Lund & Whittall (No 3)
[2025] FedCFamC1F 287
•20 May 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lund & Whittall (No 3) [2025] FedCFamC1F 287
File number(s): DNC 518 of 2022 Judgment of: BERMAN J Date of judgment: 20 May 2025 Catchwords: FAMILY LAW – COSTS – Where judgment was delivered following final hearing – Where the applicant seeks that the respondent pay costs fixed in the sum of $150,000 on a party/party basis and pay the costs of this application – Where the respondent seeks that the application for costs be dismissed and the applicant pay the costs of this application – Where the applicant asserts that the respondent did not make full and frank disclosure – Section 117(2A) of the Family Law Act 1975 (Cth) – Consideration of the parties’ financial circumstances – Consideration of the parties’ conduct and the offers exchanged – Whether the applicant has been wholly unsuccessful – Costs order. Legislation: Family Law Act 1975 (Cth) s 117.
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 6.01, 12.13, 12.17, 15.05.
Cases cited: Bant & Clayton(Costs) [2016] FamCAFC 35,
Briese & Briese (1986) FLC 91-713,
Hadwick & Scadden (2020) FLC 93-973,
Lund & Whittall (No 2) [2025] FedCFamC1F 76,
Martin & Martin & Anor (No 2) [2014] FamCA 232,
Oriolo & Oriolo (1985) FLC 91-653,
Parke & the Estate of the late A Parke [2016] FLC 93-748,
Petrucci & Delos [2017] FamCA 1079.
Division: Division 1 First Instance Number of paragraphs: 77 Date of hearing: 9 April 2025 Place: Adelaide Counsel for the Applicant: Ms V. Farmer Solicitor for the Applicant: AFL Withnalls Lawyers Counsel for the Respondent: Mr K. Tredrea Solicitor for the Respondent: McQueens Solicitors ORDERS
DNC 518 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LUND
Applicant
AND: MR WHITTALL
Respondent
ORDER MADE BY:
BERMAN J
DATE OF ORDER:
20 MAY 2025
THE COURT ORDERS THAT:
1.Mr Whittall (“the respondent”) do pay Ms Lund’s (“the applicant”) legal fees, costs and disbursements fixed in the sum of FIFTY THOUSAND DOLLARS ($50,000) within twelve (12) months of the date of this Order.
2.All extant applications are hereby 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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Berman J
INTRODUCTION
By Application in a Proceeding filed 19 March 2025, Ms Lund (“the applicant”) seeks that Mr Whittall (“the respondent”) do pay her costs of and incidental to the proceedings as follows:
(1)Pursuant to r 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), the respondent pay the applicant’s costs of and incidental to the proceedings on an “ordinary basis” in a specific amount of $150,000, or alternatively, in such other sum as determined by the Court;
(2)That the respondent pay the applicant’s costs within 28 days; and
(3)That within 28 days, the respondent pay the applicant’s costs of and incidental to this Application in a Proceeding on an “ordinary basis” in the specific sum of $10,000 or alternatively in such other specific amount as determined by the Court.
The Application in a Proceeding is supported by the applicant’s affidavit filed 17 March 2025.
By Response to an Application in a Proceeding filed on 9 April 2025, the respondent seeks orders that the application for costs be dismissed, and further, that the applicant pay his costs of the action in the amount of 75 per cent of scale, as agreed or taxed.
The respondent does not seek a specified amount although there is broad support by each of the parties to fix quantum and thereby avoid further litigation that may arise if the Court determines that an order for costs should be made in favour of one party or the other. In the absence of quantum being fixed, the said amount will then need to be taxed.
The parties’ competing costs applications arise in respect of contested property settlement proceedings which culminated in judgment being delivered on 14 February 2025 in Lund & Whittall (No 2) [2025] FedCFamC1F 76.
The property of the parties available for division was not extensive and whilst substantial agreement as to the identification of assets and liabilities together with value was reached, there were areas of complexity that remained in dispute. The net assets of the parties were in the sum of $669,505, with superannuation agreed in the total sum of $1,064,952 comprised of the applicant’s cumulative entitlement to superannuation being $816,110 and the respondent’s entitlement being $248,842.
Following a contested hearing comprising three days in August 2024 and a further two days in January 2025, I ordered that the respondent transfer to the applicant all of his right title and interest in the property situate at B Street, Suburb C, Region D (“the Suburb C property”).
The value attributed to the Suburb C property was agreed in the sum of $1,000,000 but was subject to a mortgage of $393,308.
The settlement date for the transfer of the respondent’s interest in the Suburb C property to the applicant was to take place within 24 days of the order being made subject to the following:
6.Up until the transfer of the [Suburb C] property pursuant to paragraph 1 of these orders, the following shall occur:
(a) The respondent shall pay all repayments to the [E Bank], dealing number […] as and when they fall due up to the date of the discharge of the mortgage PROVIDED THAT if the respondent defaults in the payment of any mortgage payment and the default shall extend for more than fourteen (14) days then the applicant is entitled to bring enforcement proceedings seeking that the outstanding mortgage is to be discharged forthwith;
(b) The parties shall sign an authority and any other documents required by the mortgagee to release the mortgage; and
(c) The applicant will arrange for the mortgagee to attend on the settlement date for the purpose of delivery of title, executed release of mortgage and other required documentation.
The final orders sought by the applicant are summarised as follows:
(1)Within 60 days, the respondent transfer his interest in the Suburb C property to the applicant:
(2)The respondent do cause the mortgage secured over the Suburb C property to be discharged;
(3)Until the discharge of the mortgage, the respondent pay all repayments to E Bank with the acknowledgement of the respondent that the applicant has the right to occupy the Suburb C property until the discharge of the mortgage and settlement; and
(4)That within 60 days, the respondent pay to the applicant the sum of $500,000 (“the settlement sum”).
Each of the parties were to retain personalty and superannuation interests in their separate possession and control with the respondent to retain his interest in a number of corporate and trust entities described in the proceedings as the “group of companies”.
In particular, the most relevant consideration was the respondent’s interest in F Pty Ltd (“F Pty Ltd”), an entity incorporated in 2003 with the respondent and Mr L (“Mr L”) as both directors and shareholders each of 1,000 ordinary shares beneficially held.
The tension that arises in the competing costs orders sought by each of the parties is in circumstances where orders were made broadly in the terms sought by the respondent as to the status of the Suburb C property, and the payment and discharge of the mortgage over a period of 24 months. The applicant, however, sought that the mortgage be discharged over a period of 60 days with the further payment by the respondent of a settlement sum of $500,000.
It is also notable that neither party has provided a schedule of costs in support of either the sum sought by the applicant of $150,000 or an unspecified amount incurred by the respondent of which 75 per cent is claimed.
The parties did not press that it was not appropriate to apply a consideration of indemnity costs and as such should their separate applications be successful, costs are to be determined on a party/party basis.
For the purposes of the final hearing, Exhibits “1” and “13” represent the Costs Notices of each of the parties with the applicant’s costs as at 17 January 2025 in the sum of $226,583 (inclusive of GST) and the respondent’s costs as at 20 January 2025 in the sum of $183,862.55.
The parties also agreed that they would each pay one half of the total valuation fees in the sum of $43,290. However, it is not controversial that the respondent paid the fees but has not sought to bring to account one half of that sum as payable by the applicant.
It is likely that the costs were paid via one or more of the companies that comprise the group. It is not known how the payment of the valuation costs was accounted for. The applicant asserts that as a result of the lack of transparency as to the payment of valuation fees, they should be ignored. The respondent concedes that whilst an arithmetical calculation is not sought, the fact that the valuation fees were caused to be paid by the respondent may be a relevant consideration in the exercise of the Court’s jurisdiction.
DOCUMENTS RELIED UPON
At the hearing the applicant relied upon the following documents:
(1)Application in a Proceeding filed 19 March 2025; and
(2)Affidavit of the applicant filed 17 March 2025.
The respondent relied upon the following documents:
(1)Response to an Application in a Proceeding filed 9 April 2025;
(2)Affidavit of the respondent filed 7 April 2025.
APPLICATION FOR COSTS
In considering what orders, if any, should be made in respect of the applicant’s costs, s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) sets out that the Court shall have regard to the following:
(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, admission 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.
Accordingly, whilst the primary consideration of s 117 of the Act is that each party should pay their own costs, the applicant argues that there are circumstances which would justify the Court making an order pursuant to s 117(2A) of the Act.
As discussed, if an order for costs is made in favour of either of the parties then it is agreed that they should be assessed on a party/party basis.
A preliminary point taken on behalf of the respondent is that the applicant is out of time to bring her application for costs.
Rule 12.13(3) provides that:
…
(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.
Rule 15.05 provides that:
(2) If a period of more than 1 day is to be calculated by reference to a particular day or event, the particular day or the day of the event must not be counted.
…
(4) If the last date for taking an action that requires attendance at a registry is a day when the registry is closed, the action may be taken on the next day when the registry is open.
Judgment was delivered and final orders were made on 14 February 2025.
Rule 15.05 would provide that the first of the 28 days would be Saturday, 15 February 2025.
The Application in a Proceeding seeking costs was filed on 17 March 2025. Twenty-eight days from the date of judgment would require that the Application in a Proceeding be filed on or before 19 March 2025. As such, I consider that the application has been filed in accordance with the Rules.
The same cannot be said for the respondent’s Response to an Application in a Proceeding. The respondent’s affidavit in support of the said Response was filed 7 April 2025, however the Response to an Application in a Proceeding was provided to the Court at hearing on 9 April 2025 and subsequently filed on even date.
The affidavit in support of the cost orders sought can be described as a scant document that provides no explanation for the delay in bringing an application seeking a costs order.
The respondent considers that the costs sought by the applicant were not caused or increased by his conduct and summarises his opposition to the applicant’s application for costs as follows:
7.On 14 February 2025 the judgement and final orders of the Court were delivered. I achieved at trial an outcome that was as good as my Amended Response filed on 23 February 2024 while the Applicant has been wholly unsuccessful in the proceedings since that date, including being wholly unsuccessful in relation to Applications in a Proceeding filed by her on 26 February 2024, 1 March 2024 and 9 September 2024.[1]
[1] See the affidavit of Mr Whittall filed 7 April 2025 at paragraph 7.
Whilst the respondent has an arguable case in respect of his opposition to the order sought by the applicant, there is no explanation that justifies the delay in bringing his application for costs.
The financial circumstances of each of the parties
Judgment was delivered on 14 February 2025. There has been no challenge to the table of assets and liabilities as set out in judgment at [113]. As has been considered, the net assets in the sum of $669,505 are modest. The applicant and the respondent are 56 years of age and 53 years of age respectively. For her part, the applicant intends to continue her current employment as an office manager. The respondent is a self-described professional.
Neither party are likely to satisfy a condition of release in respect of their separate superannuation entitlements for the foreseeable future.
A significant aspect of the proceedings is the observation that the parties’ total costs excluding the cost of single expert valuation fees is in the sum of $410,445 being approximately 60 per cent of the total net assets.
As such, even considering what at first instance appears to be a generous outcome to the applicant, when costs are brought to account the position is marginal for the respondent and likely to be parlous for the applicant.
As such, the financial circumstances of the parties but in particular of the applicant is a relevant consideration.
The conduct of the parties
Rule 1.04 of the Rules provides as follows:
(1)The overarching purpose of these Rules, as provided by section 67 of the Federal Circuit and Family Court Act, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
(2)Parties to family law proceedings must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
(3)A party’s lawyer must, in the conduct of a proceeding before the court (including negotiations for settlement) on the party’s behalf:
(a)take account of the duty imposed on the party referred to in subrule (2); and
(b) assist the party to comply with the duty.
The main purpose of the Rules is to resolve proceedings in a just and timely manner and at a cost to the parties and the Court that is reasonable in all the circumstances.
The applicant sets out the following chronology of the history of the proceedings:
·On 4 November 2022, the applicant files proceedings with a first return date on 8 February 2023;
·On 21 February 2023, the respondent files his Response to Initiating Application;
·On 14 March 2023, orders were made for expert evidence for real estate and business valuations to occur. Further orders for disclosure were made;
·On 31 October 2023, the parties attend a Conciliation Conference with no agreement being reached;
·On 5 February 2024, the applicant files Amended Initiating Application met with a Further Amended Response to Initiating Application as filed by the respondent on 23 February 2024;
·On 21 February 2024, the respondent files an undertaking as to disclosure;
·On 26 February 2024, the applicant files an Application in a Proceeding with judgment delivered on 24 April 2024; and
·On 26 August 2024, final hearing commences with judgment delivered on 14 February 2025.
The applicant acknowledges that she was unsuccessful in her attempts to join F Pty Ltd and the respondent’s business partner Mr L.
It appears that the applicant’s solicitors have not charged her for the costs incurred in preparing and arguing the unsuccessful joinder applications.
The gravamen of the applicant’s application for costs has its foundation in the assertion that the respondent, whether by deliberate action or reckless indifference, did not make full and frank disclosure. It is asserted that the lack of transparency both in terms of the bookkeeping and accounting records of the group of companies, together with what might be considered as somewhat chaotic financial dealings by the respondent, was such that even if his initial offer might have been seen as generous and to some extent vindicated by the final orders actually made, it was not reasonable for the applicant to accept the core premise of the respondent that all his interests were identified and his shareholdings in the group of companies was without value.
An important consideration was the treatment of a commercial property situate at 1 J Street, Suburb K, Region D (“1 J Street”). I found that 1 J Street was purchased in September 2009 for $250,000 with a mortgage initially with the Commonwealth Bank of Australia and then refinanced with E Bank.
1 J Street was valued at $2,200,000. The respondent argues that there is a liability of approximately $2,000,075 arising from a loan facility between F Pty Ltd and the ANZ Bank dated 31 July 2023 in respect of a loan facility for $3,500,000.
The level of disclosure by the respondent in respect of the status of 1 J Street was wholly inadequate and the disclosure of the relevant documents evidencing the loan facility was only made available after the facility had been put in place.
I found that 1 J Street should be treated as a personal asset of the respondent as to his one-half interest as a tenant in common rather than the property being subsumed into the assets of F Pty Ltd.
Whether 1 J Street was considered as an asset of the respondent or whether it was part of the asset base of F Pty Ltd was immaterial to the single expert valuer (“Mr N”).
The financial statement and books of accounts for F Pty Ltd did not reflect any adjustment between the respondent and the company as to the costs and expenses paid in respect of 1 J Street.
I found that the arrangements put in place by the respondent in respect of 1 J Street should be considered as less than transparent business practice. It is also likely that efforts were made by the respondent to financially encumber an asset in which he would have a valuable interest.
Whilst there remains considerable uncertainty, the evidence suggests that monies borrowed from the ANZ Bank via the current loan facility in the sum of $3,500,000 has been dissipated.
Mr N noted at paragraph 14.17 of his second report that “some intra group loan balances do not reconcile” and that “as a general comment, the group financial statements are deficient in a couple of respects and my report is qualified accordingly.”
In evidence, Mr N conceded a significant level of irregularity in bookkeeping and proper financial recording of transactions. Such was the inadequacy of the information provided to the single expert that he adopted the somewhat unusual valuation methodology being that of a “look through approach” which highlighted that poor bookkeeping reflected decisions made by the respondent and his partner Mr L to “rob Peter to pay Paul.” A concern is also raised as to the evidence of the respondent having access to cash stored in a common safe in the office. The various business enterprises operated by the group of companies had as their income a cash component and whilst it was not possible to opine an estimate of cash taken by the respondent and Mr L, the amount is likely to be considerable.
In the judgment. I summarised the issue of discovery and transparency as follows:
96.I do not cavil with the submissions made on behalf of the applicant that the bookkeeping and transparency of the financial transactions involving the respondent and other associates involved in the [Whittall] group, at best could be described as chaotic and at worst is evidence of deceptive conduct, rendering the information provided to [Mr N] as unreliable.
Whilst the applicant submitted that I should ignore the valuation of Mr N and bring to account what might be described as the raw assets of the respondent and the group of companies to be treated as his property, I determined that the evidence of Mr N was compelling in that when considered holistically, the respondent’s interest in the group of companies would be given a nil value.
That does not diminish the conduct of the respondent in failing to make full and frank disclosure when required to do so by Court order and direct request from the applicant. It does provide a basis for the applicant to reject the orders sought by the respondent not because it was reasonable for her to do so but rather because until the final hearing required the respondent to produce documents that had been held by him, it was not possible nor reasonable for the applicant’s solicitors to provide firm advice and for the applicant to consider that she was sufficiently informed that would have enabled her to weigh up the competing claims.
Failure to comply with previous orders
Whilst the Court is obliged to have regard to whether the proceedings were necessitated by the failure of a party to comply with previous orders, no such conduct is alleged or asserted, however, it is an easy argument that a party to litigation has an obligation to make full and frank disclosure of documents that are likely to relate to an issue in the proceedings even if they are contrary to a party’s interest.
The general duty of disclosure is contained in r 6.01(1) of the Rules in the following terms:
Each party to a proceeding has a duty to the court and each other to give full and frank disclosure of all information relevant to the proceedings, in a timely manner.
As discussed, the overarching purpose of the Rules is to facilitate the efficient resolution of disputes in a manner and at a cost that is proportionate to the complexity of the matters in dispute.
In Oriolo & Oriolo (1985) FLC 91-653 (“Oriolo”), the Full Court held at 80,256:
We consider that there is a clear obligation on a party to proceedings in this Court to make a full and frank disclosure of all relevant financial circumstances.
The Full Court in Oriolo favourably considered the remarks of Smithers J in Briese & Briese (1986) FLC 91-713 at 75,180:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner… the need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance… mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties… there is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
The nature of the duty of disclosure under the Rules was considered by the Full Court in Hadwick & Scadden (2020) FLC 93-973. At [29] – [34] the Full Court said:
29.The respondent’s entitlement to have the applicant comply with a rule of the Court as to the disclosure of his financial affairs … or to seek further discovery … is not a right, the determination of which, is legally indispensable to the making of property settlement orders under s 90SM of Act. These are procedural rights only. Thus, decisions made by judges as to what discovery should be given, do not give rise to even an issue estoppel, because they are interlocutory and are not the determination of a fact or issue essential to the determination of the action…
It is not controversial that the consequences for non-disclosure or even inadequate disclosure, specifically where the information may be considered as important, can result in a costs order and if particularly egregious may invite a consideration of costs to be assessed on an indemnity basis.
In circumstances where the respondent conceded that his income exceeded his expenditure together with my finding that he conducted his financial affairs without there being any apparent financial control or appropriate bookkeeping, the Court could not have confidence as to the full extent of his financial circumstances. Given my findings at trial, it could not be considered as unreasonable for the applicant to reject what was upon first consideration to be a generous offer when the nondisclosure and chaotic financial management of the respondent did not enable the applicant to formulate an asset pool against which the orders sought by the respondent could be properly considered.
In Petrucci & Delos [2017] FamCA 1079, I considered the decision of Cronin J in Martin & Martin & Anor (No 2) [2014] FamCA 232 and at [27] – [28] said:
27.It is understood that the current proceedings do not necessarily fall within the category of “commercial proceedings”. It is also important to differentiate proceedings under the Family Law Act 1975 (Cth) where the parties may have different levels of control and advantage. In many cases, without the clear obligation on a party to make full and frank disclosure, matters that could well be relevant to the issues that the Court needs to determine may not be known by any other means.
The conduct of the respondent as to his obligation to make full and frank disclosure was very much tempered by his view that the offer he made was generous and even if his full financial position was the subject of proper disclosure, the end result rendered his conduct less egregious.
The obligation to make full and frank disclosure of documents relevant to the issues in the proceedings is an overarching obligation and resulted in the significant costs incurred by each of the parties which may have been unnecessarily incurred.
Whether any party to the proceedings has been wholly unsuccessful
The Court should have regard to whether any party was wholly unsuccessful in the proceedings. A consideration of what is intended by the term “wholly unsuccessful” has been the subject of judicial consideration. In Parke & the Estate of the late A Parke [2016] FLC 93-748, the Full Court considered the decision in Bant & Clayton(Costs) [2016] FamCAFC 35 at 17 and went on to say as follows:
36.We are of the opinion that so far as the criteria in s 117(2A)(b) – (f) are concerned, these are matters which are limited to the appeal proceedings because in each case, those sections refer to “the proceedings”…
The respondent argues that the applicant was wholly unsuccessful not just in the final orders sought by her but also in her earlier attempts to join F Pty Ltd and Mr L.
A determination as to whether a party has been wholly unsuccessful must be considered against the totality of the circumstances in which a party is asked to consider the orders that are being sought and further in this case, whether the orders sought by the respondent should be rejected.
As discussed, until the further disclosure was made by the respondent at the commencement of the final hearing and the Court was able to assess the evidence of Mr N as to the inadequacy of the respondent’s bookkeeping and financial management, it would not have been reasonable for the applicant to be required to accept the position adopted by the respondent.
CONCLUSION
I find that there should be an order for costs in favour of the applicant however, only limited assistance has been provided to assist in the determination of quantum.
I note that the total fees of the applicant are in the sum of $218,083. The applicant seeks an order for costs in the specific amount of $150,000 calculated as a party/party basis.
It could not be said that the entirety of the proceedings were occasioned as a result of the non-disclosure by the respondent. Doing the best that I can, and having regard to the affidavit evidence relied upon by the applicant, together with the history of the conduct of the proceedings, I consider that the respondent should pay the applicant’s costs of the proceedings on the basis of one third of the party/party charges resulting in the sum of $50,000.
Time allowed to pay
As discussed in the judgment at [148], there is a paucity of evidence as to the consequences to the respondent if he is not given sufficient time to pay the costs order. Whilst I do not consider that 24 months is appropriate, it is reasonable that the respondent be given 12 months in which to pay given that he has the ongoing obligation under the final orders to pay the mortgage instalments as and when they fall due with the intention that the loan will be discharged within 24 months of judgment.
I make orders as appear at the commencement of these reasons.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 20 May 2025
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