Peters and Peters
[2011] FMCAfam 323
•11 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PETERS & PETERS | [2011] FMCAfam 323 |
| FAMILY LAW – Property – dispute over orders – interpretation of orders – cost applications. |
| Family Law Act 1975, ss.75, 117,117AB Federal Magistrates Court Rules 2001, r.16.05 |
| Sharma (2007) FamCA 425 |
| Applicant: | MR PETERS |
| Respondent: | MS PETERS |
| File Number: | (P)BRC 503 of 2009 |
| Judgment of: | Coates FM |
| Hearing date: | 12 August 2010 |
| Date of Last Submission: | 12 August 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 11 April 2011 |
REPRESENTATION
Solicitors for the Applicant: | Evans & Company Lawyers |
| Counsel for the Applicant: | Mr Hackett |
| Counsel for the Respondent: | Mr R Hamwood |
| Solicitors for the Respondent: | Mr A Cooper, Barry Nilsson Lawyers |
ORDERS
That the wife is entitled to $177,857.91 from the monies belonging to the parties and held in trust by Evans and Company Family Lawyers and half of the total interest therein, subject to Orders 2, 3, 4, 5, and 6 below.
That the wife pay costs to the husband in the sum of $5,250.00, to be deducted from the amount stated in Order 1.
That the wife pay costs to the husband in the sum of $1,465.00, to be deducted from the amount stated in Order 1.
That the wife pay costs to the husband in the sum of $3,300.00, to be deducted from the amount stated in Order 1.
That the wife pay costs to the husband in the sum of $1,815.00, to be deducted from the amount stated in Order 1.
That the wife pay costs to the husband in the sum of $522.50, to be deducted from the amount stated in Order 1.
That the husband pay half of refunded school fees to the wife.
IT IS NOTED that publication of this judgment under the pseudonym Peters & Peters is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
(P)BRC503 of 2009
| MR PETERS |
Applicant
And
| MS PETERS |
Respondent
REASONS FOR JUDGMENT
I delivered judgment and final orders in this matter on 21 July 2010.
It was a parenting and property case.
The distribution of the marital pool under the property orders has not been effected.
There are now applications from the wife and husband relating to the property orders made and for costs. I will use the broad reference of wife and husband even when referring to parenting issues when they would otherwise be referred to as the mother and father.
The wife applies for orders which would see:
a)$177,857.91 paid to her pursuant to the property orders;
b)Interest on joint money held in trust be divided equally;
c)Monies reimbursed to the husband for school fees be distributed equally; and
d)Costs of this application on an indemnity basis.
The husband’s Application in a Case filed 6 August 2010 seeks several costs orders against the wife:
a)For hearings on 7, 13 and 24 August 2009 and 3 September 2009 resulting from an Application in a Case filed 6 August 2009, in the sum of $21,190.94 (the date of the application for which costs are sought is incorrectly stated as 6 August 2010, not to be confused with the filing date of this Application in a Case, for which costs are also sought, being 6 August 2010);
b)Costs of trial related to the wife’s denials surrounding a diary and her knowledge of civil legal proceedings related to a failed investment;
c)Costs of and incidental to the hearing of an adjournment application on the day of trial, 3 March 2010, to be agreed or on the Family Court scale;
d)Costs of this application as agreed or on the Federal Magistrates Court scale; and
e)Costs of outlays of $3,300.00 for the handwriting expert in relation to the diary, costs of $1,815.00 being half of the fees of psychiatrist Dr L and $522.50 being the cancellation fee for an appointment with Dr L.
As a preliminary issue, Mr Cooper for the wife made an oral application that I restrain the solicitor for the husband for an alleged conflict of interest.
Mr Cooper had received correspondence from the husband’s solicitor advising that the firm held a lien over funds held in its trust account as against the husband for his costs and any order I may make may offend that lien. The submission was that the interests of the solicitor and the husband were now in conflict.
Mr Cooper’s pre-emptive submission about a conflict of interest was more out of acceptable precaution in my view.
Any lien held by the husband’s solicitor is a matter concerning the solicitor and the husband, not a matter for me under the wife’s current applications. It is an alleged debt for the performance of an obligation or service, but cannot be taken from joint marital funds held in trust or as trustee which are the subject of these proceedings. There is no need to deal further with the oral application.
The first dispute is about the orders I made dividing the property equally.
The orders stated:
19. “The property of the parties be divided equally.
20. To achieve such distribution, the value of the property and resources outlined in Orders (21) and (22) below be subtracted from the funds held in trust before distribution if (sic) such funds.
21. The husband retain as his personal property or resources the notional sum (added back to the pool) of $57,802.00, his superannuation, bank accounts, goods and chattels, vehicle and boat in his possession.
22. The wife retain as her personal property or resources her superannuation, bank accounts, goods and chattels and vehicle in her possession.
23. That each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which the parties are entitled pursuant to this Order.”
The pool was $390,847.74. It included two cash amounts being $35,055.88 and $180,100.97, plus various items.
I allowed a $20,000.00 distribution at the end of the trial, leaving a pool available for distribution of $370,847.74.
It will assist if I reproduce the pool schedule, paragraph 214 of the judgment.
ASSET SCHEDULE DESCRIPTION
AMOUNT
Monies held by Evans and Company in trust on account [number omitted]
$35,055.88
At call Dean Evans as trustee for Mr Peters account [number omitted]
$180,100.97
Husband’s [car omitted]
$12,000.00
Husband’s Boat [omitted]
$12,000.00
Wife’s [S] Superannuation policy
$7,252.51
Wife’s [O] Superannuation policy
$313.45
Husband’s [A] Superannuation policy and [S] Superannuation policy
$4,770.00
Amount paid to Evans and Company Family Lawyers by husband for family law proceedings
$81,552.93
Unidentified expenditure by husband, notionally added back
$57,802.00
Total
$390,847.74
Net Total after interim equal distribution per Court Order $20,000
$370,847.74
The dispute is over the meaning of the orders.
The wife’s application is not complicated - based on the wording of the order and simple mathematics she is entitled to half the pool, such to be paid from joint monies available. On the wife’s calculation, that is $177,857.91, being half of the net total of $370,847.74 minus her superannuation amounts of $313.45 and $7,252.51.
The husband claims that the judgment is not clear or that it does not mean what the wife contends.
Mr Hamwood, counsel for the husband, submitted that as paragraph 214 did not contain a list of the value of all assets referred to in orders, there was no way they could be taken into account and no way of determining the figures under Orders 19 to 22.
But such seems to be to be forgetting the submissions made early in the trial.
At line 45 on page 4 of the trial transcript dated 10 March 2010, the husband conceded that the wife’s (then) vehicles did not form part of the pool. It was also conceded that bank accounts and post-separation liabilities held by the parties did not form part of the pool.
I am conscious that I should not make or give additional reasons to those given in the judgment, but I am being asked to interpret the orders and explanation not extending the reasons seems appropriate.
A reading of the judgment reveals that I have in fact referred to the property and resources.
At paragraph 254, I stated: “The only resource (sic) is what is left in the pool”.
That means that I have identified the property and resources and have listed them in the schedule at paragraph 214 and given their values.
Paragraph 254 was part of my s.75(2) consideration and was a reference to s.75(2)(b).
While I did not refer to the full wording of that section which refers to income, property and resources, my shorthand reference only to resources, even in the mistaken singular context, accounted for that particular s.75(2) subsection and was to alert the parties to the fact that I had considered their property and resources, not all of which would be accounted for here because it was conceded they were not part of the pool, including bank accounts, goods, chattels and some vehicles.
The reasons then infer how the parties are to calculate the position under the orders.
Order 21 states the husband retain the notional amount of $57,802.00, his vehicle and boat, all valued at paragraph 214.
Given my reasons in the judgment at paragraphs 175, 176, 177, 204, 245, 246 and 247, all read in the spirit of other comments relating to the husband’s expenditure, he should not interpret the order as allowing him to retain cash to that amount. He retains that amount as his own personal expenditure, not to be recovered from joint assets.
I will reproduce those paragraphs:
“175. The pool was agreed but for part of the husband’s expenditure and I was asked to add back legal fees totalling $81,522.93 and another amount totalling $65,802.00.
176. There was agreement that the husband’s legal fees, $81,522.93 be added back. It is not a notional figure as the amount is held in trust.
177. The concessions made on behalf of the husband were proper.
…
204. This expenditure seems to correlate with his free use of marital funds on legal expenses, which have been agreed to be added back.
…
245. Despite the large financial contributions, until separation, these parties were working together as a family to get ahead and make themselves comfortable, with the husband working and the wife in what is sometimes referred to as a traditional role, looking after children. The role of child and home care is not to be undervalued or underestimated. It is a huge investment of time and emotion and these parents have children. Much of that must, in light of the husband’s injuries and later working times, be put down to the mother’s care.
…
247. Accepting the husband’s greater financial contribution, I would find contributions, all up, ought to be equal.”
Those paragraphs also touch on the issue at trial with regard to the husband’s use of joint funds for his legal fees, which were added back by concession at the end of the trial.
For reasons I do not understand, submissions were made about that amount in this hearing.
In an affidavit supporting the wife’s application by solicitor Kylie Maree Perkins, filed 6 August 2010, I was asked to amend the judgment under Rule 16.05 - that expenditure by the husband of joint funds on his legal fees, being $81,552.93, be treated as a notional add back.
Mr Hamwood submitted that I did in fact make a finding about the $81,552.93, at paragraph 214 where I include the amount in the pool schedule and at paragraphs 175 and 176, where I refer to the husband’s concession at trial that the joint money he spent on legal fees was to be added back.
It is important to refer to the wording of the concession made at paragraph 41 of the written submissions given on behalf of the husband, which stated: “It is accepted that the monies applied by the father to his legal fees should be added back as they came from capital assets of the parties. Those monies are in the amount of $81,522 …”.
I note that the words “added back” were not preceded by the adverb “notionally” and subject to a mistake I made which I refer to shortly, I found the money was available.
In this hearing, Mr Hamwood submitted that: “Your Honour was of the view and made the finding that the amount of $81,552.93 was an actual sum held in trust by the husband’s solicitors and could be distributed to meet legal fees that were outstanding,” see line 32, page 11 of the transcript dated 12 August 2010, the submissions made during these applications.
He then submitted that I may well have been going down the path allowing the money to be used as legal fees.
I have re-read the judgment.
I did not state that those funds “could be distributed to meet legal fees that were outstanding” and I was not going down that path as counsel has suggested.
I did though make a mistake.
The mistake was not that the money existed, but that it was held in trust.
The mistake does not, in my view, vitiate or change the result or in fact the reasons. Given the wording of the concession, even if I wrongly assumed the money was held in trust, the fact is, the money exists. The wording can suggest nothing else as there was no modifying adverb before the words add back indicating the money did not exist. There was no submission at trial that the money be ordered to be repaid to the trust account, but from the time of the concession the money must have been available to the joint pool from the husband’s legal firm, which seems to have accepted the money as payment for fees.
Whether that money should have been paid immediately to the trust account or whether the firm’s principals were trustees of the money is not of consequence, but I did not mistake that the money existed and was to be the subject of the property claim by the parties.
The sum of $81,552.93, part of the cash assets, was simply available and ready to be distributed in whatever proportion I decided upon the evidence. How the parties utilise their proportions is up to them.
In light of this, I was perplexed as to what the submissions on this issue were really about.
Added to this, counsel for the husband clearly put to me that I can only correct the judgment (without consent) if an issue falls under the slip rule or rule 16.
The husband explains how he wants the property distributed under the judgment in two affidavits by solicitor Luke Alan Brandon, one filed on 6 August 2010 and one sworn 11 August 2010 and marked as A for identification, sought to be admitted on the day of this hearing.
In the face of objection to the affidavit, I said I would consider whether I would admit it as an exhibit.
I intend admitting it as exhibit 2, because it tells me not only how the husband interprets the orders but what is in the trust account.
Paragraph 9 of the affidavit states the amount the husband’s view of distributions under the orders, that the wife receive $134,733.04 and the husband receives $56, 517.00.
As to the trust account the opening balance, as at 1 March 2010, was $181,890.00.
On 1 April 2010 adding an interest payment took the amount to $182,404.88.
On 7 April 2010 there was a withdrawal of $27,454.39 (I assume from my $20,000 distribution at the end of trial plus costs for the trial transcripts), leaving a balance of $154,950.49.
On 3 May 2010 an interest payment took the amount to $155,427.95.
On 1 June 2010, an interest payment took the amount to $155,938.95.
I will explain further below, but the wife is to receive under the orders the sum of $177,857.91, minus orders for costs and cost of outlays which I intend making against her and giving reasons below, totalling $12,352.50, leaving a payment to her of $165,505.41, which is Order 1 above. That also takes into account the partial distribution at the end of trial and the cost of transcripts so there was no double counting.
Now the tactic of the husband becomes apparent, there is only $155,938.95 held in trust. This is where my mistake as to the amount of $81,552.93 being held in trust has become an issue for the husband.
As I have stated above, that money either should have been paid back into the trust account or held by the solicitor’s firm as trustee.
It also clarifies the correspondence from the husband’s solicitor to the wife’s solicitor that the claims of the wife would cut across a lien.
Mr Brandon’s affidavit was the only way the evidence could be put before me to show the husband’s position because of the amount of funds held in trust. That ignores the concession that the $81,552.93 taken in legal fees was to be added back, a confirmation of its availability.
For all of the twisting arguments and interpretation of the words, the only thing I intended was that the property value be divided equally and that the wife receive her share from the money available.
The figure for distribution was arrived at after deducting the value of property and resources. If no value was given to goods in possession, then there is no subtraction to be made.
On that basis, the wife is correct in her mathematics, she subtracts her property and resources, that is her superannuation, from half the total figure and that is what is paid to her. On the figures, that means the total available of $370,847.74, divided by 2 equals $185,423.87, minus her superannuation of $7,252.51 and $313.45, which leaves $177,857.91. There are no other values given to be deducted so some items should be treated as mere resources, not part of the divisible assets, but having some value to the parties.
I mentioned above that I intend making some orders about costs and outlays.
There are five applications by the husband and one by the wife.
Any costs order must be made pursuant to s.117 of the Family Law Act 1975.
The usual course is for parties to bear their own costs unless the Court forms the view that a costs order is justified.
I then must apply the considerations set out in s.117(2A).
In my view, consideration of costs are justified because of the manner in which both parties acted. I made various comments in the judgment about the behaviour of both parties.
The husband’s first cost order sought is for his Application in a Case filed 6 August 2010, which I think is a mistake and refers to the Application in a Case filed 6 August 2009 and subsequent appearances on 7 August, 13 August, 24 August and 3 September 2009.
This application was for a handwriting expert and for psychiatric assessment of the wife and an order that the children not be left with her sister Ms P, because potentially, she was an abusive person.
The handwriting expert was sought because the wife refused to identify a diary, known as the [C] diary, purportedly about a woman who had an unhappy childhood in the care of her sister and who contemplated suicide.
The wife denied the diary was hers or that it related to her life.
The handwriting expert found it was her writing and his finding was never contested.
The husband seeks indemnity costs of $21,190.94.
Section 117(2A) requires a consideration of stated circumstances.
Both parties are in poor financial circumstances.
The husband is receiving worker’s compensation payments for a back injury and the wife receives Centrelink benefits.
The wife received legal aid. The husband funded his part proceedings.
The wife was unsuccessful in her application opposing the handwriting expert.
But it is the conduct of the parties which is in issue.
I commented on such in the judgment, stating at paragraphs 31 and 32:
“31. The mother has steadfastly refused to accept the handwriting as hers, however, the end result on the evidence in my view is that there have never been real fears of suicide and [Ms P] has offered the mother much needed assistance. No issue of grave concern was pursued in the case based on the psychiatric reports.
32. Such may well have been foreseeable by the father and is that type of minor issue, blown out of proportion, which has seen the matter return to Court time and again.”
Despite being of the opinion that costs could be awarded – based on conduct and that the wife was being given legal aid - given my findings on the issue and in particular the reasons stated in paragraphs 31 and 32, I am going to dismiss this costs application. Submissions on behalf of the husband make much of the fact that the wife was legally aided in the parenting case and that her conduct was deplorable, but what he should have turned his mind to was whether the diary and any conduct were issues going to the best interests decision, because that is what I had to decide. The answer is summed up in paragraphs 31 and 32.
The second cost order sought is that the wife pays for the costs of trial in respect to an aspect of the [C] diary and litigation in relation to [D].
The argument here is a little different from the previous submission.
It is to do with knowingly making false statements.
Section 117AB provides for a mandatory costs order if the Court is satisfied that false statements were made.
At paragraph 88 of the judgment I found the mother lied about authorship of the [C] diary and about knowing, or specifically about being informed of legal proceedings relating to the parties failed property venture with a firm called [D].
It was properly conceded that the section was mandatory, but
Mr Cooper argued that costs had to be looked at against the conduct of the lie. I was referred to Sharma (2007) FamCA 425 and the effects of a lie on the proceedings.
The effect of the conduct was to prolong the proceedings.
The wife did not concede or accept that she lied at any time and not only about the [C] diary, but about being informed of the legal action on behalf of both parties in relation to their failed investment.
Her conduct was appalling and it also prolonged proceedings and court time is valuable.
I am of the opinion she should pay the costs. The husband seeks that they be “fixed in an amount or assessed on such basis as deemed appropriate by the Court”.
This would be a costs order for part of a trial and no submission was made that I did not have such a discretion.
I am against assessing the costs. Such will mean more time and send costs even higher. In the alternative I am asked to fix costs. I will do so. Referring to the schedule of costs in the rules, she should pay at least a day’s cost of trial, being stage 5, a one day matter being $3,500.00, plus half of that fee for the advocacy loading, the total being $5,250.00 which is Order 2 above.
The third cost order sought is that the wife pay the husband’s costs of and incidental to the hearing on 3 March 2010, by agreement or failing agreement on the Family Court scale.
The 3 March hearing was an application by the wife to adjourn the trial because she had just changed solicitors, again.
I referred to the number of solicitors she had had during the matter, but in fairness, the first change of solicitor was possibly out of her control and I also said at paragraph 3: “I do not know whether the mother’s case was hampered because of ineffectual lawyers, or because she failed to give timely instructions.”
On balance, relying on conduct such as the denial of issues which should have been admitted and that she was receiving legal aid, I am of the view that a costs order against the wife is justified.
I am not of the view that costs should be by agreement, because there will be none, or that the Family Court scale applies. This Court has its own schedule for party and party costs in its rules and no reason was given as to why the Family Court’s scale should be used.
It was a discrete application. The wife should pay costs to the husband at stage 2 of the schedule, the sum of $1,465.00 which is Order 3 above.
The fourth cost order sought is that the wife pay the costs of this application.
But she also asks for a costs order on an indemnity basis.
I would not make an order on an indemnity basis – no reasons for such were given - but I would otherwise order that he pay her, stage 2, in the sum of $1,465.00, as I would order her to pay him in the same amount.
In the event, the cross-applications cancel each other so I will not make an order.
The fifth cost order sought is that the wife pay the handwriting expert’s fees in the amount of $3,300.00, half of Dr L’s fees of $1,815.00 and a cancellation fee for Dr L of $522.50.
Despite my statement that the husband should have realised that the [C] diary would not have eventuated into useful evidence, the fact is that had the wife admitted the authorship at the time, then he may have been in a better position to determine that the diary contained nothing of concern.
She caused the order for the handwriting expert.
At the time, psychiatric evidence appeared to be appropriate.
She should pay these costs as her obstinacy caused the expenditure.
I will make such orders, which are Orders 4 and 5 above.
It was conceded that she should pay $522.00 for a cancellation fee which was her fault, which is Order 6 above.
Lastly, the wife also now asks for an equal division of the school fees for part of the 2010 school year.
At the time of trial, such a refund was anticipated but I made no orders for such.
That was in fact a slip that I did not include as an order which can be corrected and I will order that the husband refund half of the fees to the wife which is Order 7 above.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Coates FM
Date: 11 April 2011
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