LAD & GITTINS

[2014] FamCA 439

FAMILY COURT OF AUSTRALIA

LAD & GITTINS [2014] FamCA 439

FAMILY LAW – COSTS – Application by the husband for costs against the wife – Application by the wife for costs against the husband – Wife’s application dismissed – Insufficient evidence to support her allegations of the husband’s fraud and non-disclosure – Husband’s application successful – Husband’s reasonable offer of settlement not accepted by the wife – Order made for wife to pay husband’s costs in relation to the proceedings on an indemnity basis from the time of his offer – Orders made for wife to pay husband’s costs in relation to three separate subsequent interim hearings on a party/party basis – Order made for security of payment of the husband’s costs

Family Law Act 1975 (Cth) ss 79, 79A, 117
Family Law Rules 2004 (Cth) rule 10.06

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225

APPLICANT: Mr Lad

RESPONDENT: Ms Gittins

FILE NUMBER: NCC 729 of 2012

DATE DELIVERED: 11 April 2014

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Austin J

HEARING DATE: 11 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr G Levick

SOLICITOR FOR THE APPLICANT: Tonkin Drysdale Partners

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: N/A

Orders

1. The wife shall pay the husband’s costs of and incidental to:

   i.The final hearing concluded on 11 November 2013, calculated as and from 10 May 2013, on an indemnity basis, in the sum agreed or assessed;

   ii.The interim hearing conducted on 28 February 2014, on a party/party basis, in the sum agreed or assessed;

   iii.The aborted interim hearing on 7 March 2014, on a party/party basis, in the sum agreed or assessed; and

   iv.The interim hearing conducted today, on a party/party basis, in the sum agreed or assessed.

2. By way of security for the costs payable by the wife to the husband, the parties shall do all such things and sign all such documents that may be necessary to:

   i.Pay from the net proceeds of sale of the Suburb L property (in addition to any other payment due to the husband out of those sale proceeds) the sum of $150,000 to the husband’s solicitors;

   ii.Instruct the husband’s solicitors to hold those funds on trust or in a controlled money account pending quantification of the costs due to the husband pursuant to either agreement or assessment; and

   iii.Forthwith upon agreement or assessment of the quantum of costs payable, instruct the husband’s solicitors to deduct from that sum the amount payable to the husband and refund any remaining balance to the wife.

3. Otherwise:

i.The Application in a Case filed on 6 December 2013 is dismissed; and

ii.Any and all outstanding applications are dismissed.

NOTATION

A.The costs orders herein operate in addition to the following costs orders:

i.Order 3 made on 12 September 2013; and

ii.Order 4 made on 9 January 2014, which costs were quantified by Order 2.9 made on 7 March 2014.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lad & Gittins has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 729 of 2012

Mr Lad

Applicant

And

Ms Gittins

Respondent

EX – TEMPORE

REASONS FOR JUDGMENT

1. On 11 November 2013, proceedings between the parties pursuant to s 79 of the Family Law Act (“the Act”) were concluded by the pronouncement of final orders and the publication of reasons for those orders. 

2. Order 21 reserved the parties’ costs for a period of 28 days.  Within that period, the husband filed, on 6 December 2013, an Application in a Case seeking the wife’s payment of his costs in respect of the proceedings.  That application for costs was successively adjourned on 9 January 2014, 28 February 2014 and 7 March 2014 until its determination today, 11 April 2014. In support of that application the husband read his own affidavit filed on 6 December 2013 and the affidavit of his solicitor, Mr Lee Pawlak, also filed on 6 December 2013.

3. The wife filed no Response or any affidavits with the Court. Today, when the matter came on for hearing, the wife produced to the court three documents.  They were successively entitled Response to an Application in a Case, which was apparently executed by the wife on 24 March 2014, an affidavit purporting to be sworn by her on 24 March 2014, and an affidavit of Mr Q, which purported to be sworn on 6 March 2014. None of those documents had been filed in this Court. Nonetheless, with the consent of the husband’s counsel, the documents were tendered and collectively became Exhibit B in the proceedings. The wife also produced two other documents which were collectively admitted into evidence as Exhibit C. One was a schedule of medical attendances by the wife and the other was a medical certificate prepared on 8 April 2014.  Those documents have also been read and taken into account.

4. The issues now pending before the court are as follows.

5. Firstly, the wife presses an application for the husband to pay her costs of the substantive proceedings completed in November 2013.

6. Secondly, the husband presses his application for the wife to pay his costs in a variety of alternative ways. Primarily, he proposes that the wife pay his costs of the whole of the proceedings on a party/party basis. Alternatively, he seeks discrete costs orders in relation to specific court events, both during the substantive proceedings and in relation to the pending application for costs.  Lastly, he seeks an order for costs against the wife on an indemnity basis calculated from a date in May 2013, being the date upon which he served the wife with a written offer of settlement, up until the conclusion of the substantive proceedings in November 2013.

7. I intend to deal firstly with the wife’s application for costs. 

8. As I indicated, Order 21 made on 11 November 2013 reserved the parties’ costs for 28 days.  The application for costs now made by the wife, set out within the documents which comprise Exhibit B to the proceedings, is clearly brought out of time. She is unable to press the costs application unless the court grants leave for an extension of the time.

9. Counsel for the husband did not oppose the grant of leave to the wife for that purpose, but it is unnecessary to advert to that issue because the evidence does not disclose any valid basis for an order that the husband pay any proportion of the wife’s costs of the proceedings.

10. Relevantly, it is common ground the wife made an offer of settlement to the husband in or about October 2013, proximate to the final trial before the court. Broadly speaking, her offer was for the husband to pay one-half of debts owed by the parties to the National Australia Bank, totalling approximately $900,000, and for the husband to pay her an additional sum of approximately $200,000.  The ultimate result of the property settlement proceedings was for the wife to pay the whole of the NAB debts on behalf of the parties and for her to additionally pay a sum approximating $300,000 to the husband. Arithmetically then, the wife’s offer was approximately $950,000 worse than the ultimate result of the property settlement. 

11. In the course of her submissions to the Court the wife contended, on the basis of comments made within the documents comprising Exhibit B, the husband had perpetrated a fraud by giving false evidence in the final trial concluded in November 2013. As was discussed with the wife during the course of her submissions, there is no evidence of the husband’s fraud aside from her assertion of such and her mere assertion is insufficient to prove the fact. It may be, as she submits, she has taken her grievance to the police and other authorities and it may be that she agitates her complaints against the husband with some success, but in the adjudication of the costs application presently before the court there is no evidence to substantiate her allegation of fraud against the husband. To her credit she seemed to understand that that was so. I therefore reject her allegations of fraud against the husband for present purposes.

12. Lest it not be otherwise known to the wife, if she continues to maintain her allegations of fraud against the husband she may always resort to s 79A of the Family Law Act (the Act”) if she feels, or is advised, that she has the evidence to substantiate her allegations.

13. The wife also asserted in her submissions the husband failed to provide proper disclosure to her in the course of the substantive proceedings.  Although the wife earnestly alleged it, she acknowledged she was aware the husband earnestly denied it, and further, she acknowledged without any further evidence to substantiate her allegations or his denials it was impossible for the Court to undertake a fact finding exercise to determine whether or not her allegations were vindicated. In those circumstances I reject her allegation of the husband’s failure to disclose material evidence.

14. In the circumstances, there is no evidence or submission capable of persuading the Court to exercise its discretion to do anything other than apply the orthodox rule under s 117 of the Act, namely, to expect that the wife pay her own costs of the proceedings.

15. I turn then to the husband’s application.

16. Firstly, I wish to repeat the statutory premise upon which these proceedings are contested. Section 117 of the Act relevantly provides that each party to proceedings shall bear his or her own costs. Although that is the orthodox situation, the Act expressly contemplates that costs orders may be made in circumstances which justify it. Section 117(2A) of the Act sets out a list of factors which the court may take into account in determining whether circumstances exist so as to justify the making of a costs order.

17. Dealing with the husband’s initial application for payment of his costs in relation to the whole of the proceedings on a party/party basis, there is no legitimate basis upon which such an order can be made. The husband did only what the Family Law Rules (“the Rules”) and the Act require of him. He disclosed his financial circumstances to the wife in correspondence in early 2012 and he attempted to negotiate a settlement. Had he not done those things he may have faced a costs order himself by failing to comply with the pre‑action procedures prescribed by the Act. The Act and the Rules emphasise the need for parties to attempt conciliation of their grievances before resorting to litigious process.

18. I turn then to the individual Court events for which the husband seeks costs.

19. The first was on 26 March 2012. Order 9 made on that day reserved the husband’s costs. The husband’s solicitor deposed in his affidavit (at [18]) that the husband’s interim application was before the court on that date and the wife had not filed any material in response to the husband’s application when the matter was heard. The wife made an adjournment application and the adjournment application was dismissed. Injunctive relief was granted and orders for sale of property were made in similar terms to those sought by the husband. In the Response, comprising part of Exhibit B (at [71]), the wife indicated she was only given two days’ notice of the Court event. She had been holidaying in Queensland and received late notice of the interim application. I note the proceedings were commenced by an interim application filed on 20 March 2012, only six days in advance of the return date of the interim application. Nothing about those circumstances convinces me that a costs order is justified against the wife and I therefore dismiss the husband’s application.

20. The second date of interest is 21 May 2012. On that day Order 7 reserved the husband’s costs. The husband’s solicitor (at [19]-[20] of his affidavit) deposed that on that day the husband’s application for final orders was listed for case assessment conference. The husband appeared, represented by a solicitor. The wife was represented by another solicitor as an agent. The wife did not appear and was not available via telephone. The wife had not, at that stage, filed any material in response and the matter was necessarily adjourned. In the Response document prepared by the wife, which comprises part of Exhibit B (at [72]), the wife advises that she did not attend court on 21 May 2012 because her child had a specified serious health issue. I accept the truth and accuracy of that evidence and in the circumstances it is understandable why the wife would not have attended Court at a time so proximate to such an unfortunate family event. In the circumstances, I am not therefore satisfied a costs order should be made against the wife in respect of that Court event. The husband’s application for such a costs order is dismissed.

21. The next event of interest was on 5 October 2012. The husband’s solicitor (at [27] and following of his affidavit) indicates that on that date the matter was to proceed to a conciliation conference. In preparation, he had sent a letter to the wife’s then solicitors. Some weeks antecedent to the Court event the husband’s solicitor received an email from the wife’s solicitors indicating their instructions had been withdrawn. The husband’s solicitor notified the Registrar in writing that the matter was not ready for conciliation conference, but the matter remained listed for 5 October 2012. As I understand the submissions, the husband is aggrieved because the Court event proceeded unnecessarily when the wife was unready. Although I accept that might be the husband’s honest view of the situation, nothing within the orders or notations made by the Registrar on 5 October 2012 indicates the precise reasons for why the matter was adjourned without significant progress and so I am not prepared to make a costs order against the wife in relation to that event.

22. The next event of interest occurred on 31 January 2013. On that day Order 4 reserved the husband’s costs. The husband’s solicitor deposes (at [30] of his affidavit) that the matter was listed for a procedural hearing before the Registrar, when orders were made for disclosure and the reservation of costs. The wife asserted, without any particular evidentiary foundation, that she did make proper disclosure at all relevant points in time. I am not satisfied, in the face of discrepant evidence, that a costs order should be made in relation to that Court event and I therefore dismiss the husband’s application.

23. The next court event was on 11 April 2013. There was no costs order made on that date. The matter was listed before me. An order was made for the wife to file a written undertaking as to disclosure by 19 April 2013. The husband’s solicitor alleges in his affidavit that the wife failed to file the undertaking by that date, or at all during the proceedings. If that is the sole basis upon which the costs order is sought for that particular date it is not a sufficiently compelling reason to warrant the order for costs since the wife’s alleged failure to give proper disclosure was not an issue during the substantive hearing. I therefore reject the application for costs in relation to the Court event that occurred on 11 April 2013.

24. Before passing to consider the court events as and from the filing of the husband’s costs application on 6 December 2013, it is now convenient to pass to consideration of the husband’s application for costs arising out of his making of an offer of settlement to the wife in May 2013.

25. The uncontested evidence in relation to that application is that on 11 April 2013 the parties were ordered to exchange offers of settlement. The husband instructed his solicitor make a written offer of settlement as directed by those orders. The husband’s solicitor sent a letter to the wife’s solicitors, dated 9 May 2013, setting out the offer made by the husband. That offer was not accepted by the wife. The copy of the letter dated 9 May 2013 is an annexure to the husband’s solicitor’s affidavit (at LP34). The letter records it is sent to the wife’s solicitors in compliance with the orders made on 11 April 2013 and should be regarded as an offer of settlement pursuant to Rule 10.06. In general terms, the nature of the offer was to the effect that the parties should retain their own property, subject to the wife’s payment on behalf of the parties of the total amount of the debts due by them to the National Australia Bank, which as I previously indicated amounted to approximately $900,000. I have already indicated the counter-offer later submitted by the wife to the husband in October 2013, the nature of which is deposed to by the husband’s solicitor (at [43] of his affidavit).

26. It is instructive at this point to make the following observations about the parties’ respective offers to one another. The result the husband gleaned in these proceedings bettered the offer he made to the wife by some $300,000, because the orders ultimately made by the Court in November 2013 not only required the wife to pay, on behalf of both parties, the whole of the debt of approximately $900,000 owed by them to the National Australia Bank, as was offered by the husband, but additionally required her to pay to him the sum of approximately $300,000.

27. Undoubtedly, the husband was wholly successful in the proceedings.  Conversely, the wife was wholly unsuccessful in the proceedings for, as I have already explained, the ultimate result was about $950,000 worse for her than the offer she made to the husband. It will therefore be apparent the positions of the parties were polarised and there was an enormous difference between their offers.

28. One of the arguments raised by the wife about why she ought not be ordered to pay the husband’s costs in the face of such offers was that her financial circumstances were not conducive to such an order. I do not accept that submission. It was found that the distribution of the parties’ property in accordance with the orders made in November 2013 would result in the husband’s retention of property worth approximately $380,000 and the wife’s retention of property worth approximately $1.9 million. Those sums are expressed in net terms. Although the wife was at pains to express she has discharged all of the debt owed to the National Australia Bank in accordance with the orders, which amounted to some $900,000, that payment was taken into account in determining her net receipt of property worth about $1.9 million.  An additional consideration is that the Suburb L property, which is owned by the wife, was valued for the purposes of the proceedings at $1.7 million. Pursuant to enforcement orders which have subsequently been made, that property was sold for $2.7 million – some $1 million more than the value attributed to it in the proceedings. But for the payment to the husband of the amount owed to him in accordance with the orders made in November 2013, the surplus sale proceeds of the Suburb L property would be enjoyed by the wife. I therefore do not accept the submission that her financial circumstances do not permit her to satisfy a costs order in the husband’s favour.

29. Even though the wife is not working, that fact was taken into account in the reasons published by the court in November 2013. It was accepted the wife is 58 years of age, that she still has a dependant minor who will probably remain dependant upon her until the child attains a majority in March of 2015, and the wife has not been gainfully employed for many years. It was acknowledged she had experienced recent ill health, and understandably, no suggestion was made that the wife had the capacity to find and retain employment. It was found she was only ever likely to derive income from commercial assets under her control. As I have indicated, the net asset position for the wife on the evidence was approximately $1.9 million, but that figure will be inflated because of the surplus she receives from the sale of the Suburb L property at a greatly appreciated price.

1. In all of the circumstances, I am satisfied that the wife should pay the husband’s costs of and incidental to the proceedings, calculated from 10 May 2013 up until the proceedings were concluded on 11 November 2013.  The date of 10 May 2013 is chosen because it is the day after the letter conveying the husband’s offer to the wife was sent.

2. The costs will be payable on an indemnity basis, rather than a party/party basis, from that date because of the substantial amount by which the ultimate result was better than the husband’s very reasonable offer (see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225). That is an overarching consideration, as is the wife’s substantially superior financial circumstances.

3. I also need to turn to the Courts events that post‑dated the substantive orders in November 2013. Those dates were 9 January 2014, 28 February 2014, 7 March 2014 and today’s date, 11 April 2014.

4. A costs order was previously made in respect of the Court event on 9 January 2014. No more need be said about it.

5. On 28 February 2014 the wife and her case guardian both appeared. On that date the case guardian was discharged and the wife appeared on her own account. She sought an adjournment of the husband’s costs application and an order was made, that being Order 5, reserving the husband’s costs of the event.

6. On 7 March 2014 the wife appeared with her counsel. Another interim dispute between the parties over enforcement orders was compromised, but the wife sought and was granted an adjournment of the husband’s costs application.  Again, another order was made, being Order 7, reserving the husband’s costs of that appearance until today.

7. The adjournments were seemingly unnecessary. In those circumstances I am inclined to make a costs order against the wife in favour of the husband for his attendances at the court events on 28 February 2014 and 7 March 2014.

8. Costs are also ordered for the hearing today, 11 April 2014, because the husband’s application was vindicated. The wife pressed her own futile costs application and unreasonably opposed the successful parts of the husband’s application.   

9. Clearly, the costs payable by the wife to the husband will not be calculated by me. That will be a matter for assessment by a Registrar in the event the parties cannot agree on the quantum. Because agreement may elude the parties and an assessment may be needed, the only readily available asset from which the costs can be paid will be the sale proceeds of the recently sold Suburb L property. I accede to the application of the husband to set aside from those sale proceeds not only the amount due to him under the substantive orders made in November 2013, but also an arbitrary sum which should be sufficient to cover the costs order that I will now make.

10. Consequently, I make the following orders. 

I certify that the preceding thirty nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 11 April 2014.

Associate:     

Date:  23 June 2014