Lazenby and Hansen

[2009] FamCA 190

FAMILY COURT OF AUSTRALIA

LAZENBY & HANSEN [2009] FamCA 190

FAMILY LAW – COSTS – Dismissal of costs application made by all other respondents

Family Law Act 1975 (Cth)

APPLICANT: MS LAZENBY

RESPONDENT: MR HANSEN

INTERVENORS:

A BROKERS

B PTY LTD

C PTY LTD

D PTY LTD

E PTY LTD

D HANSEN

P RITE

FILE NUMBER: MLF 2732 of 2005

DATE DELIVERED: 13 MARCH 2009

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 13 MARCH 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR BROWN SC

SOLICITOR FOR THE APPLICANT: TAUSSIG CHERRIE & ASSOCIATES

COUNSEL FOR THE RESPONDENT: MR DAVIS

SOLICITOR FOR THE RESPONDENT: MARIA BARBAYANNIS & CO

COUNSEL FOR THE INTERVENOR: MR THOMPSON

SOLICITOR FOR THE INTERVENOR: RICHMOND BENNISON

ORDERS

IT IS ORDERED BY CONSENT:

1. THAT all previous orders as to property be discharged save for paragraph 1 of the Orders made 9 May 2006 which remains in full force and effect until the payment pursuant to paragraph 2 hereof and thereafter be discharged.

2. THAT on or before 10 July 2009 (“the date”) the husband in accordance with the agreement entered between the husband and the 2^nd, 4^th, 5^th, 6^th, 7^th, 9^th and 10^th respondents contemporaneously with these orders (“the Agreement”) pay to the wife the sum of $1,750,000 (“the payment”) and pursuant to s77A of the Family Law Act 1975, the amount of $150,000 of the monies be paid to the wife is attributable to the provision of maintenance for the wife.

3. THAT in default of payment by the husband by the due date, the payment becomes due and payable immediately with interest accruing against the husband on the payment or any part thereof outstanding at the rate of 10% per annum adjusted monthly until payment in full is made. 

4. THAT the wife be solely liable for and pay the liabilities in her sole name:

   a.Visa Card;

   b.ATO debt;

   c.Debt to wife’s father;

   d.two (2) Capital Finance Judgement Debts;

   e.Westpac Hire Purchase.

5. THAT save as provided herein the husband be solely liable for and pay and otherwise indemnify the wife against all debts accrued by him during the marriage whether in his sole name or in the name of R Pty Ltd or H Pty Ltd.

6. THAT the husband in his capacity as director of R Pty Ltd forthwith upon receipt of the proceeds of sale of shares pursuant to the Agreement discharge the judgment debt owing to NAB in the sum of $850,000 plus costs and interest, if any, and the husband indemnify the wife and keep her indemnified in respect to the said liability. 

7. THAT until compliance by the husband with paragraphs 2 and 6 hereof, the husband, his servants or agents, be restrained from selling, encumbering, disposing or otherwise dealing with, the proceeds of sale of shares pursuant to the Agreement and thereafter the husband be entitled to retain the balance of the said share proceeds.

8. THAT the husband otherwise retain the assets in his possession or control and his interest as shareholder in or beneficiary of:

   a.I Pty Ltd;

   b.F Pty Ltd;

   c.J Pty Ltd;

   d.G Pty Ltd;

   e.R Pty Ltd

   f.The K Family Trust

   g.The L Trust

   h.The Hansen Family Trust

   i.the chattels in his possession save that he is to deliver to the wife within seven (7) days of these orders if located and in the husband’s possession the Christening clothes of O Hansen born … January 2002 and two (2) paintings of religious icons. 

9. THAT the wife otherwise retain the assets in her possession or control.

10. THAT within seven (7) days of the making of the orders the wife, at the husband’s expense;

    a.resign as a director of H Pty Ltd as trustee of the Lazenby & Hansen Family Trust;

    b.transfer her share-holding in the same company to the husband or his nominee;

    c.resign as secretary of the said company;

    d.renounce and relinquish all claims and entitlements in the said company and trust (including as a beneficiary of the said trust and to any funds standing to her credit in any loan accounts).

    e.and the husband be liable for and pay and otherwise indemnify and keep indemnified the wife in respect of all liabilities howsoever arising from or in relation to the said company and trust (including taxation liabilities and fixed and floating charges) whether past, present or future.  

11. THAT each of the husband and wife retain their respective superannuation entitlements to the exclusion of the other.

12. That all orders as to costs reserved be dismissed. 

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel including Senior Counsel for the wife, counsel for the husband and counsel for the 2^nd – 7^th and 9^th – 10^th respondents.

IT IS ORDERED NOT BY CONSENT

1. THAT the application for costs made on behalf of the 2^nd, 4^th, 5^th, 6^th, 7^th, 9^th and 10^th Respondents be dismissed.

2. THAT all subpoenaed documents be returned by the Subpoena Clerk of the Family Court at Melbourne to the person or organisation to whom the subpoena was directed. 

3. THAT all extant applications be otherwise dismissed.

4. THAT the matter be removed from the list of cases awaiting trial and from the docket system conducted by the Honourable Justice Young.

IT IS NOTED:

A.THAT the parties intend that for the present all child support issues remain with the Child Support Agency. 

B.THAT the parties intend these orders shall as far as practicable finally determine the financial relationship between the parties and avoid further proceedings between them. 

IT IS NOTED that publication of this judgment under the pseudonym Lazenby & Hansen is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2732 of 2005

MS LAZENBY

Applicant

And

MR HANSEN

Respondent

A BROKERS
B PTY LTD
C PTY LTD

D PTY LTD
E PTY LTD
D HANSEN
P RITE
Intervenors

REASONS FOR JUDGMENT

1. The remaining issue for determination in the matter of Lazenby and Hansen and Others is the costs application now made orally by Mr Thompson of counsel for and on behalf of the various respondents. Specifically that application is made on behalf of his clients who are the second, fourth, fifth, sixth, seventh, ninth and tenth respondents.  Of significance it is made only as against the wife and there is no application for costs sought or requested as against the husband for whom Mr Davis of counsel appears.  I have received oral submissions from Mr Thompson in support of his application and have had submissions in reply from both Mr Brown of Senior Counsel for the wife, and Mr Davis. 

2. Dealing first with the application for costs what is sought is that an order for costs should be made as against the wife for the period as and from 2 March 2009.  Those costs were not sought on any indemnity basis but on the basis of solicitor and client costs.  The costs were quantified by Mr Thompson at a maximum of $21,780.  Very much as an alternative, and on the basis that costs for the whole period from 2 March this year were not allowed, then it was submitted that they should be allowed to Wednesday, 11 March 2009, at the conclusion of court that day, on which basis costs would be approximately $12,000.

3. I was asked to exercise my judicial discretion and fix costs but, as an alternative, they could and would be taxed subject, of course, to all of the ongoing costs of the taxation process.  The basis which Mr Thompson summarised as appropriate to determine a costs order being just were:

   a)the conduct of the wife

   b)the fact that the wife was wholly unsuccessful, and

   c)the offer of settlement that had been made by solicitors on 5 March 2009, and that is now exhibit “2” in these proceedings.

4. Mr Thompson and his instructing solicitor have been in court on each day of this week, or otherwise engaged in these proceedings.  The matter was first listed for the defended hearing on Tuesday, 10 March.  Today is Friday, 13 March, and I pronounced final property orders as between all parties, including the respondents, this afternoon immediately prior to this oral application being presented to the court.

5. The focus of the costs submission is paragraphs (2), (3), (4) and (5) of the recently issued application of the wife by way of a further amended application filed 2 March 2009.  To the extent that Mr Thompson identified paragraphs (2), (3) and (4) I am content in understanding that paragraph (5) was intended by him to be included.  That is consistent with exhibit 2 and is the only way to make sense of the variation in orders sought by the wife.

6. It is important to have a firm understanding that the wife, by an amended application for final orders filed 7 September 2007 (court index document 60), had sought almost the identical orders as to paragraphs (1), (2) and (3) of this most recently issued application.  True it is that the percentage sought had declined from 75 per cent to 60 per cent for the necessary adjustment in paragraph 4(b) of the subsequent orders, from 40 per cent to 25 per cent.

7. Clearly those orders, paragraphs (2), (3) and (4), are identical to that which was before the court almost 18 months ago and there is not and cannot be any surprise visited upon any of the respondents for understanding that cause of action.  Indeed, it is that very amended application why the parties, as various respondents, are here and have been represented by an instructing solicitor throughout the period.

8. Certainly paragraph (5) of the recently issued further amended application is different and brings before the court, for the first time, the concept of appointment of a liquidator to wind up the B group of companies and apply liquidated assets to the satisfaction of the wife pursuant to court order.  It would follow that paragraph (5) did raise some concern with the solicitor for the respondents and in exhibit 2 it has been specifically included as one of the paragraphs of concern.

9. I do have some difficulty in understanding the logic and intent of the letter of 5 March 2009, exhibit 2.  I would certainly not classify it as an offer of settlement.  It is a document requesting the withdrawal of the existing applications pursuant to which the respondents were content for it to be before the court, and oppose matters sought and this further application. 

10. It might be well a tactical letter in that it put the issue of costs before the court but I do not regard it as a proper settlement letter within the true concept of a settlement of offer as contemplated within section 117 of the Family Law Act 1975 and in particular subparagraph (f) thereof. Even if another court on another day construes that letter as an offer to settlement it is a matter that still must fall to the higher test, that is, whether an order for costs is just in the proceedings. I have however given proper consideration to that letter and Mr Thompson’s submissions.

11. The other point of emphasis of Mr Thompson is that there was no evidence before the court, and no effort by the wife to present witnesses to validate or substantiate her claims.  That is true insofar as the potential liquidation is or may have been sought. 

12. Mr Davis was short and to the point.  Whilst no order for costs was made against him he advised the court, largely of what it already knew, that in principle the matter as between the husband and wife was concluded out of court by final agreement, at 3 o'clock last Tuesday, that is, 10 March and thereafter the issues had largely been the commercial acquisition of shares by or on behalf of one or many of the respondents, as against his client.  He therefore opposed a costs order.

13. Mr Brown opposed any order for costs.  He did so on the basis that it would not be just to make an order of costs as against his client.  He re-emphasised the fact that the wife had been largely committed to the court environment and process after the settlement last Tuesday and indeed these last three days had been somewhat "of a passenger" whilst the commercial negotiations were being transacted between the husband and one or many of the other respondents, or indeed all of them.

14. There was some emphasis placed upon the affidavits of the respondents; both the principal shareholder, D Hansen and P Rite, but also the affidavit of the instructing solicitor, Ms Badenoch.  That affidavit, which is document 115 in the court index, was filed by an instructing solicitor for a particular purpose at an earlier time.  Its filing date is 25 February 2009.  I am aware of the background to this matter because I had listed the matter for case management purposes to ensure that it was ready for trial on Tuesday this week. 

15. There was previously an issue as to the single expert valuation and specifically as to whether or not a 15 per cent discount for minority interest could or would be applicable.  In the original report there was such a discount.  Seemingly, and after a mediation, that was reported to be revoked by the independent expert.  That led to continuing out-of-court discussions of which the court is not fully a party.

16. The outcome however is somewhat reflected in orders which I pronounced on 3 March 2009 and otherwise in the agreement, as was recorded, where the husband's interest in the B group of companies was fixed at a dollar value.  That value remained the same for these proceedings.  Ms Badenoch's affidavit verified that, at all times, the various respondents had been parties to the proceedings on the basis of the earlier application identical to paragraphs (3), (4) and (5) of the current application.

17. She expressed that her clients held a watching brief on the basis that they would ultimately buy out the husband's shares and that their money was the source which would facilitate payment to the wife.  I have again read that affidavit and at the time that it was filed it was appropriate and it reflected the concerns and interests of the various respondents.  The matters and other witnesses identified in paragraph (8) however did not eventuate because of the agreement as to valuation with the single expert and between all parties to the proceedings.

18. In summary therefore, the various respondents who remain in these proceedings had at all times been aware of the overarching order, that is, a payment to the wife from the husband, and always the issue in this case was the husband's ability to raise money by selling or otherwise dealing with all or part of his shares in the B group of companies to the various respondents. 

19. Seemingly, and from what the court has been fleetingly told from day to day, issues arose out of court in relation to capital gains tax or other taxes on sales, disposition or transfer of shares.  There was a commercial negotiation to be supported by a commercial agreement that has now been concluded between the various respondents and the husband.  That document is not before the court and I do not know of its contents, nor do I necessarily need to know them for the purposes of section 79 proceedings, or for this costs determination.

20. All that I do need to be aware of is that those negotiations were ongoing and, from what all counsel have said, were intense.  Therein explains much of the past few days and perhaps the reverse of what earlier has been said is indeed the case, that is, that the wife has been somewhat of a bystander while these proceedings continued to completion, and for her to be able to obtain the payment sum negotiated last Tuesday.

21. That is the background that leads the court to determine the costs application. Section 117 of the Family Law Act requires each party to pay his or her own costs.  The starting point is thus that the respondents pay their own costs.  Subsection 2 is the procedure by which the court, if it is of the opinion that there are circumstances that justify it in so doing may make such order as the court considers just and clearly if I now consider it just that the wife pay the whole or part of the respondents' costs I have that outcome available to the court.

22. Section 117(2A) sets out the matters relevant to the costs orders. I am aware of the financial circumstances of the parties and, by virtue of this concluded settlement and orders that I have earlier made, the wife certainly does have the financial capacity to pay a costs order. I leave to one side legal aid as it is not relevant to these proceedings. Mr Thompson emphasised the conduct of parties to the proceedings and the essence of the conduct of the claim is largely the late issuing of paragraph (5) of the most recent amended application, and the threat of liquidation.

23. There was no affidavit or detail of the process, or the liquidator, but it does seem to be a fair statement of the position that this matter was stood down on the first morning and always the issue was the practical financial settlement and then the implication.  I do not understand that there was ever a serious discussion in court of a liquidator and more particularly - if I accept Mr Davis' timetable that from 3 o'clock on Tuesday the husband and wife had concluded an in-principle settlement - any appointment of the liquidator by the wife was both unrealistic, and virtually impossible to understand of there being any ongoing serious issue.

24. The other subparagraph, (e), that highlighted Mr Thompson's submissions was that the wife was wholly unsuccessful.  It may be debatable if indeed the wife was wholly unsuccessful because she obtained a property order with which she was comfortable and which Mr Brown has endorsed as appropriate.  That order was made with the cooperation of the various respondents acquiring the husband's interest to some extent, within the B group.  Certainly that raises the issues, pursuant to paragraphs (2), (3) and (4) of the amended application, which were always known to all parties and never a matter of prior complaint.

25. Again in that context paragraph (5) is of little or no relevance.  I cannot imagine the circumstances in which it was ever seriously outlined to the court.  My recollection of the proceedings is that I was the one, as the presiding judge, who raised the issue of any particular detail of that aspect of paragraph (5) however I do not regard the wife as having been wholly unsuccessful and the proceedings have concluded on a satisfactory manner for her.  The final orders were concluded by three parties all negotiating and arriving at an outcome with which they are all satisfied; otherwise there would have been no such settlement.

26. Finally, as to subparagraph (f) I have already expressed the view that I do not consider exhibit 2, as tendered by Mr Thompson this day to be a settlement in writing, as an offer pursuant to subparagraph (4) or in any event that there is such a level of confusion about the purpose of drafting of the letter as to make it unsatisfactory to rely upon.  Ultimately I must determine costs only on the basis of what is just. 

27. Having read the documents; having listened to all of the submissions; having carefully considered what is or is not just in the appropriate circumstances before me I conclude that it would be wholly inappropriate to make any costs order.  I therefore find that it is not just to accept any part of the submission from Mr Thompson for any costs for any one of the various respondents and I will dismiss the oral application for costs which I earlier entertained. 

28. I will have these reasons for judgment delivered ex tempore and without leaving the Bench; transcribed; placed upon the court file, and they can no doubt stand the scrutiny of others hereafter. 

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: