proceedings, that strikes me as being very reasonable.  Counsel’s fees, given what I saw, are very reasonable.  The other fees appear to be reasonable.  I am not in the position to assess the solicitor’s fees, but over five years, I would have thought they would be reasonable.  I do not have a detailed analysis.  I am not a costs assessor.  I am going to make a lump sum finding, because given the husband’s conduct in this case, I have no doubt that if there is any need to go to a costs assessment, he will continue to battle this, that he will waste the wife’s time and money, and he will waste the Court’s time.  Again, I give him the benefit of the doubt and assume it is because he is suffering from some kind of problem, perhaps, but that does not mean that the wife should continue to suffer for his conduct, and nor does it mean that the Court’s time should continue to be wasted by his conduct.

39. In those circumstances, doing the best I can and noting that the amount claimed seems very reasonable (in fact, rather modest), and given what was involved in the preparation for the trial, I consider that when awarding indemnity costs, the appropriate sum should be $75,000 on a lump sum basis.  I discount the very reasonable sum claimed just to take into account the fact that there has not been a full cost assessment.  I think I am probably favouring the husband a little bit there, but that is the balancing act to the wife of getting a lump sum order.

40. Those are my reasons.  Those are the orders that will be entered.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge B Smith.

Associate:

Dated:       17 March 2021