Lange and Lange (No 2)

[2013] FamCA 670

FAMILY COURT OF AUSTRALIA

LANGE & LANGE (NO 2) [2013] FamCA 670

FAMILY LAW – PRACTICE AND PROCEEDURE – Proceedings adjourned to a fixed date for mention – Directions hearing ordered – Orders and directions made for discovery

FAMILY LAW – COSTS – Order that Wife pay husbands costs thrown away

Family Law Act 1975 (Cth)

Prantage and Prantage [2013] FamCAFC 105
Hand v Bodily [2013] FamCAFC 98

APPLICANT: Mr Lange

RESPONDENT: Ms Lange

FILE NUMBER: MLC 7168 of 2011

DATE DELIVERED: 2 August 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Benjamin J

HEARING DATE: 2 August 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Vohra

SOLICITOR FOR THE APPLICANT: Pearsons Lawyers Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr Hess and Mr Lethlean

SOLICITOR FOR THE RESPONDENT: Mills Oakley Lawyers

Orders

1. These part heard property, spousal maintance and Child Support proceedings be adjourned for mention and directions before me at 4.30pm on Tuesday 6 August 2013 at Melbourne.

2. Leave be given to the parties to appear by telephone by dialling …

   IT IS DIRECTED

3. Both parties and their legal representatives (if they continue to act) attend at such directions hearing on 6 August 2013 at 4.30pm.

4. A copy of the transcript of the evidence of the husband given in chief on 2 August 2013 from approximately 10.35am to 11.35am be taken out and placed on the Court file.

5. The husband cause to be delivered, either in person or electronically, (either by email or facsimile) to the wife’s solicitors practice by 4.00pm Monday 5 August 2013:-

   (a)The financial accounts of D Pty Ltd for the years ending 30 June 2011, 30 June 2012 and such of the financial accounts as are prepared to date for the financial year ended 30 June 2013 together with a copy of a letter which he must send to his accountants H Accountants at I Street, Suburb J …, an authority for the wife and/or her expert and/or her solicitors to obtain such information as to the financial circumstances and financial accounts of D Pty Ltd as is reasonably required by her and at her own expense; and

   (b)The financial accounts of the Lange Family Trust No. 2 or any associated company or trust which operates around the business or owns any of the assets of the business for the years ending 30 June 2011, 30 June 2012 and such of the financial accounts as are prepared to date for the financial year ended 30 June 2013 together with a copy of a letter which he must send to his accountants H Accountants at I Street, Suburb J…, an authority for the wife and/or her expert and/or her solicitors to obtain such information as to the financial circumstances and financial accounts of the Lange Family Trust No. 2 or any associated company or trust which operates around the business or owns any of the assets of the business as is reasonably required by her and at her own expense

   IT IS FURTHER ORDERED

6. The wife pay the husband’s costs thrown away 2 August 2013 totalling $5,975. The payment of that sum to be effected by way of its deduction from the amount otherwise payable to the wife pursuant to the property orders, whether the orders are made by way of agreement between the parties or are ordered by a Court exercising jurisdiction under the Family Law Act.

   IT IS FURTHER DIRECTED

7. If the wife wishes to make an application for the appointment of a single expert to value the husband’s company and business, the wife file and serve an application in a case in that respect, to this court by 12.00 noon Thurdsay 8 August 2013, together with an affidavit in support of that application.

8. If the wife ceases to instruct her barrister and/or solicitor the wife provide to the court an address for service which will include an address, an email address and a telephone number where she can be contaced.

   IT IS CERTIFIED

9. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lange v Lange 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 MELBOURNE

FILE NUMBER: MLC 7168 of 2011

Mr Lange

Applicant

And

Ms Lange

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. The matter of Lange was to have commenced yesterday by way of a hearing of the parenting and property proceedings.  I acknowledge that the parenting issues were complex and difficult and the parties needed time to carefully consider the various options and proposals in the light of the evidence that was to be presented to the Court.  In fact, the parties did settle their parenting issues yesterday afternoon and final orders were made.  The wife sought an adjournment of the property proceedings and I have delivered reasons in relation to that.  Suffice to say that application was unsuccessful. 

2. The property hearing commenced with an outline of case filed on behalf of the husband and evidence of the husband given in-chief, primarily, in response to an affidavit of the wife, which was filed well outside the time ordered by this Court.  The wife’s counsel was to cross-examine the husband and I allowed about a half an hour adjournment at 11.35am to enable the wife’s counsel to take proper instructions.  A request was made to me in chambers to extend that time, as I was told, without being provided with details, that there was difficulty in obtaining full instructions to enable the cross-examination to continue. 

3. The matter came back before me shortly after 2.00pm and counsel for the wife said that his instructions were such, at the present time, that if the case continued, he would have been unable to properly represent her and, in fact, applied to be released.  His submissions made it clear that he did not have instructions in such a form as would enable him to adequately discharge his role to the Court and to the wife.  He was left in an invidious position and counsel for the husband made no submissions contrary to that which was an appropriate position for her to adopt in the circumstances. 

4. The hearing in this matter has, thus, been frustrated.  I have indicated to the parties that I intend to adjourn it for mention next week and I will allocate days, as soon as practicable, for the finalisation of this hearing.  I also intend to make orders that the husband provide copies of the business’ accounts for the last three financial years to the wife, care of her solicitors, by the close of business Monday afternoon.  I will also be directing that he instruct his accountants to provide such financial information about the company as the wife reasonably requests at her expense.

5. If the wife wishes to apply for a valuation to be undertaken in relation to the business, and I have no view as to whether I will allow that to occur, she will need to do so by the end of next week, together with an affidavit in support, by an expert and I will consider that probably on Friday of next week, if that is the case.  The husband makes an application for his costs of today, essentially, on a lawyer/client basis under the rules, in that the whole of the day has, essentially, been wasted.  The husband seeks counsel’s fees of $3500 and solicitor’s fees of $2475, making a total of $5975, the solicitor’s fees being $495 per hour. 

6. The basis of that application is: firstly their frustration of the endeavours to enable the matter to be heard today, which were not brought about by any breach of any order or direction of the husband, and also, in the light of the letter the husband’s solicitors sent to the wife’s solicitors on 21 May last, which is Exhibit H3.  The wife was directed to prepare the matter for hearing and to file affidavits and applications within a certain period of time.  She did not do so.  She endeavoured to file a child support departure application, one or two days before the hearing commenced, an application which, if successful, would have involved proper notification of the Child Support Agency, the joining of a third party company and perhaps the joining of the husband’s father, all of which would have required an adjournment. 

7. I am satisfied that the loss of today was brought about wholly as a consequence of the wife not wishing the matter to proceed today and I have had regard to s 117 of the Family Law Act 1975 (Cth) (“the Act”), in particular, the provision of the Act which provides that this Court is generally a non-cost jurisdiction. Secondly, that if a costs application is to be made, I have had regard to the direction given to this Court in Penfold[1] and the factors under s 117(2A). The first being the financial resources of the parties. On the evidence of the wife, her financial circumstances are dire, in that she has limited money, she is in receipt of a Centrelink benefit and her only assets of significance are likely to be the proceeds of these proceedings, which the husband concedes should at least be $200,000.

   [1] (1980) FLC 98-800.

8. The husband operates in the company, of which he is a half shareholder, and earns about $56,000 per year plus a car plus a phone.  That evidence was given in-chief but has not as yet been tested.  Neither party is in receipt of legal aid.  This adjournment has been brought about wholly as a consequence of the wife not being ready in accordance with directions made by this Court.  It would be extraordinarily unjust for the husband to be left to meet those costs in these circumstances.  Counsel for the wife sought that these costs application be stood over to the next occasion.  I had considered that but, in the circumstances, decided against it on the basis that the husband ought to know that these costs orders have been made. 

9. I do not intend to make an order that the costs are paid forthwith.  I intend to direct that the costs are paid out of any verdict or sum which is ordered to be paid to the wife, so that it does not put further economic pressure upon her and, more importantly, the children who live with her.  Normally, costs, if awarded, are awarded on a party/party basis.  However, it is clear under the Rules I am able to make costs on whatever basis I choose, whether that is party/party, lawyer/client or indemnity. 

10. The Full Court in a recent case of Prantage v Prantage [2013] FamCAFC 105 cautioned the Court against making indemnity cost orders except in the most extraordinary circumstances and made it clear that the Court should be looking at the behaviour of the parties in terms of the litigation, not generally. I have had regard to those cautions.

11. There was another Full Court decision on costs Hand v Bodily [2013] FamCAFC 98 in which, Watts J, the Deputy Chief Justice and, Ryan J, looked at the difference between party/party costs, indemnity costs and lawyer/client costs. In this case, the claim is, essentially, for determined lawyer/client costs, with a counsel fee of $3500 for the day and there seems to be no issue as to that sum and I am satisfied that is an appropriate amount. I do not have any criteria against which to determine the solicitors’ hourly rate. I have been out of the profession for too long to guess. However, it seems to me, in the circumstances of this case, that the amount sought by the husband is appropriate.

12. The financial accountants will also include the Lange Family Trust No. 2 or any associated company or trust which operates in or around the business, or owns any of the assets of the business.  I have put it as broadly as I can, I cannot make it broader than that, because if I make it any wider, it may be that the company which is the licensee in Country F may be caught in that, in having regard to the evidence.  I don’t know that that would be just and equitable to impose that upon the husband, and he may well not be able to provide that information anyway, if it’s not his company. 

13. I say this carefully.  Your client should be aware that the normal way valuations of a business are undertaken is to look at the super profits.  I don’t know if that applies to businesses of this description, and I will invite counsel if they think I am wrong, to tell me or to mention it at the end.  The way that it’s calculated is you look at what somebody could reasonably earn in the business, and it’s the extent beyond those earnings upon which good will is generally calculated.  So if the business made $100,000 a year, and the husband’s proper income for the hours and the effort that he puts in are $120,000, there is probably no good will attaching to that business based on the super profit methodology.  If on the other hand, he’s earning $100,000 a year and someone undertaking his task should only be paid $50,000, there may be a method of super profit. I do not know that that covers all methodologies in terms of the value of software or programs, or those things.  But I mention that so that your client doesn’t look at figures and think, “Well, if he’s earning $56,000 a year, that in itself may be pure payment at capital value”, because it may well not be.  I am not saying it to counsel, because obviously counsel knows this, but I am saying it for the benefit of the parties. 

14. Finally, for both parties, if you can talk through your solicitors and resolve this, it would be better.  You might find that when you go down all of the rabbit holes that are available to you, that you will find that you have spent 50, 60, 70 thousand dollars and found nothing there.  As I said yesterday or earlier today, this is a show and tell jurisdiction.  If somebody has hidden assets and those assets are later discovered, the case can be reopened and reargued.  If people haven’t hidden assets, but you spend tens of thousands of dollars searching for something that’s not there, it generally means that everybody ends up much worse off.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 2 August 2013.

Associate: 

Date:  2 August 2013