Mathers & Garver

Case [2023] FedCFamC1F 10

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Mathers & Garver [2023] FedCFamC1F 10

File number: WOC 854 of 2014
Judgment of: ALTOBELLI J
Date of judgment: 20 January 2023
Catchwords: FAMILY LAW – COSTS – Where the applicant wife seeks costs on an indemnity basis following the conclusion of proceedings under s 79 of the Family Law Act 1975 (Cth) – Protracted litigation – Where the husband passed away during proceedings and was substituted by his legal personal representative – Whether the legal personal representative should be personally liable for the costs of the proceedings – Where the legal personal representative was the director and trustee of the third respondent – Conduct of the parties – Respondents ordered to pay wife’s costs in a fixed sum.
Legislation:

Family Law Act 1975 (Cth) ss 79, 79(8), 117

1           Family Law Rules 2004 (Cth)

2           Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17

Cases cited:

Bain & Bain (Deceased) (Costs) (2017) FLC 93-797; [2017] FamCAFC 164

Colgate-Palmolive Company and Anor v Cussons Pty Limited (1993) 46 FCR 225; [1993] FCA 801

Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116

Mathers & Garver & Ors [2019] FCCA 116

Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157

Munday v Bowman (1997) FLC 92-784; 22 Fam LR 321

Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248

PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158

Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4

Phillips & Hansford (2020) FLC 93-941; [2020] FamCAFC 28

re Jones; Christmas v Jones [1897] 2 Ch 190

Warrick & Mia (No. 3) [2021] FamCA 348
Division: Division 1 First Instance
Number of paragraphs: 107
Date of last submissions: 26 September 2022
Date of hearing: Heard on the papers
Place: Sydney
Counsel for the Applicant: Mr Harper
Solicitor for the Applicant: DGB Lawyers
Counsel for the First  Respondent: Dr Barnett SC
Solicitor for the First Respondent: Banksia Family Lawyers
The Second Respondent: Did not participate
Counsel for the Third Respondent: Mr Othen
Solicitor for the Third Respondent: Banksia Family Lawyers

ORDERS

WOC 854 of 2014

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS MATHERS

Applicant
AND:

MR GARVER

First Respondent

OFFICIAL TRUSTEE IN BANKRUPTCY FOR THE ESTATE OF MR MATHERS

Second Respondent

MATHERS HOLDING PTY LTD

Third Respondent

order made by:

ALTOBELLI J

DATE OF ORDER:

20 January 2023

THE COURT ORDERS THAT:

1.Pursuant to r 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), within 28 days of the date of these orders, the First and Third Respondents are to jointly and severally pay the costs incurred by the Applicant in the fixed sum of $478,723.

2.All other extant applications in this matter are dismissed.

Note:   The form of the order is subject…

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AGLC
Mathers & Garver [2023] FedCFamC1F 10
Case
[2023] FedCFamC1F 10
Decision Date

CaseChat Overview and Summary

In the case of Mathers & Garver, the wife sought costs from the first respondent, Mr Garver, who was the legal personal representative of the deceased husband and the trustee of a family trust. The wife claimed that Mr Garver's conduct in the litigation warranted personal costs against him. The third respondent, Mathers Holdings Pty Ltd, was also a party to the proceedings, and the wife sought alternative costs from this entity. The dispute centred on the interpretation of a settlement agreement from 12 May 2016, which provided for a net payment to the wife of $1,175,000. The key legal issue was whether Mr Garver's dual role as the legal personal representative and trustee of the family trust justified personal costs against him. The court had to determine whether the wife had adequately differentiated between Mr Garver's roles and whether this differentiation was necessary for her to seek personal costs against him.

The court examined the submissions and affidavits from both parties, considering the complexity of Mr Garver's dual roles and the implications for costs. It noted that Mr Garver's affidavit suggested he believed the wife was no longer agreeable to the settlement terms, a contention the wife denied. The court also highlighted the significance of the respondents' concession on 30 April 2018 that the trust assets were property for the purposes of the proceedings, which influenced the timing of costs. The court found that Mr Garver's roles as the legal personal representative and trustee were distinct and that the wife's failure to articulate this differentiation in her submissions weakened her claim for personal costs against him.

The court ultimately concluded that the wife had not sufficiently differentiated between Mr Garver's roles, which was crucial for her to seek personal costs against him. Consequently, the court rejected the wife's claim for personal costs against Mr Garver. The final orders, made on 11 November 2020, provided for a payment of $1,525,417 to the wife by the third respondent, with the wife to pay tax of $387,190, leaving a net payment of $1,138,227. The court's decision clarified the scope of costs that could be claimed against Mr Garver in his dual capacity.

Orders

Orders of the court

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Background

Background to the litigation

The final orders made on 11 November 2020 are reproduced in the first schedule to these reasons. Ultimately, those orders provided for a payment of $1,525,417 to the wife by the third respondent. Paragraph 246 of the wife’s affidavit filed 18 February 2021 deposes that the wife then had to pay tax of $387,190, leaving a net payment of $1,138,227.OTHER RELEVANT FACTS On 12 May 2016, the wife and the first respondent signed heads of agreement to settle the litigation on the basis that, in effect, the wife was to be paid $1,175,000 net of tax. That settlement was not implemented. The complexity seems to have been establishing what “net of tax” actually meant. The first respondent deposed at paragraph 16 of his affidavit filed 9 December 2020 that he understood the wife was no longer agreeable to settling the proceedings on the basis of the heads of agreement. His understanding is not supported, however, by any other evidence. The wife at paragraph 499 of her affidavit filed 18 February 2021 denies (at least implicitly) that she was no longer agreeable to settling the proceedings on the basis of the 12 May 2016 document. It is likely that the course of the litigation distracted the parties from the offer. As the respondents continued to deny that the trust assets were, in fact, property for the purposes of the Act, until 30 April 2018, the wife was put to proof as regards to her claim. The weight to be placed on the signed heads of agreement in the present context is greatly reduced because of the above. There is a dispute between the parties about when, exactly, the respondents conceded that the trust assets were, in fact, property for the purposes of the s 79 proceedings. The respondents contend it was 10 April 2018, when the concession was made in a conditional letter from the respondent’s lawyers, which was expressed as a formal offer on a without prejudice save as to costs basis. The offer was not accepted, presumably because it was conditional on each party paying their own costs, a matter which the wife would not countenance. An unconditional concession was not made until 30 April 2018, two days before the commencement of the final hearing. The Court finds this to be the relevant date for costs purposes.PRELIMINARY ISSUE – STATUS OF MR GARVER The first respondent, Mr Garver, (“Mr Garver”) was joined to the proceedings as the legal personal representative of the husband following the husband’s death. Mathers Holdings Pty Ltd, against whom the wife seeks costs in the alternative, was the third respondent in the proceedings. Mr Garver was the director of the third respondent, being the trustee of the Mathers Family Trust, and was engaged in the proceedings on that basis as well. On behalf of Mr Garver, it was contended at paragraph 5 of his written submissions filed 25 August 2022 that it is important to differentiate his conduct as the legal personal representative and a party to the proceedings from his role as trustee for the third respondent. With respect to his role as the legal personal representative, he acted in the place of the husband as the executor of the husband’s estate (which was bankrupt). As trustee, his role was to protect the interests of the beneficiaries of the trust. It was further submitted that the wife has failed to articulate this differentiation in circumstances where she is seeking her costs against Mr Garver personally.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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