Miller and Wati and Anor (No. 2)

[2013] FamCA 369

FAMILY COURT OF AUSTRALIA

MILLER & WATI AND ANOR (NO. 2) [2013] FamCA 369

FAMILY LAW – COSTS – Enforcement – substantive dispute settled after argument but before judgment delivered – costs issue remained outstanding – injunctions also sought but refused because of lack of evidence.

Family Law Act 1975 (Cth)

Mullen and De Bry (2006) FLC 93-293

APPLICANT: Mr Miller

RESPONDENT: Ms Wati

2^ND RESPONDENT: Ms Asri

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: DGC 3617 of 2010

DATE DELIVERED: 24 May 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 8 & 13 May 2013

REPRESENTATION

THE APPLICANT: In person

COUNSEL FOR THE RESPONDENT: Ms Wheeler

SOLICITOR FOR THE RESPONDENT: Septimus Jones & Lee

THE 2^ND RESPONDENT: No appearance

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mr McCormack

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: McCormack & Co

Orders

1. That the husband pay the wife’s costs on a party and party basis in such sum as is agreed and failing agreement as assessed.

2. That the application in a case filed 6 May 2013 is otherwise dismissed.

IT IS CERTIFIED:

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Miller & Wati and Anor (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 3617  of 2010

Mr Miller

Applicant

And

Ms Wati

Respondent

And

Ms Asri

2^nd Respondent

Independent Children’s Lawyer

REASONS FOR JUDGMENT

1. On 25 March 2013, after a contested interim hearing at which both the husband and wife were represented by counsel, I ordered the husband to pay to the wife $80,000 as a litigation funding order.  That sum was to be paid by 12 April 2013. 

2. On 6 May 2013, the wife filed an application in a case seeking enforcement of the order.  In summary, she sought that the real property at B Street, Suburb C be transferred on a trust for sale to the Marshal as well as ancillary orders to give effect to the proposed trust and sale.  She sought that upon the sale, the order plus interest and costs be satisfied and the balance of proceeds be placed in an interest bearing trust account pending further determination of the property dispute between the husband and the wife. 

3. Although the husband did not file a response, his position was to oppose that sale.  He sought an order that the wife lift a caveat apparently endorsed upon the real property title so that he could borrow money. 

4. No application for leave to appeal has been filed by the husband against the orders I made on 25 March 2013; indeed, his argument was not with the quantum but with the means of payment.  The husband’s view was that the house should not be sold but rather that he repay the debt from his borrowings against the house.  The wife opposed extending the security’s indebtedness when there were, as she argued, other means of payment.  The husband said those avenues were not open to him.

5. On 13 May 2013, I heard argument and reserved judgment.

6. In addition to those proposed orders, the wife sought an injunction concerning a number of bank accounts said to be in the husband’s name.  There is not sufficient evidence here that would support the type of order referred to in Mullen and De Bry (2006) FLC 93-293. I do not propose to make any such injunctive orders.

7. I was advised by the parties at the time the reserved judgment was about to be delivered that the husband had paid the $80,000 but not interests or costs.  Counsel for the wife said the wife would pursue her interest at trial but she wanted her costs and was not prepared to wait for the trial if the order was made.  The husband opposed any order for costs.

8. The power to enforce an order lies within the rules of the Court. Rule 20.05 sets out that a money order, which applies in this case, may be enforced by, inter alia, an order for seizure and sale of real or personal property.

9. Rule 20.07 provides for the Court to declare the amount owing, order that instalments of the debt be paid or to simply make an order for enforcement. Here, the only suggestion put forward by the husband was that he would borrow against the main asset.

10. Prima facie, the wife was entitled to whatever orders were necessary to enforce her unchallenged entitlement to be paid. The husband’s approach has been to proffer an alternative outcome but the wife rejected that approach.

11. The wife wanted an immediate enforcement so that she could pay her legal practitioners.  There are corporate and trust entities in this case and the wife has limited English language skills.  To require her to simply deal with these issues personally without the assistance of legal practitioners and other professionals, may very well give rise to a denial of justice.  There is therefore a justification for her to pursue the entitlement vigorously.

12. In the March 2013 proceedings, a variety of real and personal property was listed and it was not entirely clear what assets and liabilities the parties have.  The wife referred to a lot of bank accounts which the husband maintains belonged to corporate entities but he also seems to have the control of those entities.  The husband complained that the entities have liabilities but there was no evidence to indicate their extent.  It was certainly part of the wife’s case that the husband could access those accounts and satisfy the obligations under the order. 

13. On 16 April 2013, the husband’s then solicitors wrote to the wife’s solicitors referring to those bank accounts but describing them as “business accounts” not individual accounts.  Just exactly what that means I am uncertain because the husband confirmed that he was the director and shareholder of the various entities. 

14. On 18 April 2013, the husband’s solicitors wrote to the wife’s solicitors and raised for the first time, the question of permitting the husband to borrow against the house to make the relevant payment under the orders. 

15. Although there was no reference in the husband’s affidavit, he confirmed there was a trust which he said was set up for his children and into which the sum of $300,000 or more had been deposited.  The trust deed had been provided to the wife’s solicitors but not any other statements about the trust.  The trust deed indicated that the settled sum was $20.  How the balance ended up in the trust, bearing in mind the husband’s acknowledgement that the money had belonged to he and his former wife, remained unclear.  The husband asserted there was no loan account and counsel for the wife indicated that no details had been given such as to enable the wife to make any decisions about ownership or entitlements to the trust capital.  This was just one of the accounts that showed significant cash deposits.

16. The wife pointed out that there was evidence that the husband had been travelling overseas on business.  In response, the husband said that he was trying to sell the business which he acknowledged was “travelling poorly” at this time.  He tried to explain that his intellectual property was involved in the sale of the business and he was offering potential purchasers that property.  Very little of this material was in any cogent evidentiary form. 

17. It would certainly seem that significant amounts of money appear to have gone through the husband’s hands in 2012 and the wife complained that all of that had occurred “without explanation”.  The husband replied that bank statements with concise notations had been provided.  He said the “steady depletion” of the company’s cash reserves included both “top ups” to the company due to business declining and he had been forced to borrow to pay legal costs in the proceedings in this Court.  Forced or otherwise, he had not paid any money to the wife.

18. When challenged about these various bank accounts that had significant deposits in them, the husband said he thought he could not touch them because they belonged to a separate legal entity (to him). 

19. The husband had relied upon a letter from his accountant to say that he should borrow against the home to prop up the ailing company.  That was exactly what troubled the wife.  The husband’s earlier evidence in March 2013 about stepping back from the business and turning his capital sum in a superannuation fund into a pension (which was the picture he portrayed in March 2013) has apparently not occurred.  He said that the superannuation trustee had stopped the pension conversion because of the family law proceedings yet the wife through her counsel, said that no such representations had been made by the wife and they were not aware of why there was a problem.  The correspondence attached to the husband’s affidavit indicated that the superannuation fund had come across an administrative issue but just exactly what it was remains unclear.  The wife’s counsel complained at the costs’ hearing that the wife was unaware of how the husband obtained the $80,000 he had paid.  All of these and the following matters are relevant to the question of costs.

20. As a basis to refuse to agree to allow the husband to borrow against the house, the wife complained that he had removed US$300,000 from a company account after December 2012 and no explanation had been given.  The husband’s response in his affidavit was that the withdrawal ended up in the “AUD” accounts.  If it was as simple as that, presumably, the bank documents and the company balance sheet would have been proffered.  They were not. 

21. The wife’s position was best set out in paragraph 15 of her affidavit where she said:

    My fear is that if (the husband) is able to mortgage the house there will be nothing left for me to receive as and by way of property settlement.

22. The wife produced a letter indicating that the husband’s accountant thought that he should borrow $200,000 against the home but even on the husband’s synopsis, that would not necessarily solve the problem of his solvency.

23. Perhaps as portent of things to come, the husband replied to the wife’s affidavit and said:

    In response to (paragraph) 15 I say that (the wife) made next to no measurable contribution to our marriage, financial or otherwise (the wife) was desperate for me to “save” her from a life in [Southeast Asian Country D] where she and indeed most of the country live in absolute poverty, where her family was weighed down by her sister’s gambling debts and where they had no prospects.

    As evidenced by the charges on her credit card on my account, (the wife) spend the remainder of her time eating out, socialising and shopping

    …

    In response to (the wife’s) concerns, even with the house mortgage, there is still the balance of my superannuation to help support the children, but with her age and capacity to work, and the likely hood (sic) that she will remarry, I am confident that that (sic) even with a mortgage on the house, there will be property left for her to receive, by way of property settlement.

24. Leaving aside the inappropriate nature of some of those comments, the husband then went on to say:

    I say that (the wife’s) legal advisors are working on the false theory that I have something to hide, and their endeavours to locate alleged hidden moneys of assets have attributed to most of the costs in this case.

25. The wife applied for costs and subsequent to reserving judgment, the wife’s solicitor sent to the Court the costs for which the wife will be responsible.  The letter appears to have been copied to the husband. 

26. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings under the Act, each party shall bear their own costs unless there are circumstances justifying a departure from that principle. If the Court is considering a departure from the principle, the Court must take into account the matters set out in s 117(2A).

27. In this case there are circumstances that justify a payment of costs by the husband. The wife had the entitlement to an order and regardless of the negotiations between the parties about how that was to be paid, the wife had to return to court to seek enforcement. The matters set out in s 117(2A) do not assist the husband. There are significant assets in his control and neither party could truly be said to be without funds. The wife is in a much weaker position than the husband who has control of not only the home which is in his name but also corporate entities and a trust if not bank accounts associated with those entities. There are no legal aid considerations here and there is clearly a failure by the husband to comply with a court order. In my view this is a case where an order for costs should be made.

28. The wife sought an order for indemnity costs but there are no unusual circumstances such as would justify a departure from the principle that costs should be ordered on a party and party basis.

29. The husband simply opposed the order and accused the wife of malicious conduct and her legal practitioners of delaying matters.  He laid the blame for non-payment at the wife’s obstinacy in refusing to allow him to borrow against the house.  For the reasons above, I could not find that to be the case.  The husband had access to funds and ultimately used them.  The wife’s enforcement was not only justified but unnecessary because the husband had the obligation.  She should not have had to expend those costs.

30. No argument was raised by the husband about quantum but it should be clear that what I read in the document setting out the quantum, nothing seemed unusual.  The costs will therefore be by agreement and failing agreement, as assessed.

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 24 May 2013.

Associate: 

Date:  24 May 2013