Lukacs & Lukacs (No 2)
[2022] FedCFamC1F 50
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lukacs & Lukacs (No 2) [2022] FedCFamC1F 50
File number(s): SYC 6545 of 2019 Judgment of: REES J Date of judgment: 10 February 2022 Catchwords: FAMILY LAW – COSTS – Applications dismissed. Legislation: Family Law Act 1975 (Cth) s 117(2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13
Division: Division 1 First Instance Number of paragraphs: 52 Date of last submission/s: 24 December 2021 In Chambers: 10 February 2022 Place: Sydney Solicitor for the Applicant: Eakin McCaffery Cox Solicitor for the First Respondent: York Law Family Law Specialists Counsel for the Second Respondent: Mr O’Reilly Solicitor for the Second Respondent: Mills Oakley Lawyers ORDERS
SYC 6545 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR M LUKACS
Applicant
AND: MS LUKACS
First Respondent
MR LUKACS
Second Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
10 FEBRUARY 2022
THE COURT ORDERS:
1.That the application for costs filed by Mr M Lukacs on 16 November 2021 be dismissed.
2.That the wife’s application for costs contained in her Response filed 3 December 2021 be dismissed.
3.That the husband’s application for costs contained in his Response filed 20 December 2021 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Lukacs & Lukacs has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
On 4 November 2021, I delivered reasons and made orders in financial proceedings between Ms Lukacs (“the wife”) and Mr Lukacs (“the husband”). The husband’s son, Mr M Lukacs (“the applicant”) was the second respondent in those proceedings.
The applicant now seeks an order that the wife pay his costs on an indemnity basis or, in the alternate, that she pay his costs on a party/party basis.
On 3 December 2021, the wife filed a Response to Application in a Proceeding seeking that the application be dismissed but that, if she were ordered to pay those costs, then the husband should pay them. Further, the wife sought a cascading series of orders in the following terms:
·Leave to make an application for an order that the husband pay her costs on a solicitor/client basis calculated at $311,547.12; or
·in the alternate, that the husband pay her costs on a party/party basis calculated at $270,007.50; or
·costs as taxed or agreed; or
·costs on an indemnity basis from 18 June 2020 in the sum of $285,709; or
·costs on a solicitor/client basis from 18 June 2020 calculated at $214,281.75; or
·costs on a party/party basis from 18 June 2020 calculated at $185,710.85; or
·costs on an indemnity basis from 25 October 2021 calculated at $48,489.
Judgment was delivered on 4 November 2021. Rule 12.13(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) provides:
(3) An application for costs may be made:
(a)at any stage during a proceeding; or
(b)by filing an Application in a Proceeding within 28 days after the final order is made.
The wife's Minute of Order filed immediately before the hearing contained at Order 11, an application for an order that “the Husband pay the wife's costs of and incidental to these proceedings”.
Thus the wife’s application for costs had been made during the proceedings and is made in accordance with the Rules.
On 20 December 2021, the husband filed a response to the wife’s application, seeking that the application be dismissed and that the wife pay his costs.
The applicant relied on an affidavit sworn by his solicitor on 12 November 2021 and written submissions filed on 24 December 2021.
The wife relied upon an affidavit sworn by her on 3 December 2021 and written submissions filed on 24 December 2021.
The husband relied on an affidavit sworn by him on 20 December 2021 and written submissions filed on 24 December 2021.
In order to place the parties’ arguments into some context it is necessary to understand, briefly, the issues in contention in the substantive proceedings and the orders which were made.
The significant assets of the husband and the wife were:
·The former home at Suburb B.
·An investment property in Suburb D.
·Shares in an entity to which I shall refer as F Pty Ltd which were legally owned half by the husband and half by the applicant.
Relevantly, in 1999 the husband transferred to the applicant shares in F Pty Ltd. That transfer was without consideration and without notice to the wife. At trial, those shares were found to have remained in the possession and control of the husband although there was no dispute that the applicant was the legal owner.
On the day before the trial, the wife filed a Minute of Order in which her position was changed. She no longer sought an order that the F Pty Ltd shares be transferred to her. Relevantly, she sought an order that the shares be transferred to the husband.
At the commencement of the hearing, there was discussion between me and counsel to the effect that if it were ultimately determined that the shares registered in the name of the applicant were beneficially owned by the husband, it was not necessary for the purpose of these proceedings to make orders transferring the shares to the husband but that the shares could, as between the husband and the wife only, be treated as the property of the husband. Thus, it was suggested, the applicant would no longer need to be a party to the proceedings. Neither the applicant nor the husband agreed with that proposition and the applicant did not seek to be excused from further participation.
In submissions, the wife sought an order that the shares should be treated, for the purpose of the proceedings, as if they were the property of the husband. The value of the shares at trial exceeded one million dollars.
In the judgment, it was determined that the shares should be treated as the property of the husband, as the wife submitted.
It was at all times the position of the applicant and of the husband that the applicant was the beneficial owner of the shares.
As between the husband and the wife, the effect of the orders was that the net assets of the parties were divided equally between them.
Relevantly, for the purpose of determining the assets available, the F Pty Ltd shares were treated as the assets of the husband. The wife was given the opportunity to retain Suburb B subject to her assuming liability for the whole of the mortgage. The investment property at Suburb D was to be sold and the proceeds equally divided.
THE APPLICANT’S COSTS
The applicant relies on an affidavit of his solicitor to which are annexed a number of offers. The wife relies on offers made by her.
On 2 June 2020, the wife’s solicitors wrote to the husband’s solicitors seeking a concession from the husband that the F Pty Ltd shares be dealt with as being held on trust for the husband and that the husband will ensure that the shares are transferred to him so that they can ultimately be transferred to the wife.
On 4 June 2020, the husband’s solicitors responded with his contention that the shares had always been jointly owned by him and the applicant.
The applicant was not then a party to the proceedings. He was not joined until September 2020.
On 22 February 2021, the applicant’s solicitor wrote to the wife’s solicitor, asserting the strength of the applicant’s claims and offering to resolve the matter, as between the applicant and the wife, on the basis that she withdraw her application in relation the F Pty Ltd shares and each party pay his or her own costs.
On 13 May 2021, another letter was written to the wife’s solicitors proposing that the wife’s application in relation to the shares be dismissed and that she pay the applicant’s costs of $45,000. That offer remained open until 14 May 2021.
On 7 June 2021, the wife’s solicitor wrote to the solicitors for the applicant and for the husband proposing that the F Pty Ltd shares be transferred to her as part of the property settlement at the value of $1,012,411.
This application is governed by the provisions of s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”).
There is no evidence of the financial position of the applicant and I am not, therefore, able to make any comparison of the relative positions of the applicant and the wife.
The applicant does not point to any conduct of the wife in the proceedings that exacerbated his costs, other than that she continued the proceedings in relation to the F Pty Ltd shares. On behalf of the wife, it is submitted that no application was made, after the discussion referred to in Paragraph 15, for the applicant to be removed as a party or excused from further attendance on the basis that the applicant would concede that, as between the husband and the wife only, the Court could deal with the shares as being the husband’s property without affecting the applicant’s legal ownership. That concession was not made by the applicant and it was not made by the husband. Further it is submitted, correctly, that although the applicant remained a party throughout the hearing, his counsel did not cross examine the wife or any of her witnesses.
Whilst the wife was not successful in her position as stated in the Minute of Order, she did succeed in her contention in submissions that the shares should be dealt with as if they were the property of the husband. The position that the applicant maintained at all times was that he was the legal and beneficial owner of the shares and in that position he was unsuccessful.
My attention has not been taken to any offer of settlement made by the applicant which should have been accepted by the wife.
There is no justification advanced by the applicant warranting an order that the wife pay his costs.
The application will be dismissed.
THE COMPETING APPLICATIONS OF THE WIFE AND THE HUSBAND
On 2 June 2020 the wife’s solicitors wrote to the husband’s solicitors asking, inter alia, that the husband concede:
1.That all shares held by [the applicant] in [F Pty Ltd] are shares that are held on trust by [the applicant] for [the husband].
2.That for the purpose of the financial settlement between the parties,
[the husband] will ensure that [the applicant] do all acts and things and sign all documents necessary to have the shares registered in his name transferred into [the husband’s] name (noting [the wife’s] proposal is that the same be transferred to her by way of final property settlement).
On 18 June 2020, the wife’s solicitors wrote to the husband’s solicitors offering to settle on the basis that:
·The former matrimonial home is sold.
·The F Pty Ltd shares are transferred to the wife.
·The husband retains the Suburb D unit.
·The net assets are divided such that the wife receives 52.5 per cent of the asset pool, however no balance sheet was provided with the offer and it is not possible to ascertain whether that is an accurate reflection of the value of the asset pool or the effect of the offer.
I note that the wife’s application at trial was that she receive 52.5 per cent of the asset pool and that application was not successful.
On 25 October 2021, the hearing being listed to commence on 27 October 2021, there was a further offer of settlement by the wife to the effect that:
·The former matrimonial home be transferred to the wife, subject to a mortgage of $128,937.
·That the husband discharge a mortgage over the home in the sum of $161,094.
·That the husband retain the Suburb D property.
·That the shares in F Pty Ltd are declared to be the property of the husband.
·That the husband transfer superannuation of $4,293 to the wife.
In the letter, it was asserted that the offer represented an allocation of 47 per cent of the net asset pool to the wife, however, as is explained later in these reasons, that calculation is not an accurate reflection of the asset pool as it was found to be at trial.
The wife’s application for costs against the husband is predicated upon those offers.
In his affidavit sworn 20 December 2021, the husband did not depose to making any offers of settlement. I infer that, if he made offers, those offers represented, for him, a more favourable outcome than that contained in the judgment.
CONSIDERATION
As a result of the orders which were made in 2021, the property of the husband and the wife was divided equally between them. Neither has an income from employment. Their financial positions are comparable.
I was not directed to any conduct of either the husband or the wife that affected the costs of the proceedings.
Neither the husband nor the wife was successful in achieving the result for which he or she contended.
I propose to consider the wife’s offer made on 25 October 2021 with reference to the asset pool as it was determined at trial.
The net assets were $5,409,478.
The wife’s offer was that she receive:
·Suburb B subject to a mortgage of $128,937 – net value $2,571,063
·Personalty $182,489
·Superannuation $4,293
Total $2,757,845
That offer results in the wife’s receiving 50.98 per cent of the net assets, some $53,000 more than she received by operation of the final orders.
However, it was a term of the offer, in relation to the F Pty Ltd shares:
That the purported severance of the joint tenancy undertaken by the Husband and referrable to the shareholding he owned originally in his joint name and that of
Ms Q be declared to be void and liable to be ignored and set aside.The F Pty Ltd shares, their acquisition and the manner in which the husband dealt with them, are dealt with at paragraphs 64 to 97 of the judgment. The F Pty Ltd shares, and the manner in which they should be treated as between the husband and the wife, played a considerable part in the proceedings. Until the commencement of submissions, it was the wife’s position that the legal ownership of the shares must be transferred to the husband and the husband’s position that the applicant owned his shares both legally and beneficially. Neither party was successful in his or her contentions and, as had been foreshadowed at the commencement of the hearing, it was determined that:
97.…The interest in the shares will be treated as the property of the husband for the purpose of determining whether it is just and equitable to alter interests as between the husband and the wife.
The reasons for judgment concluded:
167.Each of the husband and the wife contended for a five per cent adjustment in his or her favour. In an asset pool of $5,409,478, five per cent is $270,474. In pursuit of that amount, the wife spent $491,278 and the husband spent $345,712.
168.They would each have been better off had they acceded to the other's application.
I am not persuaded other than that each should bear his or her own costs.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 10 February 2022
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