Pardo and Silve (No 2)

[2011] FamCA 371

FAMILY COURT OF AUSTRALIA

PARDO & SILVE (NO 2) [2011] FamCA 371

FAMILY LAW - COSTS

Family Law Act 1975 (Cth)

APPLICANT: Mr Pardo

RESPONDENT: Ms Silve

FILE NUMBER: SYC 973 of 2010

DATE DELIVERED: 20 April 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 20 April 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton

SOLICITOR FOR THE APPLICANT: Gayle Meredith & Associates

SOLICITOR FOR THE RESPONDENT: Litigant in person

Orders

1. So that there is no doubt, the case management fund referred to in order 14 made 2 March 2011 is to be an account in the joint names of the parties, requiring both parties to sign to withdraw funds from it and that monies only be withdrawn from that fund for the purpose set out in order 14 dated 2 March 2011 and I note that that purpose is for the funds to be used to pay G’s private school fees and associated expenses and for no other purpose.

2. Within 7 days, the wife pay to the husband by way of costs the sum of $30,000, such payment to be made from funds held in the wife’s name in the Bank of Queensland, … Branch, that she received in the approximate sum of $100,000 from the controlled monies account.

3. Upon the payment referred to in order 2 above, any injunctive order or undertaking given by the wife which restrains the wife from otherwise dealing with funds held by her in the Bank of Queensland, … Branch, is discharged.

4. There be no order for costs in relation to the proceedings which were heard by me this day.

NOTATION:

1. I note that the sum of $30,000 referred to in order 2 is to include any order for costs that might have been reserved in the husband’s favour during the proceedings. 

IT IS NOTED that publication of this judgment under the pseudonym Pardo & Silve (No 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 973 of 2010

Mr Pardo

Applicant

And

Ms Silve

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. After a defended hearing, the husband has sought an order that the wife pay his costs, either on an indemnity basis assessed in the sum of $191,256 or, alternatively, at scale on an assessed amount of $127,504.  The wife, in response to the husband’s application in the case for costs filed on 14 April 2011, seeks that the husband’s application for costs be dismissed and that the husband pay his own costs.  The wife has also sought an order which, in effect, asks for a discharge of the current order that freezes about $100,000 which has been deposited by the wife in the Bank of Queensland, … branch, as security in respect of this cost application. 

2. The husband’s costs application is made pursuant to the provisions of section 117 of the Family Law Act. Section 117 subsection (1) provides that the starting point of any discussion about costs is the proposition that each party to the proceedings shall bear his or her own costs. Section 117 subsection (2) allows an order for costs to be made as the Court considers just. Section 117(2A) of the Family Law Act sets out matters to which the Court shall have regard when determining whether a costs order should be made. 

3. The first of those matters is the financial circumstances of each of the parties.  In terms of capital, the parties’ position, are conveniently set out at paragraph 181 of my reasons for judgment dated 2 March 2011. The husband wishes to highlight in the context of this costs application, that although it appears on the face of the table at paragraph 181 that there was a 20 per cent difference in the capital position of the parties in the husband’s favour, the husband has a liability to pay moneys and has paid moneys to his solicitors. 

4. The husband has given evidence that, overall, he has incurred about $217,000 in legal costs and disbursements.  His claim against the wife for $191,000 by way of indemnity costs is a portion of those costs running from the date of second offer of settlement, which was dated 27 May 2010.  The balance sheet discloses a number of items relevant to the husband’s legal fees.  Items 3 and 6 are moneys that were partial property distributions to him that went directly towards the payment of legal costs.  Item 29 on the balance sheet is an item which relates to unpaid legal fees. 

5. In paragraph 4 of his affidavit of 4 March 2011, the husband makes a submission that when his liability to pay legal costs is taken into account his capital position is not significantly more than the wife.  On the figures that I have discussed, I am comfortable in accepting the proposition that when the husband’s legal fees are taken into account the capital position of the parties is roughly equal. 

6. It is to be noted that, given that the wife substantially represented herself throughout the proceedings, she does not have anything like the same legal costs the husband has incurred.  I have found at paragraph 165 of the reasons that neither the wife nor the husband could be said at this time to have a superior earning capacity than the other. 

7. I found at paragraph 162 of the reasons that when the matter was over I anticipated the wife would have income sufficient to adequately support herself.  I am bound by those findings, although I do take into account that the wife has filed an affidavit on 14 April 2011 in which she asserts that as at that date she is unemployed.  As a result of the orders I made on 2 March 2011 the husband received an order for regular periodic child support in the amount that he sought against the wife and I note, also, that the husband received an adjustment of capital arising from his ongoing responsibilities in relation to G. 

8. The other important matter to note arising out of the joint financial circumstance of the parties, is that there is not much money there that’s left for either of them.  The wife, in effect, after the orders were made, received only about $100,000 from a controlled moneys account and, obviously, any costs order I make will eat into that.  Her financial statement of 1 February 2011 shows that she had approximately $56,000 as at that date in the Bank of Queensland.  So the total of those two amounts is $156,000 and I would presume that, although I don’t have any evidence about it, there has been some reduction in that amount since the beginning of February.

9. I note that neither the wife nor the husband is in receipt of a grant of Legal Aid.  The husband complains that the wife failed during the course of the litigation to give financial disclosure.  The issue of financial disclosure or non disclosure was a controversy in the main hearing and I dealt with that controversy in paragraphs 169 through to 177 of the reasons.  The husband today relies upon those findings.  The wife has filed certain material and referred to it during his submissions, without objection.  None of the material she has referred me to today would cause me to change, in any significant way, the findings that I had made in the reasons in which I accepted that the husband had struggled to obtain information from the wife that she should have provided. 

10. I do note, though, that in my reasons I have concluded that that history of non disclosure did not lead to any significant assets being hidden.  The history, however, does point to the husband being put to some additional costs as a result of attempting to obtain from the wife disclosure which she should have made more easily.  The other aspect of the wife’s conduct relied upon by the husband in his application for costs relates to interim applications the husband made which he says were substantially necessitated by the wife’s attitude to dealing in a sensible and commercial way with the debt that existed on the home in which she was living. 

11. There were a series of interlocutory hearings and reviews and appeals which all turned around the wife displaying a lack of reality about her ability to retain the home.  I have dealt with this course of conduct in the reasons, particularly at paragraphs 120 to 127, 133 and 143, and I don’t repeat what I have said there.   Clearly some costs were incurred by the wife’s fundamental opposition to the sale.

12. In terms of parties being wholly unsuccessful in the substantive proceedings, neither party made a submission that the other was wholly unsuccessful and, both of them obtained an adjustment of property under section 79. 

13. A very important issue, though, in this costs application relates to offers that the husband made in writing to the wife during the course of the proceedings.  There were five of them.  The husband’s evidence about those offers is set out in paragraphs 22 to 29 of his affidavit of 4 March 2011, together with the annexures that are referred to in those paragraphs.  In summary, the husband’s five offers were made on 8 December 2009, 27 May 2010, 4 August 2010, 23 November 2010 and 12 January 2011.  Before I discuss each of those offers, I pause to note that at paragraphs 180 to 182 of my reasons I found that a just and equitable division of assets, liabilities and superannuation between the parties was 60 per cent to the husband and 40 per cent to the wife. 

14. As discussed during submissions, the first offer, that is the offer on 8 December 2009, was fairly close to the mark and, had the wife seriously considered it, the result would have been close to what she achieved at the final hearing.  The next two offers, that is the offers made on 27 May 2010 and 4 August 2010, which are fundamentally identical in their terms, contained an offer that the wife receive 55 per cent of the assets and the husband receive 45 per cent of the assets, but excluding the husband’s superannuation.  When I refer to items 19 and 20 of the balance sheet which are set out at paragraph 75 of the reasons, the husband’s superannuation totalled $67,566 at trial.  There are two amounts involved in that, being $134, 349 and the other $33,217.  As discussed during submissions, a rough calculation of that amount as a proportion of the overall pool meant that the superannuation interest of the husband represented about 8.26 per cent (that is $67,566 divided by $817,889).  It’s clear when that calculation in relation to superannuation is taken into account that both the offers of 27 May 2010 and 4 August 2010 were ones which the wife, bearing in mind the result of the ultimate hearing, should have entertained in a very serious way.  On 23 November 2010 the husband’s offer was reduced to 53 per cent to the wife and 47 per cent to the husband.  That reduction, however, would still have led to a result that was slightly better than the one achieved by the wife at hearing once superannuation was taken into account. 

15. The last offer is more problematic.  The letter of 12 January 2011 contains some calculations which make it difficult for me to assess what weight to place upon it.  To commence with, the asset pool, as stated in the letter, was $582,745 and that’s to be compared with the asset pool that was actually found in the balance sheet at trial.  Again, I refer to paragraph 75 of my reasons where that overall net figure was $817,889.  The other thing that’s difficult about the letter of 12 January 2011 was that the superannuation figures for the husband are $12,000 less than the figures presented at the hearing, which was only a month later, and I don’t really know why that was so. 

16. There was no indication in the wife’s material that she attempted in any meaningful way to engage in any discussion arising out of the five offers and, particularly, there is no evidence that she seriously considered the offers of May 2010 and August 2010. 

17. The only other relevant matter that I need to take into account is the fact that on 17 August 2010, 10 September 2010 and 15 October 2010 there were interlocutory proceedings before the Court in respect of which costs of both parties were reserved for those days.  On 17 August 2010 a stay application brought by the wife was dismissed and an order was made that allowed the husband to execute documents if the wife failed to in the future.  On 10 September 2010, again an application by the wife was dismissed, and again on 15 October 2010 another application by the wife was dismissed.  I take into account the wife has indicated that some of the orders made on some of those three days were varied in part on appeal. 

18. Finally, I note that in a defended hearing before me, which I refer to in paragraph 70 of my reasons on 15 November 2010, I dismissed the wife’s application for interim spouse maintenance.  I conclude that because the wife has made the husband’s life somewhat difficult by not doing what she should have done by providing her financial information, because the wife inappropriately resisted the sale of the house which led to numerous interlocutory applications and, most importantly, because she didn’t take seriously reasonable offers that the husband had made, that some order for costs should be made against her. 

19. This, however, is not an exceptional case where indemnity costs should be ordered. 

20. I am very mindful in this case of the small amount of money that is left at the end of litigation in the hands of both parties and that is a very important counter-balancing feature to a set of facts which would ordinarily lead to a substantial costs order being made against the wife. 

21. I find that it is just that within a period of seven days the wife should pay to the husband a sum of $30,000 by way of costs in this matter, such payment to be made from the funds currently held by the wife in the Bank of Queensland, … branch, (which contain the payment of approximately $100,000 to her from the controlled moneys account).  That sum that I have ordered includes any orders reserving costs to the husband that has been made along the way.  When that payment is made, any order or undertaking which currently prohibits the wife from otherwise dealing with funds in the Bank of Queensland at … will be discharged or is discharged.  I make a further order there will no costs order arising from these proceeding. 

I certify that the preceding twenty-one (21) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Watts delivered on 20 April 2011.

Associate: 

Date:  18.5.11