NIMITAN & NIMITAN

[2014] FamCA 221

FAMILY COURT OF AUSTRALIA

NIMITAN & NIMITAN [2014] FamCA 221

FAMILY LAW – COSTS – Where the husband sought costs on an indemnity basis – Where the wife’s position was that there should be no order as to costs – Where the conduct of the parties does not support a costs order in favour of a particular person but rather that each party pay their own costs – Where neither party can be said to have been wholly unsuccessful – Where order made for each party to bear their own costs.

Family Law Act 1975 (Cth) ss 117, 117(2A)

Penfold and Penfold (1980) 144 CLR 311

Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622

APPLICANT: Mr Nimitan

RESPONDENT: Ms Nimitan

FILE NUMBER: SYC 6145 of 2007

DATE DELIVERED: 4 April 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 18 February 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Givney

SOLICITOR FOR THE APPLICANT: Vizzone Ruggero & Associates

COUNSEL FOR THE RESPONDENT: Mr Fermanis

SOLICITOR FOR THE RESPONDENT: Giles Payne & Co

Orders

1. That each party shall bear their own costs of both sets of proceedings.

2. That the Application in a Case of the husband filed on 12 July 2013 is hereby dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Nimitan & Nimitan 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 SYDNEY

FILE NUMBER: SYC 6145 of 2007

Mr Nimitan

Applicant

And

Ms Nimitan

Respondent

REASONS FOR JUDGMENT

Introduction

1. Mr Nimitan (‘the husband’) seeks an order that Ms Nimitan (‘the wife’) pay the costs of the property proceedings between them.  These proceedings were heard on 24 and 26 April 2013 and judgment given on 14 June 2013.

2. The proceedings have had a long and involved history.

3. This is exemplified by the material relied upon on the costs application which was as extensive as the material relied upon by the parties in the final property proceedings.

4. The husband’s position, put shortly, is that, as it was obvious at all times that an appropriate division of property between the parties was a 50/50 split, that the parties had, according to the husband, agreed on such a division and that as the wife did ultimately not achieve significantly more than that division, she should pay the costs of the husband of the proceedings and should do so on an indemnity basis.

5. The wife’s position was that there should be no order as to costs.

6. In order to determine the application it is necessary to refer to the history of the orders sought by the parties at different stages and then the correspondence between them.

Procedural History

1. On 10 October 2007, consent orders were entered into between the parties pursuant to s 79 of the Family Law Act 1975 (Cth) (‘the Act’).

2. F Pty Ltd, a company through which, at least for a period, the husband conducted his business, was a party to the proceedings.   The orders provided that F Pty Ltd be wound up voluntarily and that the net assets remaining after that liquidation be distributed to the husband and the wife in equal shares.

3. There were orders that a unit at D Street, Suburb E be transferred to the wife. 

4. There was an order that a property in Queensland be transferred to the husband.

5. There was then an order dealing with H Street, Suburb G.  That property was to be sold and the proceeds were to be distributed as follows:

   …

   11.5After the payment of any duties, taxes, agents commission, auctioneer fees, legal fees for acting on the sale, and other properly incurred liabilities associated with the sale of the property, the proceeds of the said sale shall be applied as follows:-

   11.5.1In discharge of the mortgage on the [G] property;

   11.5.2In discharge of the mortgage on the [E] property

   11.5.3In discharge of the mortgage on the Queensland property;

   11.5.4In payment of any costs of the Accountant appointed pursuant to Order 3 above;

   11.5.5In payment to the Applicant of an amount equal to the present capital gains tax payable on the [E] property;

   11.5.6In payment to the First Respondent of an amount equal to the present capital against tax payable on the Queensland Property; and

   11.5.7In payment to the Applicant of any adjustment required by Order 12 below;

   11.5.8In payment to the First Respondent of any adjustment required by Order 12 below;

   11.5.9In payment to the First Respondent of $267,500.00 being an adjustment in favour of the First Respondent for the difference between the agreed value of the [E] Property and the Queensland property;

   11.5.10In payment to the First Respondent of $3,000.00 being an adjustment in favour of the First Respondent for half the value of the Mitsubishi … motor vehicle registration number …;

   11.5.11In payment to the First Respondent of any adjustment required by Order 11.9 in respect of the payment of any mortgage repayments, rates and taxes paid by the First Respondent pursuant to Order 11.9 and 11.10;

   11.5.12In payment of the balance of the sale proceeds in equal shares between the Applicant and the First Respondent.

   …

   (emphasis added)

6. There followed an order for an account and inquiry to be undertaken by the liquidator to reconcile the parties’ accounts in relation to the company since September 2012.  They were as follows:

   12.For the purpose of Order 11.5.7 and 11.5.8, the parties shall forthwith do all such acts and things as may be necessary to cause the Accountant appointed pursuant to Order 3 above to conduct an account, inquiry and reconciliation of the Second Respondent’s and the parties’ accounts since 10 September 2006 for the purpose of determining the following adjustments to be paid from the sale proceeds of the [G] property:

   12.1Payment to the Applicant of an amount equal to the sum of $400.00 per week net after tax, representing wages, 10 September 2006 to the 30 June 2007 (less any wages already received by the Applicant during the said period which have not been paid back or off-set);

   12.2Payment to the First Respondent of an amount equal to the sum of $700.00 per week net after tax, representing wages, from 10 September 2006 to 30 June 2007 (less any wages already received by the First Respondent during the said period which have not been paid back or off-set);

   12.3Payment to the Applicant of an amount equivalent to any superannuation contributions and entitlements due to her from 10 September 2006 to 30 June 2007 (less any superannuation contributions and entitlements already made by the Second Respondent on behalf of the Applicant in respect of this period);

   12.4Payment to the First Respondent of an amount equivalent to any superannuation contributions and entitlements due to him from 10 September 2006 to 30 June 2007 (less any superannuation contributions and entitlements already made by the Second Respondent on behalf of the First Respondent in respect of this period);

   12.5Payment to the Applicant of an amount equivalent to 50% of the sum of all funds taken by the First Respondent and the Applicant from the cash takings and bank accounts (including loan accounts) of the parties since 10 September 2006 (not being wages, except where such wages exceeded $700 per week net in the case of the First Respondent and $400 per week net in the case of the Applicant, properly incurred business expenses and not having been repaid or off-set) and then deducting from such amount any funds taken by the Applicant from the cash takings and bank accounts (including loan accounts) of the parties since 10 September 2006 (not being wages, except where such wages exceeded $400 per, properly incurred business expenses and not having been repaid or off-set).

   13.An Order that the parties shall do all such acts and things and sign all such documents as may be necessary to:

   13.1Provide to the Accountant and to each other full and frank disclosure as to any funds taken by them from the cash takings and bank accounts (including loan accounts) of the parties since 10 September;

   13.2Deliver to the Accountant and to each other all books of account, financial statements, bank accounts, invoices, receipts and any other relevant primary documents;

   13.3Comply with any reasonable request of the Accountant.

7. Schedule “B” to the orders provided:

   1.For the purpose of these Orders the market value of the [Suburb G] property is agreed to by the parties as $850,000.00.

   2.For the purpose of these Orders the market value of the Queensland property is agreed to by the parties as $315,000.00.

   (as per original)

8. The husband came to assert, and still assets, that there was a clear and obvious error in clauses 11.5.9 and 11.5.10.  The figures there of $267 500.00 and $3 000.00 should have read, according to the husband, $535 000.00 and $6 000.00.  This is because, he asserts, that it was the clear intention of the orders that there be a 50/50 division of the property between the parties and it is the latter figures that are required to give effect to that basic proposition.  This figure is arrived at as the difference in value of the two properties being retained by the wife and the husband.

9. On 16 April 2008, pursuant to the orders, F Pty Ltd was wound up and Mr J was appointed as liquidator.  He provided reports to the parties on 27 August 2009, 9 February 2010 and 12 March 2010.  The first two of those reports dealt with the reconciliation of the loan accounts pursuant to the orders of the court. 

10. The wife did not accept the reconciliation of Mr J and much correspondence ensued between the parties and Mr J about his findings. 

11. On 12 April 2010, the wife filed an Initiating Application seeking the following orders:

    1.An ORDER that the Orders of this Honourable Court made on 10 October 2007 be varied pursuant to s.79A (a), (b) and (c) of the Family Law Act, 1975 in accordance with the subsequent Orders.

    2.An ORDER that in determining the adjustment and any payment due to the Wife pursuant to Order 12.5 of the Orders  made on 10 October 2007, the Third Respondent (“the Liquidator”) is directed to:

    2.1regard the undisclosed Directors’ Loan Account with the Second Respondent (“the Company”) in the sum of approximately $120,000.00 as the exclusive debt of the First Respondent (“the Husband”) and make an adjustment in favour of the Wife accordingly;

    2.2regard the withdrawal by the Husband on or about 15 November 2006, of the sum of approximately $69,000.00 from the loan account with Westpac Banking Corporation secured by way of mortgage on the property known as [D] Street, [Suburb G] (“the [G] Property”) as an advance to the Husband and make an adjustment in favour of the Wife accordingly from any sums due to the Husband; and

    2.3regard the sale of the … business by the Husband in or about April 2008 for an undisclosed sum as a disposal of the Second Respondent’s goodwill and as an advance to the Husband thereby requiring an adjustment in favour of the Wife from any sums due to the Husband.

    3.An ORDER that the Husband provide full and frank disclosure to this Honourable Court, the Wife and the Liquidator of his dealings with respect to each of the transactions referred to in Order 2 above and in accordance with Order 13 of the Orders of this Honourable Court made on 10 October 2007.

    4.Further, and in the alternative, the Wife relies on s.90AE and 90AF of the Family Law Act, 1975 and s.536 and s.1321 of the Corporations Act, 2001.

    5.An ORDER that the Husband pay the Wife’s costs of and incidental to these proceedings on an indemnity basis.         

    6.Such further ORDERS as this Honourable Court deems fit.

12. As can be seen, Order 2.1 sought a finding that the loan account of the husband be as she asserted and not as Mr J had found. 

13. Order 2.3 deals with the sale of the business by F Pty Ltd prior to its winding up.  In the final property proceedings it became clear that the liquidator had not taken that sale into account.  This was not an oversight by the liquidator. He considered, on the material available to him, that he could not be satisfied it was an appropriate matter to take into account in the reconciliation he was undertaking.  On 11 October 2010 the husband’s solicitors had written to the wife’s saying ‘it can be argued that the business sold by our client was a subsequent business and there, your client is not entitled to any share of it’ (emphasis as per original).

14. On 28 July 2010, the husband filed a Response which sought that the wife’s Initiating Application be dismissed and that she pay his costs on an indemnity basis.

15. On 22 March 2011, the wife filed an Amended Initiating Application which joined as parties to the proceedings F Pty Ltd (in liquidation) and Mr J.  Mr J’s fees had not then been paid.  The orders sought by the wife in her Amended Initiating Application were as follows:

    1.An ORDER pursuant to Rule 20.07 (a) of the Family Law Rules, 2004 (Cth) declaring:

    1.1That the total amount owing and payable to the Wife by way of wages pursuant to Order 12.1 of the Orders of this Honourable Court made on 10 October 2007 (“the Consent Orders”) is $13,200.00 calculated in accordance with the report of the Third Respondent (“the Liquidator”) dated 27 August 2009;

    1.2That the amount owing and payable to the First Respondent (“the Husband”) by way of wages pursuant to Order 12.2 of the Consent Orders is $29,400.00 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    1.3That the amount owing and payable to the Wife by way of superannuation contributions pursuant to Order 12.3 of the Consent Orders is $1,732.41 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    1.4That the amount owing and payable to the Husband by way of superannuation contributions pursuant to Order 12.4 of the Consent Orders is $3,369.30 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    1.5That in determining any amount owing and payable to the Wife pursuant to the accounts and enquiry required by Order 12.5 of the Consent Orders the Liquidator is directed to:

    1.5.1Take into account the sum of $69,200.00 withdrawn by the Husband from the bank accounts of the Husband, Wife and or the Company;

    1.5.2Take into account the sum of $16,703.00 withdrawn by the Wife from the bank accounts of the Husband, Wife and or the Company;

    1.5.3Take into account any funds already paid to the Wife and the Husband from the proceeds of sale of the [Suburb G] property not being the subject of any other Order;

    1.5.4Investigate and take into account any funds received by the Husband in respect of the disposal by him of motor vehicle registration No: [1];

    1.5.5Investigate and take into account any funds received by the Husband in respect of the disposal by him of motor vehicle registration No: [2];

    1.5.6Investigate and take into account any funds received by the Husband in respect of the disposal by him of the business known as “[F]” including the goodwill and any equipment of the said business; and

    1.5.7Investigate and take into account all other funds taken by the Husband from the property pool of the Husband and the Wife or from the assets of the Company not being the subject of any other Order.

    1.6That in determining any amount owing and payable by the Husband to the Company and any amount payable by the Company to the Wife on final distribution to be made on the winding up of the Company pursuant to the Consent Orders, the Liquidator is directed to:

    1.6.1Assign the whole of any Directors’ Loan Accounts to the Husband; and

    1.6.2Investigate and assign to the Husband all other funds taken by the Husband from the assets of the Company not being the subject of any other Order and not already taken into account elsewhere in these Orders.

    2.An ORDER that pursuant to Rule 20.07 (d), (i) and (k) of the Family Law Rules, 2004 (Cth) that in aid of enforcement of the Consent Orders:

    2.1The Husband is required to produce to the Wife all documents in his possession:

    2.1.1Evidencing all funds received by him from the property pool of the Husband and the Wife or from the assets of the Company since the date of separation, including the disposal of any motor vehicles and the business  name and goodwill, except in respect of any funds received pursuant to the Consent Orders; and

    2.1.2All source documents evidencing the individual entries comprising the alleged Directors’ Loan Accounts, including the opening balance.

    2.2The Liquidator is required to make available for inspection by the Wife and her legal representatives, and if requested to produce to the Court, all documents in his possession provided to him by the Husband and all such documents in his possession relating to the Company.

    3.Further, or in the alternative, an ORDER that the Consent Orders be varied pursuant to s.79A (a), (b) and (c) of the Family Law Act, 1975 (Cth) to the extent necessary to give effect to Order 1 above.

    4.Further or in the alternative, an ORDER pursuant to section 536 of the Corporations Act, 2001 (Cth) inquiring into the Liquidator’s performance of his duties pursuant to the Consent Orders, and in particular, the adequacy of any investigations carried out by him and the manner of calculating any payments due by or to the parties pursuant to the Consent Orders.

    5.Further or in the alternative, an ORDER pursuant to section 1321 of the Corporations Act, 2001 (Cth) appealing from the Liquidator’s manner of calculating any payments due by or to the parties pursuant to the Consent Orders as set out in his reports.

    6.An ORDER pursuant to section 504 of the Corporations Act, 2001 (Cth) for a review of and reduction in the remuneration of the Liquidator.

    7.An ORDER that the Husband pay the Wife’s costs, and the costs of any other party, on an indemnity basis.

    8.Such further ORDERS as this Honourable Court deems fit.

16. As can be seen the wife continued to agitate the correctness of the reconciliation of the accounts undertaken by Mr J.

17. On 2 May 2012, the husband filed a further Amended Response to the Initiating Application.  The orders sought by him were as follows:

    1.1.1 Agreed;

    The total amount owing and payable to the Wife by way of wages pursuant to order 12. Of the Orders of this Honourable Court made on 10 October 2007 (“the Consent Orders”) is $13,200.00 calculated in accordance with the report of the Third Respondent (“the Liquidator”) dated 27 August 2009;

    2.        1.2 Agreed;

    That the amount owing and payable to the First Respondent (“the Husband”) by way of wages pursuant to Order 12.2 of the Consent Orders is $29,400.00 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    3.        1.3 Agreed;

    That the amount owing and payable to the Wife by way of superannuation contributions pursuant to Order 12.3 of the consent Orders is $1,732.41 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    4.        1.4 Agreed;

    That the amount owing and payable to the Husband by way of superannuation contributions pursuant to Order 12.4 of the Consent Orders is $3,369.30 calculated in accordance with the report of the Liquidator dated 27 August 2009;

    5.That pursuant to the “slip rule” or in the alternative pursuant to S79(A)(1) of the Family Law Act:-

    a.Order that Paragraph 11.5.9 of Orders made on the 10 October, 2007 be varied by substituting the words $535,000 instead of the words $267,500.00.

    b.Order that paragraph 11.5.10 of Orders made on the 10 October, 2007 be varied by substituting the words $6,000 instead of the words $3,000.

    6.That the wife do all things and sign all documents to finalised Orders dated 10 October 2007.

    7.(a)       That for the purposes of finalising Orders made on 10 October, 2007, the following amounts have been received by the husband and wife:-

    (i)The sum of $69,200.00 withdrawn by the Husband from the bank accounts of the Husband, Wife and or the Company;

    (ii)The sum of $16,703.00 withdrawn by the Wife from the bank accounts of the Husband, Wife and or the Company;

    (iii)The sum of $13,600 from the bank account of the Husband, Wife and or the Company.

    (b)Take into account any funds already paid to the Wife and the Husband from the proceeds of sale of the [Suburb G] property not being the subject of any other Order;

    (c)Take into account the funds received by the Husband in respect of the disposal by him of the business known as “[F]” including goodwill and any equipment of the said business being the amount of $28,666.40.

    8.If the wife fails to pay the husband the wife shall immediately:

    a.Do all acts and things necessary to forthwith place the property known as [D Street, Suburb E] (“the  home”) on the market for sale by private treaty at a price agreed between the husband and the wife or, in default of their agreement for a period exceeding 14 days, at the price determined to be the fair market price by a registered valuer appointed by the President of the NSW Division of the Australian Property Institute.

    b.Pending completion of the sale of the home pursuant to orders 3a hereof, the wife do all acts and things necessary to pay or procure the payment of all outgoings in relation to the home including all mortgage instalments, rates and taxes and insurances.

    c.Upon completion of the sale of the home, the wife do all acts and things necessary to procure the payment of the proceeds of sale in the following manner and priority:

    i.Payment of the amount outstanding under the mortgage secured over the title of the home.

    ii.Payment of agent’s commission and auction expenses if any due on the sale of the home.

    iii.Payment of legal costs on the sale of the home.

    iv.Payment to the husband of all monies outstanding now owed to the husband.

    v.Balance of monies to the wife.

    9.The husband be paid all interest earned on the controlled monies account held with Westpac Banking Corporation Account No: …90 held by the wife’s solicitors, Giles and Payne & Co.

    10.The wife pay all costs and interest due to the Liquidator, [L Accountants’] Application for payment of monies.

    11.The wife to pay 75% of the Account of [L Accountants] in the sum of $55,000.00 and costs of $31,500.00.

    12.That the wife pay the husband’s costs.

1. The husband also sought the following two orders which were described, perhaps inaccurately, as interim or procedural orders:

   1.That the husband and wife sign all documents and give authority to the Solicitors, Giles Payne & Co to pay the sum of $323,935.62 to the husband.

   2.That if there is a shortfall in payment of monies, that the wife pay the balance to the husband without fourteen (14) days.

   …

2. It can be seen that the husband now agreed with some of the adjustments sought by the wife.  Also, for the first time, at least in an application to the court, the husband sought the amendment of the orders made on 10 October 2007 to remove what he said was the clear error in those orders.

3. On 12 September 2012, the husband served a second Further Amended Response.  Importantly, that Response now included the following order:

   That pursuant to S79A(1)(a) of the Family Law Act orders made on 10 October 2007 be set aside.

4. On 13 September 2012, the following day and the first day of the hearing to determine the wife’s application, by consent, Johnston J set aside the consent orders of October 2007.

5. The subsequent property proceedings pursuant to s 79 were heard on 24 and 26 April 2013 and judgment was delivered on 14 June 2013. I found that, subject to one matter, an appropriate division of the property was an equal division. I rejected assertions by the wife that the liquidator had wrongly failed to include any account of $50 000 from the sale of the F Pty Ltd and $18 101.47 which appeared in a schedule entitled ‘Reconciliation of Cash at Bank and Cash Receipts’.

6. I did, however, find that the husband had received $50 000 from the sale of the F business. That business had then been owned by him or by the company. Regardless of the true position, he retained the proceeds of sale. I found that the wife had made a significant contribution to that business and thus the funds that he had received from its sale. It was appropriate then to make an adjustment under s 75(2) of the Act to take that into account.

7. As I found that one half of the sum received by the husband was an appropriate adjustment and that as that sum approximately equalled one per cent of the net assets, a one per cent adjustment should be made in favour of the wife.

8. On 14 June 2013, the orders were amended pursuant to the ‘slip rule’ to take account of an asset that had been omitted from the Balance Sheet.

Correspondence

1. The correspondence between the parties was extensive.  I do not propose to refer to it in detail.

2. It is clear that by June 2007 the parties, through their respective solicitors, were engaged in extensive and detailed negotiations in attempting to resolve the property proceedings.

3. On 20 June 2007, the husband’s solicitors wrote to the wife saying:

   …

   So far as an adjustment is concerned, my understanding is that we are to have an overall split of 50/50 on everything and your clause so far as the company accounts, loan accounts etc. are concerned should, I believe, be amended to include a general taking of accounts with respect to the whole property settlement so that they both end up 50/50. 

4. In reply, the wife’s solicitors said:

   …

   With respect to the loan accounts, we disagree.  In our view, this is a simple balancing adjustment (similar to that which would be required for the real property in any event) and it should be undertaken to ensure that the parties receive their entitlements in accordance with their agreement that the marital property be split 50/50.  In our view a general accounting may disadvantage one or both parties and the accounting proposed in our draft Consent Orders is more appropriate.

5. I infer from this correspondence that whilst it was agreed that a 50/50 split was appropriate it was not agreed as to how the accounting in relation to the loan accounts was to be conducted.  In short, the wife asserted that the loan accounts did not accurately reflect the drawings by the husband and that he in fact had taken much more money from the company than had been recognised in the company accounts.

6. There was much subsequent correspondence about the resolution of the matter based upon the premise of a 50/50 split. What was to be split 50/50 was never agreed.

7. On 27 August 2011, which is after the 2007 orders were made, the wife’s solicitors wrote to the husband’s saying:

   As part of these consent orders an accounting is to be undertaken to determine the amounts to be paid to the parties on a voluntary winding up of the company, [F] Pty Ltd.  In addition to orders relating to the company, there are additional orders requiring that an audit of all accounts held by both parties to ensure that all monies are accounted for and an equitable division [50/50] is achieved.

8. Again, the proposition is that there is to be an equal division of the property but only after an appropriate accounting is to be conducted.  This, on the wife’s case, always included an accounting for the funds received by the husband for the sale of the F business.

9. On 3 September 2012, the husband’s lawyers wrote to the wife’s in relation to the husband’s allegation that the orders of 10 October 2007 did not reflect the agreement reached between the parties.  They said:

   …

   The paragraph as drafted is correct.  However, where it has been placed is incorrect.  The payment to our client of $267,500.00 from the sale of the [Suburb G] property does not reflect an equal adjustment in relation to the two values of the property which were referred to in [Schedule B] to the consent orders.

   In particular, the matrimonial assets should reflect the equal division which is what it was agreed between the parties.

   …

   4.The sum of $535,000.00 was calculated in accordance with the Schedule attached to the Court Orders made the 10 October 2007 whereby the value of the [Suburb E] property is agreed at $850,000.00 and the value of the Queensland property at $315,000.00.  The difference between the two properties is $535,000.00.  The wife was to pay the husband half the difference, being $267,500.00.

   5.The husband does not claim the sum of $535,000.00.  The husband claims the sum of $267,500.00 being the difference between the two properties.  However, if the monies are to be paid calculated from the sale of proceeds of the [G] property, the amount should have read $535,000.00 as the husband already owns half the property.

   …

   (as per original)

10. There then ensued extensive correspondence whereby the parties tried again to resolve their differences.  It is clear from the correspondence that consent orders had been proposed and those proposed orders were the subject of considerable argument and amendment.  It is to be recalled that at this stage the liquidator was still a party and there were still issues in relation to his fees which had to be resolved between the parties in conjunction with the liquidator.

11. Thus, the matter was not as simple as simply amending the earlier orders under the slip rule.  It is also true, as is evident by the claims made in the final property proceedings, the wife did not accept that the liquidator’s accounting had finalised the issues of the monies received by the husband.

12. On 9 December 2011, the husband’s solicitors wrote to the wife’s, informing that in addition to there not being any agreement as to the inclusion of $10,000 for the van ‘[o]ur client does not agree to the amount payable in respect of the liquidation of the company as our client does not accept the loan accounts and therefore proposes that the payment to the liquidator should be paid equally by the husband and the wife’.

13. The van formed part of the sale of the business of F Pty Ltd.

14. On 27 January 2012, the solicitors for the wife wrote to the husband’s saying:

    This claim is not, as you continue to allege in your correspondence a ‘slip rule’ matter.  This is a matter that requires proper pleading and particulars to be provided and evidence in support if it is to proceed.

15. The wife’s attitude as to any application under the slip rule was made clear on 28 March 2012 when they said:

    In any event, our client’s position regarding your client’s application has been made clear on three previous occasions.  We do not believe that this is a slip rule matter.  Your client was ordered to file and serve evidence in support of that application.  Your client is in breach.

Discussion

1. Section 117(1) and (2) of the Act provides:

   (1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2) If, in proceedings under this Act, the court is of 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.

2. The authorities establish that there is a broad discretion regarding costs. The Court is required to have regard to the specified matters in s 117(2A) of the Act. Nonetheless the discretion remains at large. What is required is “a finding of justifying circumstances as an essential preliminary to the making of an order”. (Penfold and Penfold (1980) 144 CLR 311at 315)

3. The husband’s application for costs was described thus by his counsel in written submissions:

   48.In this matter the Husband seeks an Order for costs based on a number of factors being: offers of settlement contained both in correspondence and Court Applications and the conduct of the Wife particularly in regard to the Orders of 10 June 2007 which includes the Wife’s failure to address the reality of the parties’ situation.

   49.The reality of the parties’ situation was that there was always going to be a division of the pool near 50 per centum.  The Wife acknowledged this position in June 2007 when she entered into Consent Orders but resiled from that position in June 2010 when the mistake referred to in these submissions became evident.  The Wife continued to avoid a concept of equal division of the asset pool until final submissions in the hearing before the Court in 2013.  It is respectfully submitted that the Wife’s failure to acknowledge the offers of settlement and her conduct entitles the Husband to an Order for costs.

4. As a supplementary submission, the husband submitted that had the wife accepted the husband’s response on 10 October 2010 there would have been a payment $323 935.62 to the husband and not the entitlement of $394 302.00 that was the consequence of the ultimate finding of the court.

Section 117(2A)

1. The husband did not give any additional evidence to his financial circumstances other than that that was before the court in the final property proceedings.  Pursuant to the orders of the court he retained the property in Queensland where he lived and received several hundred thousand dollars in cash.

2. The wife did adduce evidence of her present financial position.  It establishes that if she were required to meet any significant costs orders she will more than likely have to sell the property at Suburb E where she has lived for many years.

3. The financial position of the parties supports each party bearing their own costs.

4. Neither party appeared to be in receipt of assistance by way of legal aid.

5. The conduct of the parties to the proceedings was marked by extensive correspondence dealing in detail with issues that, at least with the benefit of hindsight, did not bear the monetary value to justify such an expense.  Neither party can be singled out for blame in that regard.

6. A particular instance pointed out by the husband is that had the wife accepted the orders proposed in his response of 12 October 2010 she would have been significantly better off.   

7. It is far from obvious, from a perusal of the response that that assertion is so. There are difficulties with the husband’s assertion that the parties had always agreed to a 50/50 division of their property and that the wife unreasonably failed to put the agreement in place by the making of appropriate consent orders. 

8. Firstly, the wife achieved a property division of 51 per cent to 49 per cent.

9. Secondly, and perhaps more importantly, throughout the period when it was clear that the parties were contemplating an equal division of their property there was a dispute between them as to what funds the husband had taken, in particular, from F Pty Ltd.  An accounting was undertaken in an attempt to resolve that dispute.  It was always a part of that dispute that the husband had received the benefit of the proceeds of the sale of the F business, whether owned by the company or not and that it should be taken into account.  The husband always opposed this.  That position which was raised prior to the consent orders being made in 2007 remained the parties’ position at the final hearing and required resolution by the court.

10. Thus, whilst there was an agreement, or at least a common approach, as to what was an appropriate division of the property there was not an agreement as to what property was being divided.  This ultimately required resolution by the court.

11. It might be thought that, given that the amount of the proceeds of sale of that business, the sum of $50 000.00, the parties spent more on costs determining that issue than the value of the issue itself.   That, however, is a criticism that can be made against both parties.  As to the proposed application of the slip rule, whilst the position might seem clear if there were no other disputes in relation to the property pool, there were such disputes.  In the husband’s Amended Response to the Initiating Application he accepted at least four of the adjustments proposed by the wife.  The issue of correcting the 2007 orders pursuant to the slip rule was not the only issue outstanding.

12. It was not until 2 May 2012 that the husband made a claim under the slip rule. It ultimately did not proceed. This is because on the eve of the hearing of the wife’s Initiating Application the husband proposed that all the orders be set aside under s 79A to which the wife agreed.

13. There was thus no determination on the merits of the slip rule application.

14. In the well known passage of McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at pp 624 – 625:

    In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

    In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action…

    (References omitted)

15. The first paragraph of his Honour’s reasoning must, of course, in the Family Court of Australia, be read subject to s 117 of the Act.

16. Whilst there is some force in the proposition that, on the face of the orders, an error may have been made, such a conclusion could not be reached without consideration of the negotiations that led to the orders being in the particular form in which they were.

17. In addition, there were other issues remaining unresolved relating to the accounting to be undertaken by the parties and the reconciliation of the loan accounts and the proceeds of the sale of the F business.

18. The parties themselves did not ask the court to resolve this dispute but rather agreed to set aside the orders in their entirety and to start again. 

19. In those circumstances, it is not possible to predict what would have occurred on the outcome of the wife’s Initiating Application, which involved issues other than simply the correction of the orders under the slip rule somewhat belatedly raised by the husband.  The court cannot conclude those proceedings, if run to judgment, would have resulted in a complete success to the husband.

20. The conduct of the parties therefore does not support a costs order in favour of a particular person but rather supports the order that each party pay their own costs.

The proceedings not necessitated by the failure of a party to comply with previous orders of the court

1. For the reasons given earlier neither party can be said to have been wholly unsuccessful in the proceedings.  In particular, the wife succeeded in having an allowance made in her favour for the sale of the F business, which had always been disputed by the husband.  This resulted in a division of property slightly in excess of the position of the husband.

Offers of settlement

1. There were many offers of settlement made in this matter.  Each was hedged with many conditions and counter-proposals dealing with a number of sub-issues.

2. The highest the evidence for the husband goes is a letter of his solicitors to the wife’s dated 16 February 2012 wherein the following appears:

   In our response of 27 July 2010 we make it quite clear that our client is to be paid $323,935.62 being the proper adjustment to the wife for the husband for an equal division of the real property.  Again it cannot be said that you were not on notice.

3. The effect of the orders made by me was that the husband received a payment of $394 302.00.That proposal was put by the husband on the basis that the property pool was as he saw it.  It did not include the proceeds of sale of the F business.

4. Again the difficulty with the offer is that it ignores the other issues that were extant at the time.  It was not until 11 December 2012 that the issues relating to the reconciliation of the loan accounts and the issues of the Liquidators costs and who should pay them were resolved.  The offer referred to the ‘slip-rule’ issue and the balancing item said to be required to effect the 50/50 spilt of the parties’ property. That issue was overcome when the parties decided to set the orders aside and to start the property proceedings afresh.  Once the 2007 orders were set aside the offer had no context.  It was not an offer to accept a particular sum in settlement come what may.  It was a statement of position based upon the assumption that the slip rule issue was correctly stated by the husband.

5. In those circumstances the statement in the letter carries little weight.  The same made be said of all the offers made up to the time the orders were set aside.  There was no offer, or set of offers, which, in the light of the consent orders setting aside the 2007 orders, was unreasonable to refuse.

Conclusion

1. Having regard to the above matters, the appropriate order is that each party should bear their own costs of both sets of proceedings.  Accordingly, the Application in a Case of the husband filed on 12 July 2013 will be dismissed.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 3 April 2014.

Associate: 

Date:  4 April 2014