O'Hara and O'Hara and Ors

[2009] FamCA 581

FAMILY COURT OF AUSTRALIA

O’HARA & O’HARA AND ORS [2009] FamCA 581

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

APPLICANT: Ms O’Hara

RESPONDENT: Mr O’Hara

2^ND RESPONDENT: Mr O’Hara (Snr)

3^RD RESPONDENT: Mrs O’Hara (Snr)

FILE NUMBER: SYF 305 of 2003

DATE DELIVERED: 6 July 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 18 September 2008 and 4 November 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Bridger

SOLICITOR FOR THE APPLICANT: Kells The Lawyers

COUNSEL FOR THE RESPONDENT: Mr Watkins

SOLICITOR FOR THE RESPONDENT: In person

COUNSEL FOR THE 2^ND & 3^RD RESPONDENTS: Mr Dura

SOLICITOR FOR THE 2^ND & 3^RD RESPONDENTS: Matthews Folbigg

Orders

1. The husband pay the wife the sum of $15,000.00 by way of costs.

2. The wife’s application for costs against the 2^nd and 3^rd respondents be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym O’Hara & O’Hara and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 305 of 2003

MS O’HARA

Applicant

And

MR O’HARA

Respondent

And

MR O’HARA (SNR)

2^nd Respondent

And

MRS O’HARA (SNR)

3^rd Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 20 March 2008 I made orders in proceedings under Part VIII of the Family Law Act 1975 (“the Act”) following the hearing of the dispute between the wife (applicant), the husband (respondent), the husband’s father (second respondent) and the husband’s mother (third respondent).

2. The husband was a bankrupt but the trustee in bankruptcy was granted leave to withdraw from the case.  He had entered into a deed of arrangement with the remaining parties.

3. The principle dispute was about what was to happen to a property at E (“the E property”). 

4. The wife by way of application in a case filed 17 April 2008 sought orders in the following terms:-

   1.That the husband and the second and third respondents pay the wife’s costs of the property settlement proceedings and that such costs be calculated on the indemnity basis.

   2.That such order for costs be assessed in accordance with the Family Law Rules 2004 or, in the alternative, if within 28 days from the date of the order the solicitors for the husband and the solicitors for the second and third respondents notify the solicitors for the wife that they accept the quantum of the wife’s costs then that amount be paid forthwith.

   3.That in the event the husband and the second and third respondents pay interest on the quantum of an order for costs at the rate provided for in the Family Law Rules calculated from the due date of payment and until payment of the quantum or any part as remains unpaid.

   4.That the amount to be paid to the wife by way of costs be secured against the whole of the right, title and interest of the husband and the second and third respondents in the property situate at and known as [E] in the State of New South Wales.

   5.That the husband and the second and third respondents pay the costs of the wife of and incidental to this application.

5. This application was opposed by the husband and the 2^nd and 3^rd respondents. 

6. All parties agreed that the starting point was s 117(1) which provides for a general rule that each party to proceedings under the Act bear his or her own costs.

7. Section 117(2) provides the exception to the general rule so that a court may make such orders as to costs as it thinks appropriate when it is “of opinion that there are circumstances that justify it in doing so”. 

8. Subsection (2A) provides an inclusive list of the relevant matters to be considered when exercising the broad discretion given under subsection (2).  Those matters are as follows:-

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (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 answer 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. 

FINANCIAL CIRCUMSTANCES OF THE PARTIES

1. It is the wife’s submission that her circumstances are essentially the same as in her financial statement sworn 7 August 2007 with the exception that the 2^nd and 3^rd respondents have paid the judgment monies.  It is agreed that that amount (with accumulated interest) was in the sum of $294,000. 

2. Annexed to the wife’s affidavit sworn 15 April 2008 are costs agreements entered into between the wife and her lawyers and the wife and her counsel.  It is the wife’s evidence that as at 15 April 2008 she had incurred legal fees of nearly $258,000.00 and that there was still an amount of $172,259.00 unpaid (see Annexure “E” of the wife’s affidavit sworn 15 April 2008).  There is no breakdown provided as to which parts of these fees relate to the dispute between the parties in respect of parenting issues and which parts relate to disputes between the husband, the 2^nd and 3^rd respondents in relation to the financial matters.

3. The husband in his written submissions submits that the husband estimated that 60 per cent of the time in the litigation was spent on children’s matters.  I did not deal with the children’s matters and I have no independent evidence that would enable me to make that assessment.  I infer that those legal fees have now been paid from the monies the wife received on settlement (although I was not specifically informed that they had been).  

4. The wife asserts that each of the respondents is in a superior financial position to her. 

5. The husband at the present time is an undischarged bankrupt.  It has not been suggested that the husband went bankrupt as a tactic to thwart his wife’s application for alteration of property. 

6. The effect of the deed entered into with the husband’s trustee released the trustee from making any claim against the E property.  The husband has a number of claims against his parents.  The husband’s ability to make a claim against his parents has probably vested in the husband’s trustee who could make that claim and the deed the trustee entered into does not preclude the trustee from making it.

7. In relation to my findings that the husband may have undisclosed assets or that he maybe warehousing assets, the Bankruptcy Act 1966 provides that a trustee may be able to recover assets from an entity if that entity has been used by the bankrupt to “disguise” income.

8. Therefore, it is difficult to find that the husband is in a superior financial position to the wife as asserted by the wife.

9. Counsel for the wife asserted that the husband must have received $36,488.00 from the settlement.  This is on the basis that the settlement statement shows that the barrister received $71,000.00 and he was otherwise entitled to an amount of $107,488.00.  The husband answers that by pointing out that under the deed he entered into with his trustee in bankruptcy, he indemnified his parents in relation to the monies that they paid and that provides an explanation as to why he received no cheque from the settlement proceeds.  I accept the submission by counsel for the 2^nd and 3^rd respondents that when one analyses the settlement statement it is clear that the entirety of the settlement funds have been disbursed and the husband received none of those funds.

10. It is also clear now that the trustee will require the husband to pay any monies that he could otherwise recover from his parents.  I accept the submissions by counsel for the husband that the husband, in effect, has no assets apart from those undisclosed assets that he may have warehoused.  I accept that it is unlikely that any costs order made against the husband can be satisfied. 

11. It is submitted by counsel for the husband that making a costs order against him would commit him to a second bankruptcy.  I am not sure that that is so, and even if it was so it would not be a reason for not making the order.

12. The wife asserted that the 3^rd respondent (incorrectly referred to in submissions by counsel for the wife as the 2^nd respondent) gave oral evidence during the hearing that she was the owner of a number of real estate properties (according to the written submissions) and six properties (according to counsel for the wife in oral submission) based on an assertion of a note taken by her instructing solicitor.  No transcript of that evidence was tendered in the cost proceedings.  None of the respondents accepted the assertion. 

13. Notwithstanding the lack of transcript provided by the wife, I have not, on my own motion, ordered a transcript because I have what is unchallenged sworn evidence from the 3^rd respondent in relation to a current financial position. 

14. Counsel for the wife also points out that the 3^rd respondent is now the only registered proprietor of the E property and no explanation has been given in the affidavits of the 2^nd and 3^rd respondents as to why that might be.  I do not consider my lack of knowledge in that area to be a significant matter.

15. It is the position of both the 2^nd and 3^rd respondents that whilst they have some assets in their names (principally the E property), they are heavily indebted by way of mortgage and have little assets with any equity and almost no disposal income.  The 2^nd respondent is in receipt of Centrelink benefits. 

16. As a result of findings made by me in the judgment, the husband’s trustee has now made a claim against the 2^nd and 3^rd respondents in sums totalling in excess of $155,000.  The 2^nd and 3^rd respondents assert that if the trustee is successful in prosecuting that claim, they will not be in a position to make payments and the E property will need to be sold and it may also be necessary for them to declare bankruptcy themselves.  They assert that a similar fate may befall them if any significant costs order is made against them in these proceedings. 

LEGAL AID

1. No party in this matter is in receipt of Legal Aid.

CONDUCT OF THE PARTIES

The husband

1. Counsel for the wife made extensive oral submissions in relation to the conduct of the husband based upon the affidavit of the wife sworn on 8 October 2008 (and the 119 annexures to that affidavit).  This case has a long history.  The wife says that she instructed her lawyers in February 2002.  She asserts that throughout the proceedings it was difficult to obtain financial information from the husband and the 2^nd and 3^rd respondents.  Exhibit “A” sets out the fact that the wife spent $1,248.00 in obtaining company searches in respect of a number of her companies, some of which it was shown were companies in which the husband had an involvement.

2. On 5 November 2003 the wife’s solicitors requested that the husband’s solicitors provide relevant financial records for the taxation years 2000 to 2003 in relation to R Company Pty Ltd, A Holdings Pty Ltd and P Company Pty Ltd.  The evidence by the wife is that that request was not properly complied with and that a formal request for discovery was issued on 5 November 2003.

3. It is clear from the letter written by the wife’s lawyers on 7 January 2004 (Annexure “N”) than an indexed bundle of documents was provided on 23 December 2003 under cover of letter of 23 December 2003.  There was an assertion however that the request for discovery remained unsatisfied.  There is no indication in the wife’s affidavit as to how extensive the bundle of indexed documents was.

4. Up until this point of time the 2^nd and 3^rd respondents were not parties to the proceedings. 

5. On 18 February 2004 the wife’s lawyers wrote another letter complaining that formal discovery had not been provided (and asserting that the informal discovery that had been provided was not sufficient).

6. In a letter written by the husband’s lawyers on 23 February 2004 the husband’s lawyer asserts that no formal order had been made for formal discovery (that misunderstood the position under the rules once a Notice for Discovery was served).  The letter asserts that “the wife had been provided with quite a substantial amount of documentation”.

7. On 18 February 2004 the wife again complained that formal discovery had not taken place.

8. By May 2004 the wife had instructed her lawyers to issue subpoenas for production of documents from P Company Pty Ltd and A Holdings Pty Ltd.  The secretary of both of those companies was a Mr P who lived at the E property.  The return date of those subpoenas was adjourned on more than one occasion.  No documents were produced.  The wife wrote a letter to the husband’s lawyers asking for documents for these companies and no response to that letter was received.

9. On 22 December 2004 the wife’s lawyers received from the husband’s lawyers draft financial reports in respect of A Holdings Pty Ltd and P Company Pty Ltd.

10. On 2 March 2005 the husband signed an undertaking as to disclosure whereby he undertook to the Court that to the best of his knowledge and ability he had carried out and complied with his duty of disclosure (at least on a prima facie basis and based on subsequent findings his disclosure had not been complete).

11. The wife asserts that the husband failed to co-operate, having consented to the appointment of a single expert for the purposes of preparing a report in respect of P Company Pty Ltd, A Holdings Pty Ltd, P2 Pty Ltd and R Company Pty Ltd.  On 7 July 2005 the husband originally indicated that he would consent to a single expert.  At the time, R Company Pty Ltd had been liquidated and A Holdings Pty Ltd was also currently in liquidation. 

12. On 5 September 2005 the husband changed his position and argued before the Court that the preparation of a report by an expert was unnecessary given that the companies had been liquidated, the husband had already been cross-examined in the Supreme Court during the morning, and the husband’s solicitors had already supplied all sourced documents in relation to those companies. 

13. Notwithstanding that, however, on 19 September 2005 the husband did consent to the appointment of an expert witness and an order was made on 5 October 2005 that F Accountants value those companies.  They were duly instructed to do so on 14 October 2005. 

14. The wife’s solicitors on 17 October 2005 asked the husband’s solicitors to provide information to the accountants, including up to date profit and loss and balance sheets for the companies and tax returns for the last four years.

15. The wife issued some subpoenas to the companies seeking production of documents.  Nothing satisfactory was returned in respect of those subpoenas.  The public officers of the companies were not asked to go to Court to explain why there had been a failure.  Draft financial statements were sent to F Accountants.  This was confirmed by F Accountants on 12 January 2006.

16. On 3 March 2006 F Accountants sent an extensive schedule containing a list of additional information that was required to complete the valuations.  In addition, an invoice for work done on the valuation to that time was sent on 16 March 2006 in the sum of $2,166.89.  That invoice is Annexure “JJJ”.  That is the last document that I have from the single expert that was appointed.

17. Counsel for the wife invites me to infer that the single expert did not complete their report because that report would otherwise have been tendered at the hearing.  She further invites me to infer that the reason a report was not completed by the single expert was because documents were not forwarded by the husband.  I have no direct evidence as to why that report may not have been completed and it would be unsafe to draw the inferences requested.

18. Counsel for the husband points out that there is no indication as to why F Accountants failed to complete the valuation in relation to the four companies.

19. Counsel for the 2^nd and 3^rd respondents correctly point out that any failure in relation to the single expert completing this work cannot be visited upon the 2^nd and 3^rd respondents.

20. One thing that happened about this time was that the husband’s bankruptcy became known (the husband was declared bankrupt in December 2005 and the wife says she found out about that on 24 February 2006).  Upon the husband’s bankruptcy his interest in the E property vested in his trustee.  The trustee remained in the case up until the first morning of the hearing whereby upon the mutual agreement of all parties the trustee was released from further involvement in the case.  I accept that the involvement of the trustee in the proceedings added delay and a logistical complexity for the wife.  The wife provided the trustee with photocopies of documents relating to the proceedings (the trustee paid for the photocopying), she dealt with requests for information from the trustee and otherwise co-operated with the trustee in the trustee’s enquiry in respect of the husband’s financial position.  In return the trustee provided information to the wife about the husband’s creditors.

21. On 13 April 2007 there was an agreement in relation to a joint valuation of the E property.  There was some dispute about who should be responsible for the preparation of the instructions to the joint expert.  The 2^nd and 3^rd respondents asserted that it was up to the applicant to prepare the instructions pursuant to the Family Law Rules (no such rule exists – there is no rule that governs who should prepare the letter of instruction. The rules allow for a Court to order that the parties confer for the purposes of preparing an agreed letter of instruction to the expert).

22. Counsel for the wife put some emphasis upon the letter received by the wife’s lawyers from C Valuers, the valuers appointed to carry out the valuation of the E property dated 18 May 2007.  That letter advised that those valuers had attempted to contact the husband on 4 May 2007 in order to organise access to the E property.  The communication is in the following terms:

    We wish to advise that our office contacted Mr [O’Hara] on 4 May 2007 to organise access to the property.  However at this point of time, Mr [O’Hara] has not called our office back with any details.

23. Two letters were written by the wife’s lawyers on 18 May 2007 to the lawyer for the husband and the lawyer for the 2^nd and 3^rd respondents recording that the valuers were “experiencing problems in gaining access to the [E] property”.  It seems, however, that after those letters were written the valuer then obtained access to the property and the valuation was carried out.

24. On 18 July 2007 the wife’s lawyers filed subpoenas directed to O’Hara Investments Pty Ltd, A Pty Ltd, the local City Council and L Insurance Ltd. 

25. On 1 August 2007 the wife’s lawyers received an email from lawyers acting for O’Hara Investments Pty Ltd and A Pty Ltd.  A request was made to narrow the scope of the subpoena and that in part was agreed to.

26. On 2 August 2007 the solicitors for the companies indicated that they objected to the production of documents on a number of grounds which are set out in Annexure “AAAAA” to the wife’s solicitor’s affidavit sworn 8 October 2008.

27. On 3 August 2007 the return of the subpoenas before Registrar Cameron led to him setting the subpoenas aside except for a limited class of documents (group certificates and employment details relating to the husband).  The wife reviewed Registrar Cameron’s decision and that matter, after a number of adjournments, came before Justice Cronin on 16 November 2007.  The orders made by Justice Cronin on that day and the reasons for him making those orders are contained in Exhibit “CC”.  His Honour reinstated the subpoenas to A Pty Ltd and O’Hara Investments Pty Ltd.  In Order 5 his Honour made an order that the Application in a Case filed by the wife on 9 August 2007 be otherwise dismissed and that the application be removed from the list of cases awaiting a hearing.

1. It was part of the wife’s application that the companies, A Pty Ltd and O’Hara Investments Pty Ltd, be ordered to pay the costs of the wife.  It does not appear from a reading of his Honour’s judgment that he specifically turned his mind to the issue of costs but his Honour clearly had that application before him. 

2. Rule 19.08(2) of the Family Law Rules provides:

   (2) An application for costs may be made:

   (a)   at any stage during a case; or

   (b)  by filing an Application in a Case within 28 days after the final order is made.

3. His Honour dismissed the balance of the wife’s application.

4. The wife’s solicitors wrote to the Court on 29 November 2007 advising that the wife intended to apply for costs in respect of the matter before his Honour on 22 October 2007, in respect of which his Honour had made orders and delivered reasons on 16 November 2007 (Annexure “TTTTT”).  The basis upon which that letter was written is unclear to me.  The wife’s lawyers assume that the matter of costs had not been dealt with (when on the face of the orders it had).  It may well be that the wife wished to argue to his Honour, Justice Cronin that there is a slip in the orders that he has made and that Order 5 should not have covered the application in relation to costs.  The matter was asked to be brought to his Honour’s attention.  I was informed that the Court did respond to the letter of requesting a re-listing on the question of costs.  That letter told the wife that she needed to make an application if she wanted the matter re-listed in relation to costs.  It is clear that the wife has been told that if she wanted to pursue her costs applications against the two companies she would need to re-list the matter.  She has not done so.

5. In any event the application before me does not involve any issue of making a costs order against either A Pty Ltd or O’Hara Investments Pty Ltd.  The purport of the submission made by counsel for the wife was that as these companies were at all times the alter egos of the husband and, according to the submission of counsel for the wife, also the 2^nd and 3^rd respondents, it would be appropriate to take the behaviour of these companies in resisting the subpoenas into account when determining the wife’s costs in the substantive proceedings.

6. Whilst I appreciate that the wife realistically may not hope to get anything from these companies; and it is in the interests of all parties that the matter of costs be determined finally on an overall basis.  I find that it would be inappropriate to take what happened with these subpoenas into account in circumstances where Justice Cronin has already made an order.

7. The wife sets out subpoenas she issued to the husband’s then de facto partner, Ms D on 12 February 2008.  She seems to complain that that was wasted expenditure because by the time of the hearing the husband advised that he was no longer in a relationship with Ms D.

8. Counsel for the wife refers to particular passages in my reasons for judgment.  For completeness I refer to others:

   (1)At paragraphs 14 to 30 I generally deal with the parties’ credit. Whilst I make some criticism of the wife’s evidence in relation to the deposit in respect of the E property, overall I conclude that although I approached the evidence of each party with some caution the doubt I had in relation to the husband’s evidence and the evidence of the husband’s parents far exceeded the doubt I have in relation to the wife’s evidence.  Overall I concluded that where the evidence of the husband and the 2^nd and 3^rd respondents differs to the evidence of the wife I preferred, unless I otherwise indicated in the reasons, the evidence of the wife.

   (2)At paragraphs 27, 28 and 29 I say the following:

   27.I conclude that the husband adopted a strategy in the witness box which was designed to stop any effective testing of the evidence that he had given or any testing of his evidence in respect of his current everyday involvement with the business activities of various companies. 

   28.The 2^nd respondent was as equally unimpressive.  He couldn’t remember almost anything about what was in his affidavit nor remember anything about what was in any other document.

   29.I was unimpressed with the evidence given by the 3^rd respondent.  She was on occasions vague and on other occasions unconvincing when giving evidence in relation to the companies that she ostensively controls. 

   (3)At paragraphs 227 to 264 I deal with the husband’s disclosure of his financial position and conclude that I was not satisfied that the husband had made a full and substantive disclosure of his financial affairs.  At paragraph 262 I say:

   … The circumstances in which the corporate structures have been established leads to a strong influence that they have been set up in circumstances where the husband has needed to find a way to continue operating as he always has, notwithstanding his bankruptcy and the liquidation of [R Company] Pty Ltd.  The husband should not be able to take any advantage from the fact that he has not fully disclosed to me what his involvement is in this group of companies.  It is my view that the husband does exercise a degree of control over the operations of the companies.  I find that it is probable that the husband will benefit from his involvement with these companies, once he is more freely able to do so, when he is discharged from his bankruptcy (I infer that that may be as early as the end of 2008).

   (4)At paragraph 264 I say:

   I find the husband’s non disclosure is deliberate.  Consequently I should not be unduly cautious about making findings in favour of the wife and I am able to go beyond the identified property.

9. The husband does not cavil with any findings made in my reasons for judgment in respect of his non-disclosure or his conduct.

10. Counsel for the husband submits that I have already in my reasons for judgment (paragraph 270 to 283) penalised the husband in relation to his non-disclosure.

11. Counsel for the husband submits that when applying the discretionary factors in s 79(4) the Court, after considering the non-disclosure issues, adjusted the asset split from 70/30 in the husband’s favour (paragraph 270) of the judgment to 70/30 in the wife’s favour (paragraph 283 of the judgment), that is, the wife receive 40 per cent of the overall equity the parties had by way of adjustment for non-disclosure.  This is not entirely accurate.

12. Whilst I did indicate that I would take the husband’s non-disclosure into account as a “weighty matter” (see paragraph 278), it was not the whole of the matters I took into account under s 79(4)(d) - (g). 

13. The overall assets of the parties that were to be divided were in the sum of $419,957.00.  Forty per cent of that amount (which is the s 79(4)(d) – (g) adjustment) would be in the sum of $167,982.00.  A weighty factor in making that adjustment was the husband’s non-disclosure.

14. I do not, however, think that there is much force in the argument made by counsel for the husband that the husband has already been penalised for his non-disclosure.  The order that was made was not a “penalty” but rather an “adjustment” of property.  The issue as to whether or not the wife is entitled to costs based on the husband’s conduct in not disclosing assets is a separate issue.  I accept the submissions made by counsel for the husband that the wife concedes that the husband had made some limited disclosure and that the reasons for F Accountants not providing its valuation are not entirely clear.

15. Counsel for the wife’s submission against the 2^nd and 3^rd respondents in relation to conduct was that they were arm in arm with the husband in assisting him to fail to disclose his financial position to the wife.

16. In relation to the non-production of documents at the pre-trial stage, paragraph 110 of the wife’s affidavit indicates that on 31 July 2007 the 2^nd and 3^rd respondents sent a list of documents and a further list of documents was sent on 7 August 2007.

17. Counsel for the wife complains that the 2^nd and 3^rd respondents were requested to produce copies of the deed of trust pertaining to the Family Discretionary Trust of which O’Hara Investments Pty Ltd was trustee.  It is submitted by counsel for the wife that that trust deed was never produced.  At paragraph 130 of the wife’s affidavit she says that on 15 October 2007 the 2^nd and 3^rd respondents’ solicitors advised by letter that their clients were not aware of any trust deed in existence (see Annexure “JJJJJ”).  It is unclear to me on the evidence that has been filed whether the statement in Annexure “JJJJJ” is inaccurate.

18. In paragraphs 259 and 260 of my reasons for judgment I said the following:

    259.The 3^rd respondent, when she gave evidence towards the end of the second day, indicated that she would agree overnight to attempt to obtain the depreciation schedule of [O’Hara and Co] Pty Ltd. 

    260.When she gave evidence on the third day she told the court that she had taken the deliberate decision not to attempt in any way to obtain that information for the Court.  I accept counsel for the wife’s submission that the inference to be drawn is that that information would not have assisted her son’s case.

19. Counsel for the 3^rd respondent submits that this matter cannot be raised in any significant way for the purposes of obtaining a costs order against the 3^rd respondent in the wife’s favour.  It is submitted that at the trial the documents called from her whilst she was in the witness box would not necessarily have led to a different result and that overall this is not a significant matter given the lateness of the call made by the wife on the 3^rd respondent and the little effect, if any, it would have had on the proceedings.

20. Apart from the complaint about the trust deed, there is no significant complaint in the wife’s material against the 2^nd and 3^rd respondents co-operating in their obligations to make disclosure and discovery and providing inspection.  It is slightly unclear on the material before me as to exactly when the 2^nd and 3^rd respondents were joined to the proceedings but it was not before 4 February 2004 and not after 10 June 2004.  It is clear that the 2^nd and 3^rd respondents had nothing to do with any problems in respect of F Accountants’ valuation.  The invoice from F Accountants was not in any way directed to the 2^nd and 3^rd respondents.  I am not satisfied that the 2^nd and 3^rd respondents, although they were living in the property at the time, did anything that would have hindered the valuation of the E property.  It seems the E property was valued after an initial complaint that the husband had been tardy in returning a telephone call that the valuer’s office had made to him.  There is no indication as intimated by counsel for the wife that the valuer was in some way stopped from coming onto the property.

FAILURE TO COMPLY WITH COURT ORDERS

1. Counsel for the wife does not make any claim in her written submissions that there has been any failure to comply with court orders by the husband or the 2^nd and 3^rd respondents.  There is a claim that the husband and the 3^rd respondent failed to produce documents but those matters are dealt with under the discussion in respect of the conduct of the parties above.

WHOLLY UNSUCCESSFUL PARTY

1. At paragraph 10 of my reasons for judgment I set out the application made by the wife before me during the proceedings.  By way of the declarations sought in applications 1 and 2, the wife required the 2^nd and 3^rd respondents to pay her an amount of $143,487.00.

2. In addition, in Order 7.4 as sought by the wife, she required an amount to be paid to her equivalent to 35 per cent of the net proceeds of the sale of the E property after she had been paid the sum of $143,487.00.  At paragraph 90 of the judgment I note that the agreed value of one half of the E property was in the sum of $367,500.00.  Consequently the property had an agreed value at hearing of $735,000.00.  Thirty five per cent of that figure is $257,250.00.  Overall therefore at hearing the wife sought an order for $400,737.00 ($143,487.00 + $257,250.00 = $400,737.00).  The wife actually received an award in the sum of $283,500.00.

3. It consequently cannot be said that the wife was wholly successful in the claim which she made at hearing and consequently it cannot be said that the respondents were wholly unsuccessful in resisting the wife’s claim.

OFFER OF COMPROMISE/SETTLEMENT

1. By letter dated 6 June 2007 the husband made an offer of compromise to the effect that in return for the wife transferring her interest in the E property to him he would pay her $30,000.00.

2. By letter dated 21 June 2007 the 2^nd and 3^rd respondents offered to settle the proceedings on the basis that they would pay to the wife the sum of $30,000.00 in return for the wife transferring to them her interest in the E property.

3. The wife in July 2007 (Annexure “QQQ” to the wife’s affidavit sworn 8 October 2008) made an offer that she would transfer her interest in the E property for a sum of $440,000.00.

4. By way of letter dated 21 August 2007 the husband made an offer (Annexure “FFFFF” to the wife’s affidavit sworn 8 October 2008) to settle the matter on the basis that he would pay the wife $135,000.00 in relation to her interest in respect of the E property.

5. As set out above, the effect of the orders made on 20 March 2008 was that the wife receive an amount of approximately $283,500.00.

6. It cannot be said therefore that the written offers that were provided by one party to another in this matter should influence the way in which I exercised my discretion when considering this application for costs.  The result fell between the husband’s best offer and the wife’s best offer.  The wife criticises the husband’s offer on the basis that given that he was an undischarged bankrupt the wife asserted that there was no prospect that the husband could satisfy the terms of the offer that he made.  The husband’s parents in this case have been a source of funding for the husband and I am unable to say that the husband may not, by borrowing from his parents, have been able to fulfil the terms of the offer that he made.

SUCH OTHER MATTERS AS THE COURT CONSIDERS RELEVANT

1. Another factor I need to take into account is the amount of money that has already been expended on this litigation when compared with the amount of money the parties had.  An order for costs to be taxed or assessed is an order that will create another area for further litigation and dispute.

CONCLUSION

The husband

1. I accept counsel for the husband’s submission that any costs order must be limited to the property proceedings and limited to the wife’s additional costs of enquiry arising from non-disclosure.  Such costs would include the costs of issuing subpoenas and considering those documents.

2. The husband’s conduct in not fully disclosing his financial position is conduct that merits a partial costs order against him in the wife’s favour.  I acknowledge in making the order that it may well not be one that the wife can enforce easily.

3. I reject the wife’s submissions that the particular facts and circumstances of this case warrant the making of an indemnity costs order. 

4. Taking into consideration the material in the wife’s most recent and lengthy affidavit, I accept that there is some cause for some complaint about how the husband cooperated in pre-trial discovery.  Taking that whole history into account and doing the best I can, I assess that the husband should pay the wife’s costs in the sum of $15,000.00.  That amount in my view would cover the matters that have been highlighted in these reasons, including the cost of the proceedings before Cronin J in relation to the two companies referred to above, namely A Pty Ltd and O’Hara Investments Pty Ltd.  I have found in my reasons for judgment that the husband in fact controlled those companies.

2^nd and 3^rd Respondents

1. The most current evidence that I have from the 2^nd and 3^rd respondents (unchallenged in this costs application) is that they now have at best only a modest equity in the E property (based on the valuation I had of that property at the hearing).  The wife made no offer to settle the matter with the 2^nd and 3^rd respondents that would be an offer that I would take into account when considering the wife’s costs application against them. 

2. The matters specifically complained of against the 2^nd and 3^rd respondents are relatively minor.  More important is the more general complaint that the husband’s parents were arm in arm with him in attempting to defeat the wife’s claim, and that complaint is not without any merit.  I do not, however, find that the wife has made out a case of serious and systematic conspiracy to not disclose.  When non-disclosure happened it was primarily at the hand and direction of the husband.  The conduct by the 2^nd and 3^rd respondents was not of the nature that would, in my opinion, warrant of itself a costs order being made in the wife’s favour against the 2^nd and 3^rd respondents and certainly not warrant a costs order being made against them on an indemnity basis.

I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts

Associate: 

Date:  6 July 2009