O’Cleary & Vukasin (No 4)

Case [2024] FedCFamC1F 872

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

O’Cleary & Vukasin (No 4) [2024] FedCFamC1F 872

File number: SYC 4005 of 2020
Judgment of: CAMPTON J
Date of judgment: 18 December 2024
Catchwords: FAMILY LAW – COSTS – Where the husband seeks costs payable by the wife pursuant to s 117 of the Family Law Act 1975 (Cth) of substantive s 79 proceedings – Where consideration is given to the conduct of the wife in the proceedings, including opposing a determination as to a portion of the husband’s interests in a corporation being held on trust for a third party to the marriage, the wife prosecuting relief outside the reasonable ambit of the s 79 discretion, the wife’s offer of settlement being unreasonable, proposing a compromise well outside the reasonable ambit of discretion – Where the husband made a competitive offer of settlement that had some deficiency in the interpretation of its terms – Where both parties, but the wife to a greater extent, failed in compliance with their obligations pursuant to the legislation and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Costs ordered for both the substantive proceedings and the costs application in a fixed sum.
Legislation:

Family Law Act 1975 (Cth) ss 75, 79, 95, 117

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Sch 3, r 1.04 and r 12.07
Cases cited:

Browne v Green (2002) FLC 93-115; [2002] FamCA 791

D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64

Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33

Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23

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

Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178

O’Cleary & Vukasin (No 2) [2024] FedCFamC1F 660

O’Cleary & Vukasin (No 3) [2024] FedCFamC1F 814

Sfakianakis& Sfakianakis (2019) 59 Fam LR 419; [2019] FamCAFC 54

Warbrick and Warbrick (No. 2) (2021) FLC 94-030; [2021] FamCAFC 101
Division: Division 1 First Instance
Number of paragraphs: 50
Date of hearing: 6 December 2024
Place: Sydney
Counsel for the Applicant: Mr Puckey KC
Solicitor for the Applicant: Jeffrey Choy Legal
Counsel for the Respondent: Mr Smith
Solicitor for the Respondent: JC Legal Practice

ORDERS

SYC 4005 of 2020

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

MR VUKASIN

Applicant
AND:

MS O’CLEARY

Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

18 DECEMBER 2024

THE COURT ORDERS THAT:

1.On or before 31 March 2025, or within such further time as agreed in writing between the husband and the wife, the wife pay the husband’s costs fixed in the sum of $177,500.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors…

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AGLC
O’Cleary & Vukasin (No 4) [2024] FedCFamC1F 872
Case
[2024] FedCFamC1F 872
Decision Date

CaseChat Overview and Summary

The case of Syc 4005 of 2020 involves a dispute between Mr Vukasin (the husband) and Ms O'Cleary (the wife) concerning the division of assets following their divorce. The husband filed an application for costs under section 117 of the Family Law Act 1975 (Cth), seeking reimbursement for costs incurred during the substantive proceedings and the costs application. The legal issues before the court included whether the wife's conduct warranted an award of costs against her, and if so, the appropriate amount. The court considered factors such as the wife's opposition to the determination of Mr Passerini’s entitlements in Vukasin Pty Ltd, her adducing of inaccurate evidence, and the overall conduct of the proceedings.

The court found that the wife's conduct was a significant factor in the husband's application for costs. It was noted that the wife had opposed the recognition of Mr Passerini's entitlements in Vukasin Pty Ltd, which the court considered a core issue in the proceedings. The wife's evidence was found to be either reckless or deliberately inaccurate, aimed at securing a greater division of property in her favour. Despite the wife's contention that her prior solicitors were responsible for her deficiencies, the court gave little weight to this argument. The husband's submission that the wife's conduct led to an unmeritorious claim was also accepted by the court. The court further considered the financial circumstances of both parties and found that the wife's financial situation weighed in her favour. Nevertheless, the court ordered the wife to pay the husband's costs of the substantive proceedings and the costs application in a fixed sum.

In its judgment, the court ordered Ms O'Cleary to pay Mr Vukasin's costs of the substantive proceedings fixed in the sum of $165,000, and the costs of the costs application in the sum of $12,500, making a total of $177,500. The payment was to be made on or before 31 March 2025. The form of the order is subject to entry in the Court’s records, and any minor typographical or grammatical errors may be reviewed or rectified in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Orders

Orders of the court

SYC 4005 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR VUKASIN

Applicant

AND:

MS O’CLEARY

Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

18 DECEMBER 2024

THE COURT ORDERS THAT:

1. On or before 31 March 2025, or within such further time as agreed in writing between the husband and the wife, the wife pay the husband’s costs fixed in the sum of $177,500.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

These reasons determine an application for costs filed by the husband on 9 October 2024. The application for costs of the intervenor, heard at the same time as the husband’s application, was compromised after judgment was reserved by way of consent orders made on 9 December 2024. The wife is to pay Mr Passerini’s costs fixed in the sum of $110,000 within 65 days. For the reasons that follow, the wife is ordered to pay the husband’s costs of the substantive proceedings fixed in the sum of $165,000, and the costs of the costs application in the sum of $12,500, being a total of $177,500 on or before 31 March 2025.BACKGROUND The husband and the wife were married in 2013, separated on 26 January 2019 (at [92]), and were divorced in 2021. There are no children of the relationship. The central issues in the primary determination were as to whether the husband held 30 per cent of his interests in Vukasin Pty Ltd for the benefit of the intervenor, whether the husband or the wife was to retain a property at G Street, Suburb H (“the G Street property”) in specie, and as to the value of a cash adjustive sum payable by the husband to the wife. The husband and the wife engaged in mediations on 2 December 2020, 31 July 2023 or 3 August 2023, and 13 August 2024. They could not achieve a compromise. The husband conceded the claim of the intervenor. The wife opposed it. A declaration was made as to the husband holding 30 per cent of the share capital and any dividends and/or distributions associated or connected with those shares in Vukasin Pty Ltd on trust for the intervenor, and orders were made facilitating the transfer of the shares to him or his nominee as agreed in writing no later than 31 December 2026. The value of the property of the husband and wife was found to be $45,264,891 (at [187]). The s 79 orders provide for the wife to receive 16.5 per cent of the value of that property, being $7,402,545, and for the husband to receive 83.5 per cent, being $37,461,366. Orders were made providing for the husband to discharge a NAB mortgage secured on the G Street property. The husband complied with that order on 5 November 2024. The orders then provided for the wife to have the first option to retain the G Street property by paying the husband $3,679,350 on or before 25 November 2024. The wife exercised that option and paid the husband those monies on 25 November 2024.THE COMPETING RELIEF AS TO COSTS Pursuant to Order 16 as made on 30 September 2024, the husband filed an Application in a Proceeding on 9 October 2024 seeking:1. That in accordance with s117(2), s117(AB) and 117(C) of the Family Law Act 1975 that the [wife] be ordered to pay the costs of and incidental to the proceedings of the [husband] as follows:a. i.from the date of the mediation convened on 2 December 2020; or ii. in the alternative, from the date of the directions made on 13 December 2023 setting the matter down for trial; or iii. in the alternative from the date of filing of my trial affidavit on 18 April 2024; or iv. in the alternative from the date of the service of my offer of settlement on 31 July 2024.b. on an indemnity basis, or in the alternative on a party-party basis

Evidence

Evidence Before The Court

The husband’s criticisms as to the evidence adduced by the wife at trial echo the findings made in the primary reasons, especially as identified in bold:36I accept the submission of the husband that an underlying theme constructing the presentation of the wife’s case was to adduce evidence in which she had been either reckless as to its content, or which she knew was inaccurate, with the objective of achieving a perceived advantage in securing findings to generate a greater value of the adjustment of property in her favour. …136At no time during the four years of the proceeding did the wife identify or disclose her knowledge of an agreement or understanding between the husband and [Mr Passerini] for [Mr Passerini] to be “entitled” to 30 per cent of the proceeds of any sale of [Vukasin Pty Ltd]. She did not adduce evidence to explain her secretion of her knowledge of that information or why she provided evidence of her knowledge of this understanding on the business day prior to the trial. She had steadfastly put directly into issue the contention that [Mr Passerini] has any interest arising from any agreement or understanding at any time in [Vukasin Pty Ltd].137It is a reasonable indicator that the wife implicitly knew this information was relevant and material, else it would not have been included in her late affidavit. Her evidence as to her knowledge of an understanding or agreement between the husband and [Mr Passerini] does not stand on all fours with the case that she had pleaded. The circumstances and content of this evidence adversely impacts on her reliability and credibility on the subject matter of [Vukasin Pty Ltd] and the husband’s interests therein. I treat her evidence on this subject matter with caution. 138In cross-examination the wife said she did not know whether the 2006 and 2013 agreements were fabricated. She said she could not point to any fact grounding the assertion that the documents had been fabricated. She nevertheless maintained her contention that the 2006 agreement and the 2013 agreement were not authentic. (Emphasis added) The wife submitted that “[t]he highwater mark of the complaint was the income and financial resources available to the wife for which “broad” and “robust” findings have already been made against the wife in the proceedings”, and that there is no evidence that the wife’s failure to make disclosure caused unnecessary or additional costs to the husband. Those submissions are accurate. In her affidavit filed on 25 November 2024 the wife attempted to shift the blame for her deficiencies in the conduct of her case to her prior solicitors. I give this evidence little weight where it is adduced absent particularity or context. The husband submitted that the wife was “wholly unsuccessful” because she sought a cash payment from him to achieve 40 per cent of a pool of property that she sought to be valued at approximately $60 million, while he proposed a division of 15 per cent in favour of the wife of a pool of property that he sought to be valued at approximately $45 million. The s 79 determination was that the wife to be entitled to 16.5 per cent of a pool of $45 million. He submitted that the integers in which the wife was unsuccessful included her contentions as to:(a)An additional $15 million in divisible property of the parties;(b)A 30 per cent assessment in respect of her contribution-based entitlement; and(c)A 10 per cent adjustment in her favour pursuant to s 75(2) factors.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The Full Court has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. I shall refer to such s 117(2A) matters as are relevant and engaged here.CONSIDERATION After the s 79 determination, each party has the benefit of significant property as identified earlier. The wife’s income and income earning capacity is less than that of the husband but is nevertheless not insubstantial (at [241]). To raise funds to retain the G Street property the wife entered a loan agreement to borrow $3.11 million, attracting interest of one per cent each month. The parties’ financial circumstances are a consideration that weighs in favour of the wife. The husband submitted the wife’s conduct in the proceeding was the primary factor grounding his application for costs, including consideration of:(a)The wife’s opposition to the determination of Mr Passerini’s entitlements in Vukasin Pty Ltd. He said this “struck at the core” of the s 79 process in the identification of the existing legal and equitable interests of the husband, and that the dispute as to Mr Passerini’s entitlements, being an issue in the s 79 proceeding since it was initiated, “should never have existed”.(b)The wife’s adducing of inaccurate and at times deliberately false evidence designed to secure a greater division of property in her favour. The husband submitted, and I accept, that the wife was absolute in her position on the first subject matter throughout the litigation, alleging fraud on the part of both he and Mr Passerini as to entering documents in 2006 and 2013 recording the terms of their agreement as to the husband holding 30 percent of his interest in Vukasin Pty Ltd for Mr Passerini. The wife “at the eleventh hour” (on the eve of the trial) conceded that she had been made aware of Mr Passerini’s entitlements by the husband at the time of the commencement of her relationship with him in early 2013. She nevertheless maintained in cross-examination that the written agreement between the husband and Mr Passerini was fabricated, although she could not point to any fact of circumstance or evidence to support that assertion (Exhibit 1, Transcript 10 September 2024, p.157 lines 14–45). The submission of the husband then flowed to the position taken by the wife being an “unmeritorious claim pursued from start to finish”, and that the husband was “dragged to judgment” before a settlement as to the issue of Mr Passerini’s interest was achieved. The wife had little to say in response to this submission. The submission attracts significant weight. The husband’s criticisms as to the evidence adduced by the wife at trial echo the findings made in the primary reasons, especially as identified in bold:36I accept the submission of the husband that an underlying theme constructing the presentation of the wife’s case was to adduce evidence in which she had been either reckless as to its content, or which she knew was inaccurate, with the objective of achieving a perceived advantage in securing findings to generate a greater value of the adjustment of property in her favour. …136At no time during the four years of the proceeding did the wife identify or disclose her knowledge of an agreement or understanding between the husband and [Mr Passerini] for [Mr Passerini] to be “entitled” to 30 per cent of the proceeds of any sale of [Vukasin Pty Ltd]. She did not adduce evidence to explain her secretion of her knowledge of that information or why she provided evidence of her knowledge of this understanding on the business day prior to the trial. She had steadfastly put directly into issue the contention that [Mr Passerini] has any interest arising from any agreement or understanding at any time in [Vukasin Pty Ltd].137It is a reasonable indicator that the wife implicitly knew this information was relevant and material, else it would not have been included in her late affidavit. Her evidence as to her knowledge of an understanding or agreement between the husband and [Mr Passerini] does not stand on all fours with the case that she had pleaded. The circumstances and content of this evidence adversely impacts on her reliability and credibility on the subject matter of [Vukasin Pty Ltd] and the husband’s interests therein. I treat her evidence on this subject matter with caution. 138In cross-examination the wife said she did not know whether the 2006 and 2013 agreements were fabricated. She said she could not point to any fact grounding the assertion that the documents had been fabricated. She nevertheless maintained her contention that the 2006 agreement and the 2013 agreement were not authentic. (Emphasis added)