Paviello & Paviello (No 2)

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Federal Circuit and Family Court of Australia

(DIVISION 1)

Paviello & Paviello (No 2) [2022] FedCFamC1F 795

File number(s): SYC 2323 of 2017
Judgment of: WILSON J
Date of judgment: 24 October 2022
Catchwords: FAMILY LAW – NATIONAL ARBITRATION LIST– application for indemnity costs – application dismissed – party/party costs ordered.
Legislation: Family Law Act 1975 (Cth) ss 45A(6), s 70NFB(1), 117(1),(2), 117AC and s 117(2A)
Cases cited:

Agosti & Agosti [2021] FedCFamC1F 72

Air Canada v Secretary of State for Trade [1983] 2 AC 394

Allesch v Maunz (2000) 203 CLR 172

Al-Medinni v Mars UK Ltd [2005] EWCA Civ 1041

Anison & Anison [2019] FamCAFC 108

Bant v Clayton (Costs) (2016) 56 Fam LR 31

Calderband v Calderbank [1975] 3 All ER 333

Chang v Su (2002) 29 Fam LR 406

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Dick v Piller [1943] KB 497

EB v CT (No 2) [2008] QSC 306

Fitzgerald v Fish (2005) 33 Fam LR 123

Grimshaw v Dunbar [1953] 1 QB 408

Hatcher v Cohn (2004) 139 FCR 425

Haven & Haven [2020] FamCA 954

In the Marriage of Gelley (No 2) (1992) 15 Fam LR 483

In the Marriage of Higginbotham & Robinson (1991) 14 Fam LR 559

In the Marriage of Hogan (1986) 10 Fam LR 681

In the Marriage of Kohan (1992) 16 Fam LR 245

In the Marriage of Weir (1992) 16 Fam LR 154

International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319

Kyle & Kyle [2022] FedCFamC1F 251

Penfold v Penfold (1980) 144 CLR 311

Paviello & Paviello [2022] FedCFamC1F 592

Phillips & Hansford [2020] FamCAFC 28

Re JRL, ex parte CJL (1986) 161 CLR 342

Reid v Brett [2005] VSC 18

Sainsbury's Supermarkets Ltd and others v Mastercard Inc and others (European Commission intervening) [2020] 4 All ER 807

Sfakianakis v Sfakianakis (2019) 59 Fam LR 419

Smith & Fields [2013] FamCA 505

Smith v New South Wales Bar Association (1992) 176 CLR 256

Sommer & Sommer [2021] FedCFamC1F 37

Summit v Summit [2009] FamCA 365

Taylor v Taylor (1979) 143 CLR 1

Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471

Worth & Worth (No 2) [2019] FamCAFC 126
Division: Division 1 First Instance
Number of paragraphs: 108
Date of last submissions:: 29 September 2022
Date of hearing: On the papers
Place: Melbourne
Counsel for the Applicant: Mr J. Morris SC with Mr A. Todd
Solicitor for the Applicant: Jordan Djundja Lawyers
Counsel for the First Respondent: Mr M. Stevens
Solicitor for the First Respondent: Blanchfield Nicholls
Counsel for the Second Respondent: Mr D. Dura
Solicitor for the Second Respondent: Parker Law

ORDERS

SYC 2323 of 2017

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

MS PAVIELLO

Applicant
AND:

MR B PAVIELLO

First Respondent

MR A PAVIELLO

Second Respondent

order made by:

WILSON J

DATE OF ORDER:

24 October 2022

THE COURT ORDERS THAT:

1.The wife’s application dated 14 September…

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Details
Case
[2022] FedCFamC1F 795
Decision Date

CaseChat Overview and Summary

In Paviello & Paviello (No 2), the second respondent, Mr B Paviello, the brother of the husband, sought various orders relating to the payment of costs. Specifically, he sought that the wife pay his costs of the proceeding, the wife’s application for review, and his costs application on either a party/party basis or an indemnity basis. The application was filed on 15 September 2022, following the dismissal of the wife’s application for review of an arbitral award on 2 September 2022. The legal issues for the court to decide included the appropriate basis for awarding costs, the legitimacy of the husband’s costs application in light of the arbitral award, and the wife's failure to respond to a without prejudice offer made by the husband.

The court commenced by addressing the husband's costs application, which was based on the wife's failure to accept a compromise offer made in accordance with Calderbank v Calderbank. The court noted that the husband's proposal for a settlement offered the wife 60% of the net proceeds from the sale of a property, with each party retaining their vehicles, personal effects, and superannuation. The arbitral award, which divided the assets 57.5% to the wife and 42.5% to the husband, was not significantly more favourable to the husband than his proposal, thereby negating his entitlement to costs on the basis of the wife's imprudent refusal to accept the offer. Furthermore, the court found the husband's claim for $450,000 in costs to be excessive and disproportionate given the total pool of approximately $3 million. The court ultimately refused the husband's application for costs.

Following this, the court addressed the second respondent’s costs application. The court found no merit in the second respondent’s argument that the arbitrator had determined him to be a financial resource for the husband. Instead, the arbitrator had explicitly stated that he could not ascertain the husband’s total income from all sources, thereby refuting the wife's submission. The court concluded that the second respondent was not entitled to the costs he sought, either on a party/party or indemnity basis.

In summary, the court dismissed the husband's application for costs and the second respondent's application for costs. No party was ordered to pay the costs of the other.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The second respondent (the husband’s brother Mr B Paviello) sought orders in his application in a proceeding dated 15 September 2022. The orders he sought were as follows – (a)the wife pay the second respondent’s costs of and incidental to the proceeding on a party/party basis;(b)alternatively the wife pay the second respondent’s costs of and incidental to the proceeding “on 13 April 2017”[2] on an indemnity basis;(c)the wife pay the second respondent’s costs of and incidental to the wife’s application for review filed 3 June 2022 on a party/party basis or on an indemnity basis; and (d)the wife pay the second respondent’s costs of and incidental to this costs application. [2] This was the wording of paragraph 2 of the second respondent’s application in a proceeding, although it is ambiguous in its content. The 2 September 2022 decision In respect of the wife’s application dated 3 June 2022 for the review of the arbitral award, on 2 September 2022 following submissions made on 2 August 2022, I dismissed the review application. In reasons for the dismissal of that review application, I was of the view that the review applicant failed to make good her review on a question of law on any of the 9 grounds argued. Logically, the application for costs sought by the respondents must be addressed first, the husband’s costs application being responsive to the wife’s failure on her review application. Logically, the husband’s brother’s costs application fell for determination next and last was the wife’s costs applications. To those I now turn.The husband’s costs applications In support of his application for costs, the husband relied on the evidence in his affidavit made 15 September 2022. The following matters were raised in that affidavit – (a)by initiating application filed 13 April 2017, the wife sought orders for the transfer of the husband’s interest to the wife in the property at U Street, Suburb P, that the husband pay the wife $2 million and that the wife receive one half of the husband’s interest in 1 D Street, Suburb E as well as half interests in various trusts;(b)shortly prior to the commencement of the arbitration on 9 November 2020, the wife put forward her revised version of the orders she sought in which she sought the equal division of assets and liabilities, the payment of a cash amount and the transfer to the wife of the whole of the husband’s interest in the former matrimonial home;(c)in advance of the handing down of the award, on 10 February 2022 the wife proposed a different form of orders that she sought which included the husband transferring to the wife his interest in the former matrimonial home, orders for the husband to deliver to the wife four motor vehicles and orders for the wife to be declared as a 50% beneficial interest holder in 1 D Street Suburb E as well as the holder of a 50% beneficial interest in the Paviello Family Trust together with payment to the wife of an amount of $2,573,744 and costs in the sum of $500,000;(d)by letter dated 10 August 2018 the husband’s solicitors wrote to the wife’s solicitors, expressed to be without prejudice save as to costs and expressed to be made pursuant to Calderbank v Calderbank;[3] (e)the wife did not respond to the 10 August 2018 offer, whether in the time limited by the offer or at all; and (f)after arbitration, the pool of divisible assets was divided as to 57.5% to the wife and 42.5% to the husband.[3] [1975] 3 All ER 333.

Ratio Decidendi

Legal Principle Established

Neither of those paragraphs provide support for the wife’s submission that the arbitrator found that the second respondent was a financial resource for the husband. To the contrary. The arbitrator stated that he was unable to say what was the husband’s income from all sources. Far from that being an explicit finding, as the wife’s counsel submitted in paragraph 71 of his submissions, it was wholly erroneous to submit that either paragraph was to be so construed. Consideration of the husband’s costs applications Paragraph 1 of the husband’s application in a proceeding related to his claim for payment of a fixed sum in the amount of $450,000 being the husband’s costs of and incidental to – (a)the wife’s application filed 13 April 2017; (b)the wife’s review application following arbitration; and (c)this costs application. That paragraph of the husband’s application was headed “the entirety of the proceedings”.[20] It was the husband’s attempt to procure an order that the wife pay him $450,000 for his costs of the whole litigation from the commencement of this proceeding to the review application following the arbitration to this costs application.[20] Reference to “proceedings” (in the plural) was erroneous. One only proceeding was involved in this case so the heading should have been in the singular. Before revealing my path of reasoning for my conclusion to refuse that application, it is utile to observe that the sum claimed of $450,000 was ambit in nature, unparticularised and bore all the hallmarks of an amount properly characterised as indemnity costs, that is to say, the figure appeared to represent full recompense for the husband’s legal expenditures. No attempt was made by the husband to break the amount of $450,000 down into component parts by which it was possible to ascertain whether and to what extent a particular amount claimed related to a particular activity and whether the sum sough for that activity was reasonable in the circumstances. The sum of $450,000 is remarkably large, approximately half a million dollars in circumstances where the pool, as found, was approximately $3 million. In any event, it would be disproportionate and unjust to order one party to pay the other’s costs of $450,000 in a case involving a pool of approximately $3 million. I refuse to make an order in those terms. It then became necessary to examine the grounds on which the husband said he was entitled to an order for his costs to be paid by the wife. The first related to the husband’s offer of compromise. It will be recalled that he proposed that the wife was to be paid 60% of the net proceeds of sale of the Suburb P property and that each party retained motor vehicles, personal effects and superannuation. The arbitrator made orders that included superannuation and the net proceeds of the Suburb P property, ordering the wife to receive 57.5% thereof and the husband receive 42.5%. When properly construed the upshot of the arbitration was not more favourable to the husband than were the terms of his 26 May 2021 proposal to settle the litigation. He is not therefore entitled to a costs order in his favour on the basis that the wife imprudently refused to accept his 26 May 2021 proposal.