Lenz & Ors and Cull

[2020] FamCA 315

AMENDED PURSUANT TO RULE 17.02 OF THE FAMILY LAW RULES 2004

FAMILY COURT OF AUSTRALIA

LENZ AND ORS & CULL [2020] FamCA 315

FAMILY LAW – COSTS – Where the wife’s case was wholly unsuccessful – Where her application against the third party was summarily dismissed – Order for the wife to pay costs of husband and third party – Order for costs to be paid from any final property settlement to the wife.  

Family Law Act 1975 (Cth) s117
Family Law Rules 2004 (Cth) rr. 19.18, 19.50

1st APPLICANT: Mr Lenz

2nd APPLICANT: Lenz Investments Pty Ltd

3rd APPLICANT: Lenz Family Trust

RESPONDENT: Ms Cull

FILE NUMBER: SYC 6598 of 2017

DATE DELIVERED: 1 May 2020
Corrigendum issued 5 June 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

IN CHAMBERS: 1 May 2020

REPRESENTATION

COUNSEL FOR THE 1ST APPLICANT: Mr Lethbridge SC

SOLICITOR FOR THE 1ST APPLICANT: Nolan Lawyers

COUNSEL FOR THE 2ND APPLICANT: Mr Ford

SOLICITOR FOR THE 2ND APPLICANT: Andrews & Holm

COUNSEL FOR THE 3RD APPLICANT: Mr Ford

SOLICITOR FOR THE 3RD APPLICANT: Andrews & Holm

SOLICITOR FOR THE RESPONDENT: MCA Law Firm

Orders

Amended pursuant to Rule 17.02 05062020 Paragraph 4

IT IS ORDERED

1. That the wife pay the costs of Lenz Investments Pty Limited (“the third party”) in relation to her application filed 9 February 2018 and the application of Lenz Investments Pty limited seeking summary dismissal of the wife’s application, as assessed or agreed.

2. Pursuant to Rule 19.50 of the Family Law Rules I certify that it was reasonable for the third party to engage senior and junior counsel.

3. That the wife pay the husband’s costs in relation to the application of the wife for orders against the third party, as agreed or assessed.

4. That in the event that the costs assessed pursuant to Order (3) are equal to or less more than $69,235.21, the wife shall pay the costs of the assessor.

5. That any amount assessed to be paid by the wife pursuant to Order (3) shall be paid from any property to be received or retained by the wife by virtue of the final orders for property settlement.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6598 of 2017

Mr Lenz

1^st Applicant

And

Lenz Investments Pty Ltd
2^nd Applicant

And

Lenz Family Trust

3^rd Applicant

And

Ms Cull

Respondent

CORRIGENDUM:  Error at paragraph [42] of these Reasons has been corrected in the manner indicated.

REASONS FOR JUDGMENT

1. On 5 February 2020, I delivered reasons and made orders to summarily dismiss the application of the wife seeking financial orders against Lenz Investments Pty Limited as trustee of the Lenz Family Trust (“the third party”).

2. The wife instituted proceedings against the third party on 9 February 2018 seeking payment to her by the third party of some $25,000,000, or as amended $17,500,000. The third party now seeks an order that the wife pay its costs on a party and party basis and a certification that it was appropriate to brief both senior and junior counsel.

3. The husband has also filed an application seeking that the wife pay his costs in relation to that portion of the proceedings on a party and party basis.

4. The wife has filed a response seeking that the application on behalf of the third  party be dismissed. She has not filed a response to the husband’s application but has filed an affidavit setting out her evidence only in relation to the husband’s application.

5. I propose to proceed on the basis that the wife also opposes the husband’s application.

6. Directions were made for the parties to file affidavit evidence and written submissions in relation to costs.

7. The wife filed an affidavit sworn by her on 17 March 2020 but did not file written submissions.

8. The third party filed an affidavit of Mr H and written submissions.

9. The husband filed an affidavit sworn by him of 2 March 2020 and written submissions.

10. The provisions of section 117 of the Family Law Act 1975 (Cth) (“the Family Law Act”), which are set out hereunder, govern all these applications:

    (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

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

    (2A)  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;

    (b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

    (c)  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;

    (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.

11. Different considerations apply in relation to each application and I will consider them separately.

APPLICATION OF THE THIRD PARTY

1. The third party is the trustee of a discretionary trust in which the husband is one of the beneficiaries.

2. There is no evidence of the respective financial positions of the third party and the wife. Whilst I accept that the third party may have more assets than the wife, she has not relied on any Financial Statement and there is no evidence before me of her assets, income or liabilities.

3. Neither the third party nor the wife gives any evidence of any conduct on the part of the other which is relevant.

4. The wife was wholly unsuccessful. Her application was summarily dismissed.

5. I have not been referred to any offers of settlement which are relevant.

6. In those circumstances it is appropriate that the wife pay the costs of the third  party.

7. Whilst lengthy submissions were addressed by counsel for the third  party to indemnity costs, the application of the third party seeks party and party costs and costs are awarded on that basis.

8. No submissions were addressed by the wife to the application that I certify that it was appropriate to brief both senior and junior counsel.

9. The matter was complex. The wife sought payment by the Trustees to her of many millions of dollars. As can be seen from the reasons for judgment, the issues involved included whether the husband was the de facto controller of the Trustee; whether the Trust was an Ante-Nuptial or Post-Nuptial settlement for the purpose of s85A of the Family Law Act; rights of restitution; a claim in relation to unjust enrichment; a claim, abandoned at hearing but pursued until then, that the Trust was a sham and issues of equitable estoppel.

10. It was appropriate that senior and junior counsel be briefed.

APPLICATION OF THE HUSBAND

1. The orders sought by the husband are set out in his Application in a Case filed 2  March 2020 in the following terms:

   2. That pursuant to s 117(2) of the Family Law, the Applicant Wife pay the Respondent Husband’s costs of and incidental to the proceedings instituted by her by an application in a Case filed on 9 February 2018 on a party/party basis in the amount ordered by the Court or in the alternative as agreed of assessed.

   3. That within 28 days from the date of any Order by the Court of the issue of any assessment for costs, the Applicant Wife pay to the Respondent Husband the amount ordered or assessed.

   4. That the Applicant Wife pay the Respondent Husband’s costs of an incidental to this application.

2. Rule 19.18 provides:

   19.18  Method of calculation of costs

   (1)  The court may order that a party is entitled to costs:

   (a)  of a specific amount;

   (b)  as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)  to be calculated in accordance with the method stated in the order; or

   (d)  for part of the case, or part of an amount, assessed in accordance with Schedule 3.

3. As I understand the submissions on behalf of the husband, he relies on Rule  19.18 in support of a submission that costs should be awarded on a lump sum basis, the appropriate lump sum being the costs calculated at scale by the costs assessor whose affidavit is in evidence. 

4. The wife’s evidence in relation to the application is contained in her affidavit sworn 17 March 2020. The wife, in her affidavit prepared by her solicitor, deposed, relevantly:

   2.I have engaged the professional mediator who is also the solicitor [named] to mediate with [the husband] in 2017 but [the husband] refused and continued to pursue the legal action with 7 lawyers and barristers.

   3.My previous barrister [named] tried to mediate with [the husband] in 2019 but [he] refused.

   4.In December 2019, I participated in mediation in parramatta [sic], [the husband] refused to cooperate.

   5.This is the divorce case between the husband and the wife, each party should burden their own leagl [sic] fee.

   6.I have tried to mediate with [the husband] for three times from 2017-2019, but he refused all of them. Therefore [the husband] is not entitle [sic] to the require me [sic] to pay his legal costs.

5. Neither the husband nor the wife referred to me to any evidence of their respective financial positions or sought to rely upon a Financial Statement.

6. The parties own real property in the United Kingdom and in Sydney. Although both properties are subject to mortgage, the equity in those properties will eventually be available to be distributed between them in the substantive proceedings.

7. The husband is employed by the third party as a manager. The wife asserts that she is not in employment but her employment and her capacity to earn income are an issue in the substantive proceedings.

8. Although the wife does not submit that she is presently without funds to meet a costs order, that situation would be addressed if an order were to be made, by ordering that costs be paid from any money received by the wife pursuant to the final orders for financial adjustment. Present impecunity would not be a bar to the making of a costs order if such an order were otherwise justified.

9. On behalf of the husband it is submitted that the wife’s conduct of her case exacerbated his costs. He refers, in particular, to the fact that the wife amended her Points of Claim, setting out the basis of her claim against the third party, on Friday 6 December 2019. The husband was put to additional cost and expense to prepare for the hearing set down for 9 December 2019.

10. There is insufficient evidence to determine whether the asserted 17,000 documents produced on subpoenas issued at the request of the wife, which the husband’s legal representatives were obliged to inspect, were relevant only to her claim against the third party. Arguably, those documents, or some of them, may be relevant to the substantive claim between the husband and the wife.

11. Having joined the third party as a respondent in the proceedings, the wife was entirely unsuccessful in relation to the relief she sought against the third party. The husband was a necessary party to those proceedings.

12. I have not been made aware of any offers of settlement made by the husband in the proceedings involving the third party.

13. The husband has made an offer in relation to the costs applications. Having had his costs assessed by a costs assessor, he has offered to accept 55 per cent of the assessed sum of $69,235. That offer was not accepted by the wife.

14. The wife, although she made reference to offers to mediate in her affidavit, has given no evidence of any offer she has made in relation to the proceedings involving the third party.

15. The husband should not have been put to the cost of defending the claim against the third party.

16. It is therefore appropriate that the wife pay the husband’s costs in relation to the application against the third party.

17. For the same reasons as I have given in relation to the certification for senior counsel on the application of the third party, it was appropriate for both senior and junior counsel to be briefed on the application of the husband.

18. How then should the husband’s costs be calculated?

19. The husband has instructed a costs assessor to prepare an assessment of his costs in relation to the application against the third party which are assessed at $84,438 on a party/party basis.

20. However, that assessment has been conducted without any input from the wife who might dispute the reasonableness of particular items or argue that the particular item was referable to the applications between the husband and the wife rather than the application against the third party.

21. I propose to order that the costs be assessed on a party and party basis but, if the assessment is equal to or less more than the amount for which the husband has offered to settle, $69,235.21, then the wife will pay the costs of the assessment.

22. The amount assessed to be paid by the wife is to be paid from any funds she receives by virtue of the final orders for property settlement.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 1 May 2020 and re-issued on 5 June 2020.

Associate: 

Date:  05/06/2020