Lloyd and Merritt

[2011] FamCA 907

FAMILY COURT OF AUSTRALIA

LLOYD & MERRITT [2011] FamCA 907

FAMILY LAW – Property: Interim distribution of property
FAMILY LAW – Costs: unnecessary dispute.  Costs awarded.

Family Law Act 1975 (Cth)

APPLICANT: Ms Lloyd

RESPONDENT: Mr Merritt

FILE NUMBER: MLC 4489 of 2011

DATE DELIVERED: 29 November 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 29 November 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stewart

SOLICITOR FOR THE APPLICANT: Mason Sier Turnbull

COUNSEL FOR THE RESPONDENT: Mr Love

SOLICITOR FOR THE RESPONDENT: Frank Costanzo & Associates

Orders

1. That the husband pay the wife’s costs fixed in the sum of $2910.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That the interim applications are otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4489  of 2011

Ms Lloyd

Applicant

And

Mr Merritt

Respondent

REASONS FOR JUDGMENT

1. On 29 November 2011 in a busy Duty List, I made some orders on the application of the wife and indicated that I would give reasons later.  These are those reasons.  There was also a disputed issue associated with costs and these reasons deal with that issue as well.

2. The parties began living together in 1989 and married in 1991, separating in 2008.  There are three children of their marriage aged between 10 years and 17 years.  The 10 year old child is handicapped.

3. The husband described himself as a company director but I am not entirely clear about his current status.

4. The wife is a speech pathologist by profession who works as either a self-employed person or as a contractor.  The husband accuses her of not making comprehensive disclosure as to her financial position.  The documents would appear to me to be reasonably close to accurate.

5. The dispute related to the release of $83,000 or thereabouts being the proceeds of the sale of the former matrimonial home currently sitting in a trust account. 

6. The wife sought the whole of that sum and the husband’s application sought a division of it between the parties.

7. The proceedings began with Ms Stewart of counsel indicating that there had been a conference the previous day and that agreement had not been reached and therefore the substantive issue arising out of the application filed on 24 May 2011 for the payment of the proceeds of the sale of the home to the wife was extant. 

8. Mr Love of counsel on behalf of the husband said there had been agreement the previous day and the only issue in dispute between the parties was the fact that the wife was now claiming her costs.  That statement was tantamount to a concession that there was an agreement and as it transpired, the proceeds of the sale of the home were to be paid to the wife.

9. Because there was a dispute between the parties as to what they were litigating about, ultimately, it was agreed that I had to determine the substantive issue.

10. In May 2011, the wife sought the whole of the $83,000.  The husband sought a division of it as to $44,000 or thereabouts to him and $37,000 or thereabouts to the wife. 

11. In his affidavit in support of the application, the husband said that the children were living in a shared care arrangement and because of the special needs of the youngest child, facilities would be required by both parties.  On that basis, he said that he sought a division as to “65/35 split of all assets” in his favour.  When I challenged Mr Love about whether that was what the husband was still proposing, he said the husband did not pursue that but was now agreeing that there should be a percentage division in favour of the wife.  He said that the division was more than half in her favour.

12. The dispute between the parties concerned the property to be divided.  On the documents before me, the wife said that the husband was a director of a company in which there was an entitlement to units in a unit trust and that those units were held by the parties’ family trust.  Mr Love said that the property, albeit legally owned by the husband, was property that would have to be divided upon the property settlement.

13. In his affidavit, the husband said that the relationship with the other company directors had come to an end and his employment had been terminated.  Not only is his directorship now a subject of dispute but he was also apparently an employee and he has commenced an unfair dismissal claim. 

14. In his affidavit, the husband said that the shares were worth $150,000.  The wife’s position was that it was $280,000.  Perplexingly, counsel for the wife produced a letter dated 10 November 2011 from the husband’s solicitors showing that at a round table meeting on 27 October 2011 between the company directors an initial offer for the shares was made by “the husband’s previous employer” for $240,000.  I am not at all clear on whether the offer was rejected because it was not sufficient but on any view, the husband’s affidavit sworn on 29 July 2011, does not reflect the reality of the value of the shares.  It is well understood that an offer to buy something is not conclusive evidence of the value of the item but here, the husband’s evidence about what was in a pool to be divided reflected a much lower figure than he was pursuing in his claim against the company.  I see no reason why I cannot take a more optimistic approach when considering whether the wife is likely to ultimately retain more than $83,000 from the parties’ assets.  There is clearly a dispute about what the shares will ultimately be worth but it would seem that the other shareholders are willing to pay a lot more than what the husband was deposing to in July.

15. The pool of assets between the parties apart from the proceeds of the sale of the home amounted to two motor cars of modest value and some superannuation.  The husband’s affidavit also set out that he thought the wife’s business was worth $100,000 but he had no evidence to support that and Mr Love indicated that it was simply the husband’s estimate.  That evidence was unhelpful because it was not supported by any methodology.  The wife deposed to earning $70,000 per annum albeit that the husband disputes her capacity, it is hard to see how the husband arrived at $100,000.  No evidence supported it.

16. Doing the best I can however, there is a pool of assets of somewhere in the vicinity of a minimum of $400,000.  On any view of both parties’ case before the Court, the wife is going to get more than $83,000.

17. The husband’s position was that $83,000 should be partially divided in his favour but to do so as I pointed out, would ultimately mean that the husband would then have to pay that back to the wife along with what ever other sum would enable her to obtain her entitlement.  I acknowledge that much of that depends on the value and ultimate sale of the shares and possibly any unfair dismissal claim. 

18. I refer to the Full Court’s decision in Strahan and Strahan [2009] FamCAFC 166, 241 FLR 1, (2011) FLC 93-466 which requires a number of matters to be addressed before the Court can exercise its powers under s 79 of the Act. This was clearly and always an application for a partial distribution of property under s 79 of the Family Law Act 1975 (Cth) (“the Act”). There is sufficient evidence in the affidavit of the wife to justify an order being made. Any order so made for the reasons I have set out, is unlikely to prejudice the interests of the husband.

19. On any view of the facts as I find, the wife is entitled to the $83,000.  

20. Having reached that conclusion and having told the parties that I could not see any difficulty in such an order, Mr Love submitted that the husband had always been willing to make the $83,000 payment the previous day.  Therein began the dispute over costs. 

21. The costs issue arose in unusual circumstances.  The exact sequence of events was clouded because of a dispute between the lawyers over the timing of their correspondence the previous day.  Mr Love said that the solicitor for the husband had sent to the solicitor for the wife a facsimile transmission seeking minutes of orders which would have reflected an agreement to pay the $83,000 to the wife.  He asserted that the facsimile transmission was sent at 3.00pm or thereabouts because that was the time shown on the relevant letter.  The evidence of the wife’s practitioner was that the letter was not received until 4.00pm.  It is a sad day when legal practitioners descent to such trivia but having regard to the submission put by Mr Love, I directed that the parties obtain affidavits from their respective solicitors on the timing.  It became clear after the luncheon break that the facsimile time on the letter from the solicitor for the husband was wrong and that it was one hour out.  In other words, the solicitor for the wife was right and the document was received at about 4.00pm.  As the affidavit of the solicitor for the wife pointed out, she had already briefed counsel at that stage. 

22. Mr Love said that the affidavit of the law clerk in his instructor’s office disclosed that she phoned the solicitors at 3.48pm.  That was then followed by the letter some minutes later.  According to the affidavit, the personal assistant to the solicitor at the other end indicated that the minutes would not be available before 5.00pm.  All of those matters seem irrelevant to me because of the fact that the negotiations had occurred at the very last moment and counsel had already been briefed.  Mr Love suggested that perhaps counsel’s fee could have been reduced.  All of that seems to miss the point.

23. Section 117 of the Act provides that each party shall bear their own costs unless there are circumstances which justify the Court departing from that principle and if contemplating so doing, the Court must take into account the matters set out in s 117(2A) of the Act.

24. The very nature of the dispute seems to me to justify an order for costs against the husband.  The negotiations were left until late and counsel had already been briefed.  The solicitor for the husband seemed to be suggesting that it was the responsibility of the wife to draw the minutes.  I do not see such an obligation.  The minutes, which would then have been unambiguous, could have been prepared by the solicitors for the husband and the matter could have been far more expeditiously resolved. 

25. There are circumstances therefore that justify the departure from the principle.

26. Section 117(2A) requires the Court to contemplate such matters as the financial circumstances of the parties. Neither of them is endowed with large wealth. However, on any view, the wife’s circumstances are such that she incurred costs unnecessarily because the dispute was not resolved earlier. It would be unfair in those circumstances to expect the wife to bear costs when the husband could have resolved the matter many months before let alone the day before. The husband has been unsuccessful and wholly so. There is no suggestion of non-compliance with court orders.

27. Section 117(2A) entitles the Court to take into account any other circumstance. This was an unseemly dispute that should not have occurred and should not have wasted the parties’ time let alone that of the Court. The husband seemed to be saying that he had always been willing to pay the $83,000 but left it to the wife to draw the necessary documents to avoid a hearing.

28. The wife’s position had been clear since May.  Counsel had been briefed early.  Counsel would not have had an opportunity to obtain another brief at such late notice.  The wife would therefore have incurred the costs necessarily thrown away.  The other perplexing thing is that the resolution of the matter did not require court orders.  The husband could have simply agreed for the money to be transferred direct to the wife and the proceedings may very well have gone away.  In those circumstances, there is every reason to make an order for costs against the husband. 

29. The wife sought the costs of $2500 representing counsel’s fee and a further $410 as a result of the affidavit that I required to be filed to overcome the dispute between the two lawyers.  I see no reason why the husband should not pay those extra costs having regard to the fact that the dispute could quite easily have been sorted out by counsel obtaining instructions indicating that the fax machine was wrong.

30. The costs sought by the wife amounted to $2,910.  To make an order for the wife’s counsel’s fees in full would amount to an order for indemnity costs and the circumstances in this case do not justify such an order.  I do however consider that the schedule to the Rules is appropriate at the higher range having regard to the fact that counsel had already been briefed.  I propose therefore to allow $1,565 for counsel.  The necessary affidavit material including the affidavit prepared during the hearing will be seen to be close to or exceed $2,900.  It seems to me that the costs sought of $2,910 are reasonable.  I propose to make that order.

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 29 November 2011.

Associate:

Date:  5 December 2011