McDermott and McDermott
[2017] FamCA 619
•17 August 2017
FAMILY COURT OF AUSTRALIA
| MCDERMOTT & MCDERMOTT | [2017] FamCA 619 |
| FAMILY LAW – COSTS – INDEMNITY COSTS – Where application for indemnity costs – Where non-compliance with Rule 19.08(3) – Where application for indemnity costs fails – Where otherwise consideration of general principles – Where compelling circumstances for a departure from the normal rule – Where husband ordered to pay wife’s costs of the proceedings on a party/party basis. |
| Family Law Act 1975 (Cth)s 117 Family Law Rules 2004 (Cth) rr 19.08, 19.18 |
| Hawkins & Roe [2012] FamCAFC 77 Kohan & Kohan (1993) FLC 92-340 McDermott & McDermott [2014] FamCA 245 McDermott & McDermott and Ors [2015] FamCA 87 McDermott & McDermott [2015] FamCA 574 McDermott & McDermott and Ors [2016] FamCA 613 McDermott & McDermott and Ors [2017] FamCA 376 Penfold v Penfold (1980) 144 CLR 311 Prantage & Prantage [2013] FamCAFC 105 |
| APPLICANT: | Mr McDermott |
| RESPONDENT: | Ms McDermott |
| FILE NUMBER: | SYC | 70 | of | 2014 |
| DATE DELIVERED: | 17 August 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 29 February 2016, 1, 2, 3, 4 and 7 March 2016 and 13 December 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hodgson & Ms Picker |
| SOLICITOR FOR THE APPLICANT: | Hancock Alldis & Roskov Lawyers & Notaries Public |
| COUNSEL FOR THE RESPONDENT: | Mr Lethbridge SC & Ms Eldershaw |
| SOLICITOR FOR THE RESPONDENT: | Campbell Paton & Taylor |
Orders
That the husband pay the wife’s costs of and incidental to the proceedings including this application for costs, such costs to be assessed on a party/party basis, as agreed within one month from this date or otherwise as assessed.
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 McDermott & McDermott 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 PARRAMATTA |
FILE NUMBER: SYC 70 of 2014
| Mr McDermott |
Applicant
And
| Ms McDermott |
Respondent
REASONS FOR JUDGMENT
The application for determination is the wife’s application for costs arising from orders made 19 May 2017 as to final property and parenting: McDermott & McDermott and Ors [2017] FamCA 376.
Orders were made on 17 May 2017 as follows:
PARENTING
(1) That all previous parenting orders be discharged.
(2) That the father and mother have equal shared parental responsibility for the children K born … 2006 and AA born … 2009.
(3) That the children live with the mother.
(4) That the children spend time with the father as agreed between the father and mother in writing such writing to include SMS or email communication and failing agreement as follows:
a) during school term each fourth weekend for a block of four nights from 4.00 pm Thursday to 4.00 pm Monday and for the purpose of implementing this order:
(i) with the first of such blocks shall coincide with the third weekend after the resumption of school term;
(ii) provided always that should such time coincide with the Mother’s Day weekend or sports club (as opposed to sports club camp) the children’s time with the father shall be changed to the following weekend without interruption to the sequence of weekends that otherwise would apply and for the purposes of implementation of this order the wife shall inform the father by SMS or email not less than seven days prior to the weekend in question of any forthcoming sports club event that would interfere with the children’s time with the father as provided above.
b) during school holidays:
(i) in even numbered years from 9.00 am on the first Saturday following the conclusion of school term to 4.00 pm on the Saturday closest to the midpoint of the school holiday period; and
(ii) in odd numbered years from 9.00 am on the Saturday falling closest to the midpoint of the school holiday period to 4.00 pm on the last Saturday of the school holiday period;
(iii) if the children are to spend time with the father during a period that conflicts with sports club camp then that week of the children’s time with the father being the week from Saturday to Saturday shall be changed to the week that follows on from the last week of the holiday period that the children would spend with the father in even numbered years or the week that immediately precedes the holiday period that the children spend with the father in odd numbered years.
(5) That notwithstanding the above orders:
a) the children shall spend time with the father on the children’s birthdays from 3.30 pm to 7.00 pm if the birthday falls on a school day and from 1.00 pm to 7.00 pm if the birthday falls on a non-school day provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to the birthday whether he proposes to spend time with the children as provided;
b) the children shall spend time with the father on Father’s Day from 10.00 am to 7.00 pm provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to Father’s Day whether he proposes to spend time with the children as provided;
c) except when Easter occurs during a school holiday period the children shall spend time with the father on Easter Sunday in even numbered years from 10.00 am to 7.00 pm provided always that the father shall advise the mother by SMS or email communication not less than 72 hours prior to Easter Sunday whether he proposes to spend time with the children as provided.
(6) The mother and father shall be at liberty to have telephone communication with the children while they are in the care of the other parent each Monday, Wednesday and Friday between 6.00 pm and 8.00 pm and on Christmas Day, Easter Sunday, Father’s Day, Mother’s Day, each party’s birthday and the children’s birthdays by placing a call to either of the children’s mobile phone numbers.
(7) That the mother and father shall ensure that the other is kept informed as soon as is reasonably practicable of:
a) any serious medical problems or illnesses suffered by the children or either of them, including the details of any hospital or medical centre to which the children have or child has been taken in case of an emergency;
b) any medication that has been prescribed for the children or either of them that needs to be taken during the time the child is in the care of the other;
c) any appointments with any specialist medical doctor, dentist or other health professional and the name and contact details of such professional;
d) unless the appointment was attended by both, the outcome of any attendance by the children or either of them on any specialist medical or other health professional, including copies of any medical reports provided by that professional within 3 days of receipt of such report;
e) any changes to their residential address and other contact details within 48 hours of the change occurring;
f) any other relevant matter to the welfare of the children or either of them.
(8) That both the mother and father are permitted to liaise directly with the children’s education provider, sporting bodies and/or extracurricular organisations to obtain any necessary information about their progress and both are to do all things necessary to authorise the school, sporting bodies and/or other organisations to release such information as may be requested by the other to the extent permitted by law.
(9) That both the mother and father shall provide authorities to any education provider that provide services to the children to provide to both parents copies of the children’s school reports, school circulars, newsletters, school photograph order forms and invitations to attend any school activities to which parents are invited to attend and for both parents to be named on all school and extracurricular records as emergency contacts.
(10) That both the mother and father shall do all acts and things to authorise any medical practitioner, dentist, counsellor or other health professional who treats the children or either of them to provide information to the other upon request by the other to the extent permitted by law.
(11) That both the mother and father are permitted to attend on parent teacher interviews, concerts, carnivals, sporting matches, training sessions, prize days, and other events involving the children or either of them at school or in the context of extra-curricular activities to which parents are ordinarily invited, notwithstanding that such event occurs at a time when the children are in the care of the other parent pursuant to these orders.
(12) That both the mother and father are restrained from criticising or denigrating the other or member of the other’s household and from discussing these proceedings in the presence or hearing of the children.
(13) That except as otherwise agreed by the mother and father in writing such writing to include SMS or email communication the father shall collect the children from the gate at the D Street property at the commencement of his time with the children and return the children to the front gate of the D Street property at the conclusion of his time with the children.
(14) That the mother provide to the father not less than two months’ notice in writing such writing to include SMS or email communication of any proposal by her to relocate the residence of the children outside the state of New South Wales.
PROPERTY
(15) That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in the properties known as “D Street” and “Property BB”, E Town NSW.
(16) That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in any lease holding, Crown Grant, water licence, clearing permit relating or attaching to any parcel or parcels of land comprised in D Street including Leases …, …, …, ….
(17) That within 28 days from the date of these orders the husband do all things necessary to transfer to the wife his interest in the property known as “Property CC” NSW being Certificate of Title Folio Identifiers … and ....
(18) That the wife be declared as against the husband the sole beneficial and legal owner of assets, equipment and stock owned by either of them situate on the property at D Street.
(19) That the partnership “Mr & Ms McDermott” be dissolved at midnight on the date the Receiver/Manager’s notification is sent to the parties and that thereafter the wife be declared against the husband the sole legal and beneficial owner of the assets, including plant and equipment, of the said partnership including but not limited to:
a) Tractor;
b) Excavator;
c) Scraper;
d) Backhoe;
e) Back Plough;
f) 4WD Regn ...
(20) That within 28 days from the date of these orders the husband pay to the wife the sum of $226,000.00.
(21) Pursuant to section 106A of the Family Law Act 1975 in the event that the husband refuses or neglects to comply with any direction or order to execute a deed or instrument as required by or to give effect to these orders within seven days of a written request by the wife or the receiver/liquidator, the wife is appointed to execute the deed or instrument in the name of the husband and to do all acts and all things necessary to give validity and operation to the deed or instrument.
These reasons assume a familiarity with interlocutory judgments delivered in the course of the proceedings: McDermott & McDermott [2014] FamCA 245; McDermott & McDermott and Ors [2015] FamCA 87; McDermott & McDermott [2015] FamCA 574; McDermott & McDermott and Ors [2016] FamCA 613 and the reasons for judgment delivered in the context of final orders in May 2017.
It is noted that parenting issues between the parties were substantially resolved and there were only discrete issues for determination at final trial.
Otherwise, the primary focus was on the property issues between the parties.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2) that provides that in proceedings under this Act, where the Court is of the 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.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:
a) the financial circumstances of each of the parties to the proceedings;
b) whether any party has legal aid and the terms of any grant of aid;
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 answers, 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.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17. With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
Indemnity Costs
The application for determination is an application for the husband to pay the wife’s costs on an indemnity basis. “Indemnity basis” when applied to a costs order means an entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably: Prantage & Prantage [2013] FamCAFC 105.
It is usual for the Court to make an order for costs on a party/party basis.
Provisions of the Family Law Rules 2004 (Cth) (“the Rules”), particularly Rule 19.18(1), provide for the method of calculations of costs.
That Rule provides as follows:
(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.
The Rule further provides, in subparagraph (3), that:
(3)In making an order under subrule (1), the court may consider:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the case;
(c)the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)expenses properly paid or payable.
Rule 19.08(3) of the Family Law Rules provides that a party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement. This Rule implicitly recognises that an order for costs on an indemnity basis is a very great departure from the norm and that the Court should know to what extent costs on an indemnity basis exceeds the parameters set by the generally applicable scale of costs.
The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
In Kohan & Kohan (1993) FLC 92-340 at 79,611: the Full Court recognised that there is nothing in the Act which inhibits the making of an order for indemnity costs. However, while acknowledging there is a discretion “in an appropriate case” to make an order for indemnity costs, the Full Court also said,
… it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
Then at 79,614 the Full Court said:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O.38 r. 2, the provisions of O.38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client.
O.38 r.7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No 2) [1983] 2 NSWLR 354; Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR 358 at 368 to 370.
…When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case, the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors, that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them. If they were not explained to her, she might have her own remedies.
The obligation to provide to the Court details of any solicitor/client costs agreement in the context of an application for indemnity costs reflects the significant departure from the normal rule as to costs that such an order represents. In the absence of such details the Court is simply unable to determine the quantum of prospective costs sought on an indemnity basis and thus how far an order for indemnity costs is likely to depart from the usual party/party basis order.
The applicant for costs has not complied with the requirement of Rule 19.08(3) and thus it is unnecessary to consider costs on an indemnity basis.
Costs otherwise
The applicant properly contends in written submissions on the issue:
Resonating throughout the Reasons, and reflecting the history of this case, has been the husband’s consistent obfuscation and diversion in his conduct of the proceedings. From the outset, he failed to co-operate with the wife in even the most basic of ways to enable the Court to ascertain a reliable balance sheet. He has wasted this Court’s time and the wife’s money in the form of legal fees that she ought never have been required to meet to enable the case to be prepared for trial. Even then, the case was re-opened by the husband who “found” information not two days after the final hearing.
The complexity and convolution of the case has been of the husband’s making, and such complexity has necessitated her instructing both senior and junior counsel, but with the predictable cost impact to the wife of such an arrangement. The wife has acted reasonably in this regard by instructing junior counsel to appear unled where reasonable to do so.
As to the relevant considerations referred to above the applicant contends:
Section 117(2A)(c): Conduct of the parties
9 In this case, it is apt to begin with the conduct of parties, noting that it is an important factor when determining a costs application and noting that the husband’s conduct has so starkly shaped the course of litigation:
(a) a costs order may be warranted if as a result of non-co-operation, obstructiveness or otherwise, one party causes the conduct of the proceedings to be unduly prolonged or made unduly expensive to the otherside: In the Marriage of Jensen (1982) 8 Fam LR 594 at 595 per Nygh J;
(b) weight should be given to non-disclosure as required by the Rules, where those breaches complicate or extend the trial: Browne & Green (2002) 29Fam LR 428; In the Marriage of Kelly (No.2) (1981) 7 Fam LR 762; FLC 91-108; and
(c) the presentation of a false statement of financial circumstances which puts the other side to the trouble and expense of disproving it, is a circumstance which justifies an order for costs: Penfold & Penfold.
10 The Husband’s conduct throughout these proceedings has been the subject of findings by the Court in a series of interlocutory judgments, which need not be repeated. Suffice to say, his conduct fits the description of each of (a) to (c) of the previous paragraph and has already been the subject of extensive oral submissions at the end of the trial in March 2016.
11 The Husband’s consistent:
(a) breaches of the Rules relating to financial disclosure, multiple Court orders (including orders restraining him from operating businesses in competition with the [B] partnership and company, and restraints on two ANZ bank accounts holding partnership and company funds) and continual breach of his duty as a director under the Corporations Act to help [Mr M] and act in the interests of creditors;
(b) obstructiveness (for example, the 1000km+ road trip of the low loader through Queensland and northern NSW in 2014, the run-away and aptly named [motor vehicle 1], the [bull dozer] found in bushland and the still missing excavator), delay and undue protraction of proceedings, frank lies as to his financial circumstances including the formation of two “phoenix” companies; and
(c) his “catch me if you can” attitude towards the wife, the Court and its officer in [Mr M], would attract comedic properties were the financial consequences for the wife and waste of public time and resources not so very grave.
12 These facts are demonstrated nowhere better than in the need to appoint a Receiver and Manager to the parties businesses in May 2014 after the Husband, wilfully and deliberately (as he conceded in cross-examination in March 2016), allowed creditors of the partnership and company go unpaid with the foreseeable consequence that action would be taken by them to reclaim assets and foreclose on debts, including a line of credit secured by the matrimonial home and farm at [D Street]. This can be likened without exaggeration to a “scorched earth policy” by which he left the wife to care for the parties’ two children and deal with corporate creditors as one letter of demand or notice of default after another arrived at the farm gate while the Husband apparently took up residence in Queensland.
13 His goal could only have been to wash his hands of the past, start again in a new business controlled by him but using joint assets and client lists and allow, if not actually enable, the wife to meet with financial ruin.
14 Following the appointment of the Receiver in May 2014 (which he has been at pains to point out he neither consented to nor opposed), the Husband conducted himself in a manner that was imbued with such mischief that, so as to fulfil his duties to the Court, in August 2014, [Mr M] found himself needing to convene a public examination of the Husband and retain senior counsel for this purpose.
15 The examination occurred over two days and, while some useful information was obtained from the husband from the answers given, other answers were plain lies (such as telling the court that equipment “doesn’t exist” only to be later found in full working order on [Mr OO’s] property) and/ or so obtuse as to constitute a deliberate effort on the Husband’s part to divert [Mr M] and waste his time (such as the evidence that the Husband’s laptop containing vital post-separation information was in his 4WD at the sales yard in [PP Town] but when [Mr M’s] agent attended at the yard to receive the computer, it was not there).
16 A third day of examination was convened in December 2015 to overcome and follow up on the difficulties of the first session and the ongoing failure of the husband to co-operate with, deliver up information and books to, and help [Mr M] as required of him under s.530A of the Corporations Act.
17 At every turn, the Husband has sought to interfere with the work of the Receiver. [Mr M] estimated that, had the husband co-operated with him, his costs would have been about $150,000. Instead, his costs including legal fees are about $1.2 million. This difference, as stated by [Mr M] in cross examination in March 2016, was due to the Husband’s conduct. Had the Husband engaged in the litigation in a meaningful and responsible manner from the outset, there would have been no need for a Receiver and the earthmoving business may still be operating on a viable basis and the wife’s costs of dealing with this litigation much reduced.
18 Further, had he engaged in a meaningful and responsible manner towards the Receiver, the costs of the Receivership would have been substantially lower (by about $700,000 as at trial and a further about $45,000 for the two further hearing days in December 2016). This same conduct has resulted in the protraction of the litigation into its third year with the predictable increase in costs to the wife.
As to the financial circumstances of the parties the applicant contends:
Section 117(2A)(a): The financial circumstances of the parties
19 The Wife’s financial circumstances are now the subject of final orders. As at 19 August 2016, being her most recent financial statement, she had $9,614.34 in her bank account.
20 The Wife is the primary carer of the parties’ two young children and, due to the remote location of their home, is required to employ a governess (who is paid about $600 per week) to assist with their care and education while the Wife works on the property.
21 The Husband pays no child support having been reassessed as having no liability. In the past, when he was liable for support, he was in arrears.
22 The Husband’s financial circumstances are inherently unreliable for the reasons given in relation to the “conduct of the parties”. They have been and remain somewhat of a mystery. Just as he was not permitted to profit from that mystery in the judgment, he should not receive any benefit in the context of a costs application. For the same reasons that the court did not accept much of his evidence in relation to the substantive aspects of the case, it would place no weight on his various contentions, such as in late-filed affidavit material in 2016, that he is impecunious.
The applicant further properly contends:
Section 117(2A)(d): Proceedings necessitated by failure to comply with orders
24 While it cannot be said that the proceedings per se were necessitated by the failure of the husband to comply with court orders, multiple interlocutory aspects of the case were, being most obviously the applications in early 2015 leading to the appointment of a Receiver, the two sets of Court dates in 2015 when the Receiver conducted a public examination of the husband, and the re-opening of the case by the husband soon after the conclusion of the final hearing when he “found” documents at [I Town] and produced them to the court, despite being at (and within) the [I Town] premises/office in January 2016 with the parties’ children.
25 As an incident to the Receiver’s work, the matter was relisted on his application in 216 at various times to enable him to obtain orders and directions as required, such as to be appointed the Liquidator of the Company. It would go without saying that had the husband conducted himself properly from the outset, a Receiver would not have been required and so any further applications of the Receiver represent a “domino effect” as that conduct escalated into further Court events,
each at a cost to the wife who was at all times in accord with the Receiver’s application.
A consideration of the various reasons for judgment delivered in these proceedings readily demonstrates the force of the applicant’s contentions. The following is a brief extract from the reasons for judgment on final hearing (McDermott & McDermott and Ors [2017] FamCA 376):
The husband’s conduct and evidence:
238.The husband’s conduct has become the most significant issue in the resolution of the outstanding property proceedings between the parties. At the time that he redirected the company’s income, there were various direct debits associated with the company’s NAB account that he must have known would and did go into default. Otherwise, there were outstanding insurance premiums payable in respect to machinery and equipment under finance in respect of which there was an obligation to maintain insurance. He allowed some of such insurances to lapse. This conduct at a time when he had funds in his ANZ account to meet some if not all of the payments that fallen past due.
239.The husband’s conduct during the course of the proceedings has been characterised by failure to comply with orders as to disclosure and discovery, failure to file documents, providing misleading and at times wilfully false evidence and non-cooperation including direct obstruction of the Receiver and Liquidator in most instances.
240.There is a strong inference that the husband has been wilfully obstructive and obtusive in his evidence and he has demonstrated a complete lack of frankness with the Court throughout the proceedings.
241.In cross examination at final trial the husband’s oral evidence was mostly evasive, non-responsive and self-serving. He demonstrated little understanding of his obligations as a director of the parties’ company and indeed adopted a cavalier approach to his mismanagement of the company’s finances and revenue.
242.Counsel for the wife submits: “If, perchance the truth and [Mr McDermott’s] evidence coincided in any fact in issue in these proceedings, it was purely coincidental and certainly not designed by him to be the case.” There is much to be said in favour of that contention.
243.The husband’s evidence can only be accepted where it is supported by verifiable objective documents and in all cases where there is a conflict between the wife and the husband, the wife’s evidence is to be preferred without hesitation.
244.The husband’s conduct has necessitated multiple interlocutory applications by the wife and the Receiver and Liquidator that has greatly increased the cost of proceedings. The additional costs of the Receiver and Liquidator have resulted in a diminished return to creditors in the corporate liquidation and loss to the Partnership during its receivership.
There are thus compelling circumstances justifying a departure from the normal rule. It is appropriate that there be an order for the husband to pay the wife’s costs of and incidental to the proceedings on a party/party basis as agreed or as assessed.
Orders will be made accordingly.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 August 2017.
Associate:
Date: 17 August 2017
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