King and King
[2014] FCCA 534
•6 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KING & KING | [2014] FCCA 534 |
| Catchwords: FAMILY LAW – Property – costs application – costs granted – where access to a property for the purpose of valuation denied. |
| Legislation: Federal Circuit Court Rules 2001 |
| Weir & Weir [1993] FLC 92-338 Ferraro & Ferraro (1993) FLC 92-335 |
| Applicant: | MS KING |
| Respondent: | MR KING |
| File Number: | PAC 2429 of 2012 |
| Judgment of: | Judge Harman |
| Hearing date: | 6 March 2014 |
| Date of Last Submission: | 6 March 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 6 March 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Oliveri Attorneys |
| Solicitors for the Respondent: | Cadmus Lawyers |
ORDERS
IT IS NOTED that there is no appearance by Mr W who has received a subpoena to produce documents filed in these proceedings and has in response thereto filed but it would appear not served a Notice of Objection.
Strike out the Notice of Objection.
Grant leave to the parties and their legal representatives to produce documents produced by Mr W.
Extend time for compliance by Mr W with the subpoena served upon him to close of business 12 March 2014.
In the event that Mr W has not complied with the subpoena by close of business 12 March 2014, then grant leave to the parties in accordance with Federal Circuit Court protocols to re-list the proceedings on 7 days’ notice and upon such re-listing and in the event that compliance has still not occurred and subject to such submissions as may be made on behalf of Mr W should he appear, the Court will in all probability enforce the subpoena including but not limited to issue of a warrant for Mr W’s arrest.
IT IS NOTED that an objection is made by the husband to a subpoena served upon the (omitted) Bank seeking the production of documents relating to a mortgage granted by Mr King over property Property W, which property is the subject of the proceedings and specific Orders sought there in.
Strike out the objection noting that:
(a)It does not raise a proper objection at law;
(b)The documents sought to be produced are clearly relevant and admissible by reference to sections 55 and 69 of the Evidence Act.
The husband shall do all things sign all documents and give all consents, authorities and instructions as may be necessary to allow cause and permit any valuer instructed by the wife to have full, proper and unfettered access to the property Property C, in the state of NSW, and for the purpose of preparing a valuation of that property, such access to be given within 14 days of today’s date.
Grant leave to the parties to apply to relist the proceedings with respect to enforcement or implementation of the above Order on 7 days’ notice and in accordance with Federal Circuit Court Rules protocols.
Confirm the hearing dates allocated to these proceedings, 22-24 April 2014.
IT IS NOTED that the material to be filed by the husband is due to be filed and served by close of business tomorrow.
Extend time for compliance by the husband with the filing of all Affidavit material to be relied upon by him at trial (including valuation evidence) to close of business 21 March 2014.
Certify as to counsel for today’s appearance.
The husband shall pay the wife’s costs of and incidental to today’s listing and determination of the wife’s Application in a Case such costs fixed in the sum of $2,500 and to be paid within 28 days.
In the event that costs are not paid within 28 days of today’s date, then:
(a)Interest shall accrue upon that sum at the rate prescribed by the Family Law Rules and Federal Circuit Court Rules until paid in full; and
(b)The amount and any interest accrued there upon shall represent a charge against all assets of the husband’s and the husband’s interest and entitlement upon completion of proceedings.
Leave is granted to the legal representatives to inspect material produced on subpoena by the (omitted) Bank and Mr W.
IT IS NOTED that publication of this judgment under the pseudonym King & King is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2429 of 2012
| MS KING |
Applicant
And
| MR KING |
Respondent
REASONS FOR JUDGMENT
Before the Court today is an Application in a Case filed by the wife, 11 February 2014.
The wife seeks Orders to facilitate the complete and proper valuation of a property, Property C, so that she might conduct her litigation.
The parties to these proceedings are Ms King, the wife and Applicant and Mr King, the Respondent and husband.
The proceedings were allocated hearing dates by Orders made 5 July 2013. It became apparent in early February that the dates initially allocated 2 to 4 April 2014, were no longer available due to judicial relief commitments in another Registry. As a consequence of those difficulties, my Associate contacted each of the parties or their attorneys to ascertain what dates might be convenient upon vacation of those dates.
After a week or thereabouts, no response was received. Accordingly, judicial leave was cancelled to ensure that the matter could be accommodated within three weeks of the vacated dates rather than a delay of some five to six months. Dates were allocated 22 to 24 April 2014.
On the basis of the dates allocated, no variation of trial directions was necessary. Those trial directions as made 5 July 2013, require that the wife file and serve her material by 24 January 2014 and the husband by 7 March 2014, i.e. tomorrow.
The wife has filed her material in compliance with those directions that is, by and of itself and regrettably a somewhat extraordinary thing in the Court’s experience. However, her case is filed and she is ready to proceed subject to the fact that she has not been able to obtain a valuation of a property at Property C.
The husband opposes access being granted to that property for the purpose of valuation. That is so notwithstanding the obligations as discussed by the Full Court in Weir & Weir [1993] FLC 92-338 and Black & Kellner [1992] FLC 92-287 and a substantial list of other authorities as well as similar decisions, albeit not necessarily in family law litigation, relating to the obligation of full and frank disclosure and as delivered by the Full Court of the Federal Court, High Court, House of Lords and the Supreme Courts of each State.
The husband denies that he has any interest in or that the property at Property C is in any way relevant to these proceedings.
There is a significant dispute between these parties as to what the property pool comprises.
Indeed at the time that the proceedings were listed for trial, as counsel for the wife has pointed out it was noted that there was issue as to whether property in the husband’s hands existed in (country omitted), the wife having produced on that occasion various searches undertaken in (country omitted) suggesting that it is so but which the husband denies.
It is suggested that the value of other parcels of real estate is in issue together with this issue as to the husband’s interest, legal or equitable, in the property at Property C.
The material relied upon in support of the Application in the Case is an Affidavit by the wife’s attorney sworn or affirmed 10 February 2014. It annexes a copy of the last will and testament of a Ms L, being the sister of the husband.
At clause 2 the will appoints Mr King as the sole executor and trustee of the will. At clause 3, it appoints Mr King as the sole beneficiary subject to his surviving his sister, which clearly he has.
A copy of the certificate of title for the subject property is annexed as annexure B. It demonstrates that the sole registered proprietor of the property is the testatrix, Ms King.
In opposition to any Order granting access to the property, it is submitted by Mr King that he has no interest in the property, cannot facilitate access and that in any event, there is a dispute as to the estate and its distribution. In support of same, Mr King points to material also annexed to the Affidavit sworn by the wife’s attorney being a caveat lodged against title of the property by Mr G who by the terms of the will has an interest in revision in the event that Mr King were to predecease his sister.
The caveat alleges “…a legal and/or beneficial interest and/or an interest pursuant to the Family Provision Act 1982”. It is difficult to comprehend how the latter allegation could constitute a caveatable interest as no right or entitlement arises until an Order is made by the Court and the mere ability to make an application asserting a right or title does not create that interest. In any event, the Court is advised that the limitation period for any such claim is one year from the date of death of the testatrix. The caveat was lodged on 14 February 2013. Clearly the testatrix must have passed prior to that caveat. On that basis clearly it is more than a year ago. The Court is advised that no proceedings have been commenced thus they are out of time subject to such application for leave as the legislation permits and subject to it being made and successfully prosecuted.
The opposition to valuation by Mr King is thus curious.
Mr King has an obligation of full and frank disclosure. He has an obligation to faithfully and with candour place before the Court all assets, liabilities, resources and superannuation interests which are referable to him and whether it is interest at law or in equity.
Clearly, Mr King has an interest however it may be defined in the property Property C. He controls the property. He is the executor and trustee of it. It is unclear whether the property is occupied by any person but in any event that is a matter entirely for the trustee seized with responsibility for the property when acting properly and in good faith.
The sole beneficiary under the will is Mr King. On that basis clearly he has at least an equitable if not legal interest to the extent of execution of the terms of the trust created by the will as to 100 per cent of the property.
I am satisfied clearly on the evidence available, that Mr King is in possession, custody or control of the property and thus can facilitate access.
I am satisfied and so find that the property and such interest as Mr King may have even subject to any controversy, dispute or litigation relating to same, is relevant to these proceedings.
Accordingly, the valuation of the property is of some fundamental importance in ascertaining and defining the pool. See for instance, Ferraro & Ferraro (1993) FLC 92-335 and Stanford & Stanford [2012] HCA 52.
The Court cannot proceed to deal with, determine and be satisfied as to the justice and equity of the claim of any party until such time as the Court is aware of the constitution of the pool of property and the legal and equitable interests of the parties. See again, Stanford & Stanford.
In those circumstances the property must be valued. The property cannot be properly valued without access and the only person whose consent to same is required (subject to consent of any tenant if the property is tenanted and notice being properly given to such tenants) is the husband.
In those circumstances and noting further that no Response has been filed and thus the Application is undefended, the Application is irresistible. Accordingly, I will make Orders for access and valuation as sought.
An Application for costs is made consequent upon the determination of the Application in the Case.
Costs are dealt with and determined by reference to section 117 of the Family Law Act 1975 (Cth).
As is submitted in the husband’s case, section 117(1) of the Act creates what is usually referred to as the general rule, being that each party shall pay their own costs to proceedings. Clearly, the only parties to these proceedings are the husband and wife and thus one can infer that it is submitted that the wife should meet her own costs. The wife presses costs. The wife seeks costs on an indemnity basis.
It is important to note the Full Court’s decision in Prantage & Prantage [2013] FamCAFC 105 regarding indemnity costs that case providing a succinct and erudite discussion of authorities from Supreme Courts, Federal Court and High Court on the issue.
I am not satisfied that indemnity costs should follow with respect to this application. However, I am satisfied that clearly an Order for costs should be made. Ultimately, if an Order for costs were made in accordance with schedule 1 of the Federal Circuit Court Rules 2001 – to which I will return shortly – there is little difference on the basis of the quantum of costs sought ($2,500) as to whether the Order is made on an indemnity basis or a party/party basis. I am satisfied the appropriate and less contentious path is a party/party order.
Section 117(2) of the Act reserves the discretion to order costs in circumstances where the Court is satisfied that there is both a justifying circumstance and that it is just and equitable. As the High Court has made clear in Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812, both limbs must be established.
Section 117(2A) of the Act provides a non-exhaustive list of considerations and I will address each of these.
Financial circumstances of the parties
The wife deposes in her Financial Statement albeit filed 7 June 2012, that she is employed as a (occupation omitted) earning an income of $658 per week gross. That is a little over $32,000 per annum.
The husband, by his Financial Statement, deposes that he is a (occupation omitted) earning a gross income of $824 per week. However, what is also clear in the proceedings but cannot be articulated with precision today, is that there are a number of assets available for division between these parties or at least potentially so.
The significant asset of the parties is a property at Property W registered in the husband’s sole name. The husband by his Financial Statement filed 20 August 2012, asserted at that time that the property had a value of $650,000 and was encumbered by a mortgage of $325,000 being one half of its value.
There is issue as to suggested loans to family members of the husband. There are also significant issues as to other property in which the husband has a legal or equitable entitlement including a property in an overseas jurisdiction and the property the subject of the Application in a Case.
Accordingly, and whilst it does not determine the issue, I am satisfied that if an Order were made that the husband:
a)Could meet any Order even if only as a charge against his interest in property as may ultimately be determined in these proceedings; and
b)Would not suffer undue hardship as a consequence of an Order or to the extent that he might, that the hardship suffered by the wife absent an Order would outweigh same.
I am satisfied that the wife would suffer undue hardship if she were required from her own income and resources (she, according to her Financial Statement, owning no property in her name of any substance or significance) if she were required to meet her own costs.
Legal Aid funding
Neither party is legally aided.
Conduct of the parties to the proceedings
That is the substance and the gravamen of the wife’s position. Indeed, it is the fulcrum upon which her Application balances.
The proceedings have been before the Court today principally to determine the wife’s Application in a Case. It has been determined.
The wife has been wholly successful.
The husband has been wholly unsuccessful. Indeed, he could not have been otherwise. The Application was not opposed by a filed Response and it was thus undefended.
The issue that has arisen regarding the husband’s refusal to give access is difficult to comprehend.
The husband clearly has the possession, custody or control of the property. No other person can give access to it. The husband asserts that the property is not relevant, that he does not own it and does not have an interest or a clearly defined interest in the property. That as explained in the reasons given with respect to the determination of the Application in a Case, is a problematic proposition that warrants further exploration at final hearing, being three days of tax payer funded hearing in some weeks hence to assist these parties in bringing their financial arrangements to a conclusion.
In any event, clearly the husband was in a position to accede to that which the wife sought, i.e. for a valuer to have access to the property. Indeed, not only was the husband in a position to give access but if he was acting prudently in accordance with his obligation of full and frank disclosure imposed not only by the Court’s Rules but by the authorities referred to in the principal judgment and properly advised, the Application would not have been necessary. The access would have been granted.
Issues as to whether the property is relevant or the quantum of the husband’s interest if any are separate and distinct to the importance of being able to properly determine present assets which are suggested to be relevant and to establish their value.
Clearly, the opposition to valuation unreasonable as I am satisfied it was, is a justifying circumstance for a costs Order. Put bluntly, the Application would not have been necessary had the husband done that which his legal obligation compels – to grant access to the property. Indeed, he has an obligation to value it himself and in the absence of valuation any valuation evidence of the wife will be unopposed and unchallenged.
The husband has been wholly unsuccessful. He has sought to resist the wife’s Application. He has failed to file any Response which gives him standing to do so but ultimately in any event has failed on the evidence.
Whether the proceeding is necessitated by the failure of a party to comply with a previous order
Orders have already been made for the parties to complete valuation of assets, those Orders having been made in July of last year. That included all parcels of real estate in which the parties hold or are suggested to hold an interest, equitable or legal.
Accordingly, the husband has failed to comply with that Order indeed that obligation to prepare his case and to allow the wife to prepare hers.
Whether a party has made an offer in writing
There is a volume of correspondence annexed to the material making clear that this issue has consumed significant time and proposals regarding valuation made and refused.
Such other matters as the Court considers relevant
Court time has also been taken this morning in dealing with and exploring an Application to vary the hearing dates allocated to the proceedings although no evidence has been offered that would suggest a basis or need for same. In those circumstances I am satisfied that there is some relevance of that fact.
Further, Court time has been consumed this morning – and thus cost incurred on the wife’s part – dealing with objections to subpoena. One objection was raised by the husband regarding access to records produced by a Bank of a mortgage applied for and obtained by the husband over the principal asset of the marriage. That mortgage is entirely relevant and to seek production entirely appropriate.
The objection had no basis in law and was struck out. That circumstance I am satisfied is also relevant.
In all of those circumstances I am satisfied that there is a justifying circumstance as evidenced by the matters above.
I am satisfied that it is just and equitable an Order for costs be made.
I am satisfied that it would be unjust and unequitable if no Order were made as that would leave the wife bearing her own costs with respect to an Application which simply should not have been necessary.
As indicated, I propose to deal with costs in accordance with schedule 1 of the Federal Circuit Court Rules. Schedule 1 represents an indicative scale only and is not prescriptive as costs provisions of the Family Law Rules 2004 are. Schedule 1 is intended only to provide a guide to parties so they might have some understanding of that which might be ordered if costs are considered appropriate.
The appropriate portions of the scale would be item 3 (interim or summary hearing being an amount of $1,661) together with daily hearing fee. The daily hearing fee that I am satisfied should apply, bearing in mind that the mater is now concluded at 11 am and that preparation with respect to the matter would have been necessary is that for a half day hearing or $997.
I am satisfied that it is appropriate to certify as to counsel and accordingly, that certification will be incorporated within the Orders made by me today. On that basis an advocacy loading of 50 per cent would apply, increasing the half day hearing fee to $1,495.50. That in combination with the amount that item 3 allows would produce costs of $3,156.50 which exceeds that which is sought on an indemnity basis with respect to the matter. Accordingly, I am satisfied that the amount that should be ordered is that which was in fact sought; representing far less than the schedule 1 costs.
Accordingly I make Orders as follows.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Harman
Date: 24 March 2014
Key Legal Topics
Areas of Law
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Civil Procedure
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Negligence & Tort
Legal Concepts
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Appeal
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Costs
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Damages
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Duty of Care
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Negligence
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Standing
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