Pavlek and Spice

[2017] FamCA 47

FAMILY COURT OF AUSTRALIA

PAVLEK & SPICE [2017] FamCA 47

FAMILY LAW – COSTS – Between parties – Where final orders made 3 years prior required the husband to sell a parcel of shares for the best attainable price after a 12 month period – Where those orders were appealed unsuccessfully – Where the period of 12 months has elapsed – Where an offer was made on the shares – Where the husband did not accept the offer made – Where the husband did not disclose to the wife an offer had been made – Where the wife makes an application to compel the sale and a Registrar must sign the documents – Decided it would be just for the husband to meet the costs of the wife – Ordered the husband pay the wife’s costs of the relevant application as agreed or assessed

Family Law Act 1975 (Cth), s 117

APPLICANT: Ms Pavlek

RESPONDENT: Mr Spice

FILE NUMBER: (P) NCC 366 of 2011

DATE DELIVERED: 3 February 2017

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Cleary J

HEARING DATE: 18 November 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Graham
SOLICITOR FOR THE APPLICANT:	Braye Cragg Solicitors

THE RESPONDENT: In person

Orders

1. That the Respondent pay to the wife the costs of the Application of 18 November 2016 as agreed or assessed.

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pavlek & Spice has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: (P) NCC 366 of 2011

Ms Pavlek

Applicant

And

Mr Spice

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application by Ms Pavlek (the Applicant) for her costs of an application heard by me on 18 November 2016.

History of Litigation

1. In April 2013 there were proceedings before me for adjustment of interests in property of a defacto relationship between the Applicant and Mr Spice (the Respondent).

2. On 14 November 2013 final Orders (“2013 Orders”) were made as follows:

   1.That the Respondent [Mr Spice] shall forthwith do all things necessary to cause the company “[D] Pty Limited” (“[D]”) to sell for not less than $5.5 million (the minimum price) its shareholding in [P] Pty Limited (“[P]”).

   2.In the event that the shares remain unsold at the minimum price after a period of 12 months from the date of these orders then the Respondent shall cause [D] to sell the shares at the best price then attainable.

   3.The proceeds of sale of the shareholding shall be paid as follows:

   a)to the Respondent, 65 per cent;

   b)to the Applicant, 35 per cent.

   4.The Respondent shall be responsible for payment of all debts outstanding to his father, [Mr Spice Snr] and shall indemnify the Applicant in respect of any claims made against her in respect of those liabilities.

3. The Applicant appealed against the 2013 Orders. The Applicant sought a stay of the 2013 Orders. When that application came before me, there was no appearance by the Respondent.

4. Accordingly on 23 September 2014 the stay was granted pending the hearing of the appeal.

5. On 21 August 2015 the appeal was heard.

6. On 4 February 2016 the judgment of the Full Court was delivered. The appeal in respect of property orders was dismissed.

7. Arguably, the stay expired after 31 August 2015 once the appeal had been heard. Certainly the stay expired after delivery of orders and reasons for judgment.

8. It is uncontested that the shares in P were not sold within 12 months of the date of the 2013 Orders or at all.

9. Three years since the making of the Orders had passed when the enforcement application came before me in November 2016.

10. It should also be said that the Respondent could have caused his company to sell the shares at any time with the consent of the Applicant. Whilst the Respondent may or may not have held the belief that the stay precluded him from attempting to sell the shares, by law the stay had the effect of no longer compelling him to sell the shares. It is a significant difference.[1] 

    [1] Affidavit of the Respondent filed 18/11/2016, par 5

11. In any event, of the three years that have passed the stay was operative for either 11 or 17 months.

12. It is apparent[2] that the Applicant became aware of a proposed offer to purchase shares received by all shareholders of P. Unsurprisingly, the Applicant urged the Respondent to cause his company to accept the offer and requested that he sign an Irrevocable Authority for payment out to her directly of the proceeds as to 35 per cent.

    [2] Submissions of the Applicant filed 25/11/2016, annexure A

13. The Respondent did not take up that suggestion. His solicitors correctly identified that the 2013 Orders did not compel such a course.[3]

    [3] Submissions of the Applicant filed 25/11/2016, annexure E

14. There is evidence that the parties then fell back into the bitter dispute revealed during the 2013 hearing over the sale price of the P shares. Those shares being held by a company D Proprietary Limited, a company of which the Respondent is a sole director.

15. The Applicant in correspondence pressed for sale of the shares. The Respondent revealed resistance to sale on the basis of the price being offered.[4] It is obvious that the Respondent was unwilling on 25 October 2016 to sell at the offered price,

    It boggles the mind that it is proposed that we now are selling … such valuable [communications products] for just over $4 million dollars … it is so ridiculous as to be unbelievable in a sane and healthy world and the way it’s been orchestrated is frankly and literally criminal and you [name of solicitor] are complicit.[5]

    [4] Submissions of the Applicant filed 25/11/2016, annexure H

    [5] Submissions of the Applicant filed 25/11/2016, annexure H

16. However the submissions of the Respondent appear to overlook a critical issue. The Respondent’s company had 12 months to sell the shares at not less than $5.5 million but thereafter the Respondent was to cause the company to sell at the best price then attainable.

17. At the very latest after April 2016, and arguably by October 2015, the Respondent was obliged to compel his company to sell the P shares at the best attainable price.

18. The Respondent submitted that the open offer was unacceptable and that the Applicant should have known that the Respondent could not comply.[6]

    [6] Submissions of the Respondent filed 16/12/2016, par 15

19. It may well have been that the offer was unreasonably low and that all that the Respondent referred to in his correspondence with the Applicant about manipulation by the purchaser and its directors could be correct. The point is, there was no evidence of any other offer to purchase and the Respondent was obliged to cause his company to sell at the best attainable price.

20. On 25 October 2016 the Applicant filed an Initiating Application which was effectively for enforcement of the 2013 Orders. The interim orders sought were for the joining of other entities and enforcement of the sale.

21. On 9 November 2016 an Amended Application was filed and the revised interim application was listed before me in a duty list on 18 November 2016.

22. On that day the Respondent came with a Response and Affidavit and leave was granted to file those documents on that day. Critically for the parties a subpoena issued by the Applicant was released which revealed the details of the offer including the dollar amount. The Applicant thereafter quantified her claim.

23. The Respondent asked for more time to address the matter, effectively an Application for Adjournment on the basis that the case he had come to meet had altered. That was so, and there was some disadvantage. However the Respondent himself was aware of the details of the offer. Further, he has been aware of his obligation to sell at the best attainable price since the 2013 Orders were made.

24. The Applicant quantified her entitlement at $338,688. Orders were made accordingly, not on the basis of the merits of the offer to purchase, purely on the basis that the Respondent had an obligation, pursuant to the Orders, to sell.

25. Subsequently there was disputation between the parties over the dollar figure.

26. Ultimately on 8 December 2016 a Registrar of this Court signed a copy of the Agreement for Sale. Costs were sought by the Applicant and resisted by the Respondent.

The Evidence

1. The documents relied on in respect of the application were as follows: 

   The [Applicant]

   (a)Written submissions dated 25 November 2016;

   The [Respondent]

   (b)Written submissions dated 16 December 2016.

The Law

1. The principle established in s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) is that each party to proceedings under the Act shall bear his or her own costs. If the Court is of the opinion that there are circumstances that justify it in doing so, the Court may subject to certain subsections make such order as to costs and security for costs as the Court considers just.

2. It does appear to me that there are circumstances that justify the Court considering an order for costs in favour of the Applicant.

3. Accordingly the factors set out in the Act must be considered.

The Financial Circumstances Of Each Of The Parties To The Proceedings

1. Both parties have income. The Applicant is employed as a professional. The Respondent continues in self-employment as a director of D Pty Ltd.

2. On behalf of the Applicant it is submitted that the husband has had the benefit of dividends from the subject shares over the three years since the 2013 Orders were made. The Respondent does not deny that that is the case and it is consistent with evidence in the final hearing of dividends being paid from time to time.

3. Apparently the Respondent has received the sum of $265,978 from that source.

4. The Applicant has the care of the parties’ three primary school aged children and it is asserted, and not denied, that child support is in arrears, in excess of $3,000.00.

5. The Applicant is now in a position to receive $338,000 pursuant to Court orders.

6. The Respondent is in a position to receive approximately double that amount although he has debts to pay, as identified in the 2013 judgment. It is apparent that the husband’s financial position is stronger than that of the wife, if only on account of the dividends that have been received and irrespective of any income he has generated over the three year period.

7. Neither of the parties have had the benefit of a grant of Legal Aid.

Conduct

1. This is a significant issue.

2. The Respondent chose not to let the Applicant know of the offer of purchase. When the Applicant learned of it, and pressed for sale, I accept that the Respondent was resistant to sale of the shares despite his obligation to do so in circumstances where there was no better offer.

3. The Applicant was compelled to make an application to the Court which was resisted. Ultimately a Registrar signed the document for sale of shares although the Respondent says that he was, by that date, willing to sign the document.

4. It is arguable that the failure of the Respondent to sell the shares represented non-compliance with the orders although I am not entirely satisfied that there was any earlier opportunity for sale prior to the offer of purchase referred to in these reasons.

5. The Respondent was unsuccessful in this application.

6. The Applicant did make an offer in writing on 27 October 2016.[7] The offer was that the Respondent pay to the Applicant a sum representing 35 per cent of the value of the offer available at that time. Had that offer been accepted the Respondent would have been free to raise funds in order to pay out the Applicant’s interest and to cause his company to sell the shares at a future time of his choosing.

   [7] Submissions of the Applicant filed 25/11/2016, annexure J

7. I take all of those matters into account in concluding that it would be just for the Respondent to meet the costs of the Applicant in the Application of 18 November 2016 and in respect of preparation of submissions.

8. The order will be for payment of those costs within 28 days of receipt of assessment of costs unless otherwise agreed.

9. Orders are made accordingly.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 3 February 2017.

Associate:

Date:  2 February 2017