Pilot and Pilot

[2011] FamCA 243

FAMILY COURT OF AUSTRALIA

PILOT & PILOT [2011] FamCA 243

FAMILY COURT – COSTS – Various applications for costs orders pertaining to substantive property proceedings and costs orders on interim application – orders made in the substantive proceedings and in a number of case applications.

Family Law Act 1975 (Cth) ss 117(2), 117(2A), 117(2A)(c), 117(2A)(f), 117AA, 118

C and B [2006] FamCA 513
Greedy v Greedy (1982) FLC 91-250
Woodley v Thyme and Anor [2008] FamCA 162
Oliver v Oliver (No. 2) [2010] Fam CAFC 174

APPLICANT: Ms Pilot

RESPONDENT: Mr Pilot

FILE NUMBER: HBF 1990 of 1999

DATE DELIVERED: 24 June 2011

PLACE DELIVERED: Hobart

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 15 March 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Foster with Ms Eddington

SOLICITOR FOR THE APPLICANT: Murdoch Clarke

COUNSEL FOR THE RESPONDENT: Mr Gunson S.C. with Mr Murray

SOLICITOR FOR THE RESPONDENT: Murray & Associates

Orders

1. The husband pay to the wife her costs, on a party/party basis, in respect of her Application in a Case for spousal maintenance, use of a car and costs litigation funding heard on 23 July 2004.

2. The husband pay to the wife her costs, on a party/party basis, in respect of her Application in a Case for an injunction filed 11 October 2006 and heard on 16 October 2006 and 6 November 2006.

3. The husband pay to the wife one half of her counsels fees and one half of instructing solicitor fees in respect of the hearing at court on 25 February 2009. Such costs to be determined in accordance with schedule 3 of the Family Law Rules 2004 (Cth), being one half of item 205 in terms of counsel and four hours at the rate set out at item 108 in respect of the instructing solicitor.

4. The husband pay to the wife her costs, on a party/party basis, in respect of her Application in a Case filed 20 July 2010, to re-open and adduce further evidence, which was determined on 6 October 2010.  Such costs to include the wife’s affidavit, and the affidavits of her witnesses in support of that Application, the Application, perusing affidavits of the husband, his accountant and Mr M and the hearing on 6 October 2010.

5. The wife pay to the husband his senior counsel’s fees and his junior counsel’s fees in respect of five full days of the hearing. Such costs to be at the rate determined in accordance with schedule 3 of the Family Law Rules 2004 (Cth), being item 205 in terms of senior counsel and junior counsel, and such rate as at January 2010.

6. The wife pay to the husband one half of his senior counsels fees and one half of his junior counsel’s fees in respect of the hearing at court on 25 February 2009. Such costs to be determined in accordance with schedule 3 of the Family Law Rules 2004 (Cth), being one half of item 205 in terms of senior counsel and junior counsel.

7. The wife pay the husband’s costs, on a party/party basis, in respect of the Application in a Case filed 4 December 2008 and heard on 11 December 2008 in regard to the then Priority Notice/s.

8. The wife pay the husband’s costs, on a party/party basis, in respect of the husband’s oral Applications for costs of the wife’s Application in a Case filed the 31 March 2009 and the husband’s Response filed the 9 April 2009 reserved on the 29 June 2009 and 3 July 2009.

9. The wife pay the husband’s costs, on a party/party basis, in respect of the husband’s oral applications for costs of the wife’s applications in a case filed 18 November 2009 and 4 December 2009 and the husband’s Response filed 7 December 2009 reserved on 7 December 2009.  

10. All remaining and outstanding applications for costs of or by the wife, not otherwise dealt with in these orders, are dismissed.  This dismissal includes:-

    a.The wife’s application for costs on her application for injunctive orders filed 23 December 2005 and determined 20 February 2006 being dismissed;

    b.The wife’s application for costs in respect of her application for legal litigation funding filed 15 October 2007 and heard and determined on 1 and 12 November 2007.  The application was dismissed; and

    c.The wife’s application for costs in respect of the consent orders made 4 March 2010.

11. All remaining and outstanding applications for costs of or by the husband, not otherwise dealt with in these orders, are dismissed.

12. The application for costs made by the husband and wife in respect of their costs applications are dismissed.

    IT IS CERTIFIED

13. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage senior counsel and counsel to attend.

IT IS NOTED that publication of this judgment under the pseudonym Pilot v Pilot (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: HBF 1990 of 1999

Ms Pilot

Applicant

And

Mr Pilot

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. Ms Pilot (“the wife”) and Mr Pilot (“the husband”) were engaged in property and spousal maintenance proceedings which commenced in June 2004 and were determined by this Court in November 2010 after a lengthy hearing.

2. In December 2010, both parties filed applications seeking costs orders.  Those applications were argued on 15 March 2011.  In the wife’s costs submissions, her counsel identified the costs orders she sought, namely:-

   (a)the husband pay the wife’s costs of the proceedings;

   (b)the husband pay the wife’s costs in respect of the Interim Application for maintenance, use of car and litigation cost funding heard on 23 July 2004;

   (c)the husband pay the wife’s costs in respect of the 2005 Interim Applications for injunction, monthly reporting and quarantining of rent heard 23 February 2006;

   (d)the husband pay the wife’s costs in respect of the 2006 Application and injunctions after the dumping of boulders; the Application being made 11 October 2006 and orders made on 16 October 2006 and continued on 6 November 2006;

   (e)the husband pay the wife’s costs of her 2007 Maintenance Enforcement Application filed 22 May 2007 and heard in July 2007;

   (f)the husband pay the wife’s costs of her 2007 Application for Litigation Funding filed 15 October 2007 where orders were made on 17 November 2007;

   (g)the husband pay the wife’s costs of his 2009 Application for Leave to Complete the Sale of Z Street, filed 6 February 2009 and heard 25 February 2009;

   (h)the husband pay the wife’s costs of the 2010 Consent Orders for part property settlement in respect of the husband’s alleged breach of an injunctive order where the consent orders were made 4 March 2010;

   (i)the husband pay the wife’s costs of her Application to Re-open, following an alleged breach by husband and Mr M of orders, this being the application made 20 July 2010 and heard 6 October 2010.

3. The husband filed an application in a case on 21 December 2010 seeking the following costs orders:-

   (a)The wife pay the legal costs of the husband in respect of the final hearing as and from 4 September 2008.

   (b)The wife pay the single expert fees of Mr E, in respect of his investigations, analysis and reports, including his final report dated 7 August 2008.

   (c)The wife pay the husband’s costs of his Application in a Case filed 4 December 2008 and such costs application reserved on 11 December 2008.

   (d)The wife pay the husband’s legal costs in respect of the husband’s oral costs application for costs in response to wife’s Application in a Case filed the 11 February 2009 and the husband’s Amended Application in a Case filed the 16 February 2009.  Such costs application reserved on 25 February 2009.

   (e)The wife pay the husband’s legal costs in respect of the husband’s oral Applications for costs of the wife’s Application in a Case filed 31 March 2009 including the husband’s Response filed 9 April 2009. Such costs applications reserved on the 29 June 2009 and 3 July 2009.

   (f)The wife pay the husband’s costs in respect of the husband’s oral Applications for costs of the wife’s Application in a Case filed the 18 November 2009, the wife’s Application in a Case filed the 4 December 2009 and the husband’s Response filed the 7 December 2009. Such costs applications reserved on 7 December 2009.

4. Finally each of the parties sought costs orders in respect of their respective costs applications.

Background to costs applications

1. The wife’s costs application was filed 16 December 2010 and the husband’s costs application was filed 21 December 2010.  As the wife’s costs application, was lodged first, she was treated as the applicant.  This course was accepted by both senior counsel for the husband and counsel for the wife.

2. Each of the parties relied on different parts of the reasons upon which the November 2010 orders were made.  The wife relied upon her affidavit filed 11 March 2011.

3. The wife in that affidavit says:-

   ·Paragraph 5 of Mr. Trezise’s affidavit misrepresents the circumstances re the appointment of the single expert.  At paragraph 4 she says that in her affidavit filed 11 June 2004 husband sold properties and netted $2 million dollars and had received net income from their properties of $1.2 million dollars and that he received a net income of $50,000 per month.  She says Hannon J Pty Ltdfound (in his reasons of the 23 July 2004) that the $2 million dollars claimed by the husband to be in reduction of debt, was in fact the amount remaining after the reduction in liabilities.  She says Hannon J also found that the husband had not provided particulars of his use of the $3.2million dollars.  

   ·At paragraph 5, that on 23 December 2005 she filed application for the appointment of single expert to report on the basis that:-.

   (a)  since separation the husband had access to approx $1.2 two million dollars in net income and $2,037,650 net funds from the sale of assets.  In terms of this I have made comments later in these reasons.

   (b)  in July 2003 the business received about $6,052,000 and that those monies not been fully accounted for.

   (c)  the husband was solely in control of Pilot Group and had sole use of the funds and there no means of ascertaining whether expenditure was limited to genuine company expenses.

   (d)  proper GST records were not being maintained.

   (e)  the husband used Pilot Group funds to buy a helicopter (personal).

   (f)   Pilot Group funds had been paid into personal accounts of husband and these funds had not been properly accounted for in company records.

   (g)  the company records contained some expenses, such as flight training, which were personal to the husband and not true business expenses.

   (h)  there was no accounting by the husband for the monthly Pilot Group net landlord income of about $50,000.

   (i)   there had been no proper accounting for hundreds of thousands of dollars which the husband had admitted were in his personal accounts.

   (j)   the husband was selling Pilot Group assets and borrowing against other Pilot Group assets without properly accounting to her.

   (k)  there had not been the company meetings and statements of accounts prepared for the Pilot Group by the Corporations Act.

4. Much of the wife’s affidavit amounted to submissions under oath.

5. The wife also relied upon part of the affidavit of the husband filed 17 February 2006, in particular paragraphs 66, 67 and 68, which provided:-

   66.As stated above in this affidavit, I am happy to account to the applicant for company expenditure and income.  I am happy to account for sales of assets.  I believe that I have done so either directly or in the sense that the applicant has had access to all company financial statements and documents.  For instance, I had previously to her application given the applicant notice of the sale of Suburb K at a considerable price above her own estimated valuation as set out in her affidavit of the 23 of December 2005.

   67.I have been advised by my solicitors that it is proper for me not to sell or dispose of assets whilst Family Court proceedings are pending even though those assets may be under my name.  I will, therefore, take my solicitors advice and agree to notify the applicant of any proposed sale of assets.

   68.I had thought that the applicant had information as to the disbursement of the sale of the [D land].  I will have my accountant provide her that information.

6. In addition, the wife relied upon three exhibits from the hearing and other exhibits, namely:-

   Exhibit WCA1

   Letter from Mr SD (F Group) to the wife - dated 24 June 2003

   In this letter, Mr SD provided information to the wife as to the 2002 financial statements.  It purported to explain a delay.  For the purpose of the costs argument, I accept that Mr SD was assisting the husband, who in turn wished to delay the property proceedings, and I am satisfied it was so he could finalise and facilitate the development of Suburb K.

   Exhibit W56

   Letter from Mr SD (F Group) to Landers & Rogers - dated 17 July 2003

   In this letter, Mr SD observed, which I accepted, that the husband was developing a property in Tasmania, inevitably Suburb K, which required a cash flow and that the husband believed it was important to suspend settlement discussions until it was complete.  The implication the wife drew from this (and which implication I did not draw) was that it was so that the husband could dissipate assets.  I am satisfied, having heard the evidence during the trial that it was to enable the completion of Suburb K to provide overall improvement of the assets of the parties.

   Exhibit W3

   Letter from Mr SD (F Group) to husband – dated 12 August 2003

   In this letter, Mr SD expressed his concerns to the husband about the husband’s ‘lack of interest in the March management reports’.  Mr SD also indicated that he was assisting the husband in buying some time to enable the husband to undertake further work on the development.  I was not satisfied that this was evidence of intent to detrimentally impact on the wife but was designed to enable the completion of the Suburb K development.

   Exhibit W4

   Letter from Mr SD (F Group) to Landers & Rogers – dated 4 March 2004

   In this letter, Mr SD set out that there was an ‘in principal agreement’ between the husband and the wife in December 2003.  I was not provided with the precise details of that agreement or putative agreement, and it was not put into effect.

   Exhibit W58

   Part of this exhibit was a letter from Mr SD to husband - dated 1 April 2004

   In this letter, Mr SD expressed:-

   I think as with most people [the husband] if the cash is there you can spend it.

   Exhibit W58

   Part of this exhibit included a letter from Mr SD to husband - dated 28 April 2004 in which Mr SD endeavoured to assist the husband in terms of the litigation.

   Exhibit W58

   Part of this exhibit included a letter from Mr SD to the husband - dated 18 August 2004 in which Mr SD endeavoured to summarise the group’s financial position and raise some issues which the husband would have to address at a later time in terms of the net proceeds on the realisation of some assets and the rental income.  He also raised the question as to whether the husband ought to receive a notional allowance for wages.

Exhibit W58

Part of this exhibit included a letter from Mr SD to the husband - dated 17 October 2005 in which Mr SD set out an action plan.

Exhibit WCA2

Letter Mr G & Mr E to parties then solicitors - dated 19 February 2007 setting out the scope of the report of Mr E and an estimate of the costs of that at that time.

1. Counsel for the wife set out a list of issues at the trial, which included:-

   ·Contribution by both parties during the marriage (this was essentially the question of how to deal with the claim by the husband for a Ferraro v Ferraro (1993) FLC 92-335 allowance).

   ·Post separation contributions – husband’s claim for notional wage.

   ·Husband’s benefits allegedly taken from the company since separation, including helicopter activities and expenditure at VV Estate.

   ·Assets and conditions at the date of separation.

   ·Mr H’s house.

   ·Ownership of property at I Street.

   ·Proposed J Pty Ltd sale.

   ·Husband’s post separation drawings.

   ·Rent of Z Street.

   ·Rent of I Street.

   ·Application post separation in relation to the net profit from landlord’s activities.

   ·Part property settlement of Pilot Group Property. 

   ·In addition, there were other issues such as maintenance, maintenance compliance, injunctive applications against the husband and injunctive applications against the wife.

2. During his submissions, counsel for the wife sought to tender a part of a letter dated October 2003.  This letter was not part of a previous tender and was incomplete.  There was an objection to that tender by senior counsel for the husband and after giving reasons, I refused that tender.

3. Senior counsel for the husband had prepared detailed submissions as to costs.  In addition, senior counsel for the husband tendered a folder containing the material referred to in the costs arguments.  That folder was tendered as evidence and marked HCA1.  As a copy of this folder was not available in advance to counsel for the wife, I allowed a period of fourteen days for any objections to be raised in respect of the content of that material.  In the absence of any objections, I have treated the material as being part of the material upon which I could have regard.

4. The husband relied upon the my reasons[1] in the primary proceedings, an affidavit of the husband filed 11 March 2011, an affidavit Mr SD filed 11 March 2007 and an affidavit of Michael Trezise (a solicitor) filed 2 March 2011.

   [1] For Judgment delivered on 28 October 2010 and 22 November 2010.

5. Neither senior counsel for the husband nor counsel for the wife sought to cross-examine any of the witnesses in respect of the costs applications.

6. They each had a differing view in respect to how I should treat the facts in dispute arising out of those affidavits. 

7. Counsel for the wife’s position in relation to this issue was rather than creating a trial within a trial “we would just do our best on the material that’s there”.[2]  Senior counsel for the husband did not depart from this proposed course and submitted that the issues should be determined on the papers.  Based on their submissions I adopted that course.

   [2] Transcript of proceedings dated 15 March 2011 at page 4 at lines 3 to 4.

8. Counsel for the wife submitted that the Court could not make determinations or findings about any disputed facts, effectively without the testing of that the evidence, even if it was from a witness that the Court may have found to be satisfactory or otherwise earlier in the proceedings.  He submitted that “clearly, offers have been put, for example, by [the wife] which she says represented a certain conceptual approach to the proceedings and the husband disagrees with that.  That’s an area where your Honour, I think, would be unable to make any findings”.[3]  Counsel for the wife submitted that he would not be asking me to make findings.

   [3] Ibid at lines 24 to 39.

9. Senior counsel for the husband submitted that he would be asking the Court to make findings to the extent that I would be able to do so, on the papers.  For example, insofar as the wife relied upon the exchanges of offers, to the extent that Mr SD explained aspects of it and the husbands dealings with it, at the end of the day, he said “your Honour may say, well, in light of what I’ve got – I’ve got the husband’s account, I have the wife’s account and I have [Mr SD’s] account.  The wife carries the onus on this issue.  She hasn’t discharged it because you’re not able to make a finding.  That’s the approach we take.”[4]

   [4] Ibid at page 5 lines 1 to 8.

10. Counsel for the wife was at some levels submitting an ‘each way bet’ having regard to the approach initially submitted by counsel.  On balance, I intend to adopt the course submitted by senior counsel for the husband.  Both parties agreed that the costs arguments were to proceed on the basis of relying on the papers.

1. In these reasons any statement of fact is to be generally regarded as a finding of fact unless the alternative is clear from the context of the particular statement. As I previously indicated I have had regard to the relevant findings of fact and determinations set out in the primary reasons.

Legal Principles to be applied

1. The general rule in relation to costs is that each party to the proceedings should bear his or her own costs of the proceedings.  This general rule is subject to s 117(2), s 117AA, s 118 of the Act.  A court may make such orders as to costs, whether by way of interlocutory order or otherwise, as the Court considers just.  The Court is required not only to consider whether there are circumstances to justify the making of costs orders, having regard to s 117(2A) which sets out an inclusive list of the matters the court should have regard to.  The determination of legal costs is a matter of judicial discretion.

2. In Woodley & Thyme and Anor [2008] FamCA 162 I said:-

   30.In Brown v Brown (1998) FLC 92-882, Kay J said at pp 85,346 to 85,347:

   The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder. This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the court may in making an order take into account various matters. The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.

   31.In the absence of their being circumstances that justify the court making an order for costs, then s117(1) provides that each party will bear his or her own costs of the proceedings under the act.

   32.The interpretation to be applied to s117 and the inter relationship of s117(1) and s117(2) was considered by the High Court in Penfold v Penfold (1980) FLC 98-800. In this case Stephen, Mason Aickin and Wilson JJ, said at 75,053-75,054:

   It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec, (1) is expressed to be subject to subsec. (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
   Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently…we do not agree with the suggestion…that an order can only be made under sec. 117(2) in a ‘clear case.
   Subsection (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when the costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised.
   Moreover, the transcript shows that it was only after the respondent’s financial position had been investigated at the hearing that, in answer to questions put by the judge in cross-examination, he admitted that he could afford to pay the increased maintenance which was ultimately ordered. The respondent had filed a Form 19…(which) presented a picture of the respondent as an insolvent, a man whose liabilities exceeded his assets. It made no mention of the very valuable assets which he owned and in which he had an interest...” (at 75,054).
   Consequently, there was ample material from which the judge could find that there were circumstances justifying the making of an order for costs. The facts that the appellant failed in relation to the trust and the matrimonial home, and that the vacation judge dismissed the interlocutory application, though matters which are of relevance, are not of sufficient strength to deny the conclusion that there were circumstances justifying the making of the order.

33.The case of Penfolds was discussed by Justice Wilson in the High Court decision of Mallet v Mallet (1984) FLC 91-507 (with whom Gibbs CJ, Mason, Dean and Dawson JJ agreed at pp 79,123-79,124). Penfolds case also made it clear that s117(2A) “requires a finding justifying circumstances as an essential preliminary to the making of an order”. It is clear that the court has a wide discretion and that beyond this there is no “additional or special onus” on the applicant for costs which requires the court to make a preliminary finding that special or exceptional circumstances exist before making an order for costs[5].

[5] Jensen and Jensen (1982) FLC 91-263.

34.By virtue of s 117(2A), in considering what order (if any) should be made under s 117(2), I am required to have regard to the matters set out in s117(2A) (a)-(g) in so far as they are relevant. The factors set out in the subparagraphs do not comprise of a closed list of factors, because s117(2A)(g) includes “such other matters as the court thinks relevant”. I need to consider each of the various factors, subject to their relevance, however, in PBF (as Child Representative for AF (Legal Aid Commission of Tasmania) v TRF and LKL (2005) FamCA 118 the Full Court held at paragraph 41:

…Nowhere in subsection 2(A) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection 2(A).  As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

35.In the matter of  I and I (No 2) FLC 92-625, the Full Court at p 82,277 said:

that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. 

36.In this case Nicholson CJ, Ellis and Baker JJ declined to follow the approach adopted in the decision of McDonald and Mc Donald (1994) FLC 92-508 in relation to the question of costs. In that earlier case his Mushin J had said at p 81,271:

In the first instance it is important to note that the principal proceedings concerned questions of custody. As between parties in the strict sense of that word, it is rare for an order for costs to be made in such proceedings. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a custody order which does not even establish a prima facie case, the withholding of evidence, the giving of false evidence and like matters are common bases for such an order. However, where no factor of this type exists, there would usually need to be a very significant disparity in financial circumstances between the parties before a costs order was made.

37.The Full Court in I and I (No 2) above, declined to follow this approach and held at p 82,277;

With respect... we see nothing in the provisions of s 117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to in s 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. The financial circumstances of the parties is but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties.

1. Section 117(2A) of the Act provides:-

   (2A)    In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (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.

1. It is apposite to note the comments of the Full Court in Greedy v Greedy (1982) FLC 91-250 at page 77,382 where they said:-

   There may be situations where refusal to negotiate, to make an offer or to put forward an alternative order may be a factor justifying an order for costs.  The policy of the Act is to encourage conciliation, and failure of a party to take part in negotiations in a general manner may contribute to delay and cost and obstruct the proper resolution of the matter … .

2. May J sitting as a single judge of appeal exercising an appellate jurisdiction of the Family Court in Oliver v Oliver (No. 2) [2010] Fam CAFC 174, said at paragraph 39:-

   It was held In the marriage of Greedy, that “[a]n award of costs ought to bear some relation to the conduct of the proceedings by the parties or to their relative circumstances at the time of the application and hearing of the matter.

3. Clearly the principles set out in Greedy remain good and relevant law. I have had regard to those principles.    

4. So that there can be no doubt in terms of my reasoning, in respect of each of the costs applications I have considered and had regard to the financial circumstances of each of the parties.  In each separate application and in an overall way, I have considered those circumstances in the light of the findings and outcomes as a result of the primary proceedings and/or the interlocutory results as are relevant to that costs determination.  The husband and wife each now have a significant quantity of assets, measured in the millions of dollars.  In the past each of the parties has shown an ability to derive income from assets, both by way of rental and development.  Each of the parties has their respective strengths and weaknesses in business, which I have discussed in my primary reasons, and to which I have had regard.

5. I accept the submission of the husband’s senior counsel that, having regard to the net worth of both parties, each could meet an order for costs.  He said that the net property pool of the parties was determined by the trial judge to be in the order of about fifteen million dollars, which was divided equally between the parties.  He said the wife was in receipt of significant income from the rents (net of any mortgage repayments) of the properties at 1 Z Street and 2 Z Street.

6. He submitted that the husband was in receipt of negligible income, because the other substantive rental income, with the exception of I Street, was currently being paid to Mr E, who is the Trustee for the purpose of effecting the final orders.

7. I am satisfied that each of the parties have capacity to meet any costs order.

8. Neither party provided evidence that they were in receipt of legal aid, and having regard to their respective wealth I would have been surprised if legal aid was available to either one of them.  As such in respect of each of the applications for costs, s 117(2A)(b) it is not a relevant consideration. 

THE WIFE’S PRIMARY COSTS APPLICATION

1. The wife has sought an order that the husband pay her legal costs of the whole of the proceedings.  In addition and/or as an alternative she sought about eight specific costs orders.  In terms of my approach I have first considered the wife’s costs application in respect of the whole of proceedings and then, once I had determined that aspect, I then separately considered the other specific applications.  

(a)      The husband pay the wife’s costs of the proceedings

1. Submission by the counsel for the wife included [a submission] that the wife was ready, willing and able to settle the property issues in 2003 and 2004 and that the husband was not bona fide in his negotiations with the wife and that the “in principle settlement” was not put into effect.   

2. There is no clear evidence of the precise terms of the “in principle settlement” that was referred to in the correspondence about that time, which was in evidence before me.  The parties were negotiating and the husband was endeavouring to delay settlement so that he was able to promote the development of Suburb K.  I am not satisfied that it was done to advance his position contrary to the interests of the wife, it seems more likely that he simply wished to progress that difficult development for the benefit of both parties.

3. The application of ss 117(2A)(f) must involve two aspects.  Firstly that an offer has been made (and it must be clear that it has been effectively communicated) and secondly the terms of that offer must be apparent.  It is the combination of those two aspects which brings about a requirement under s 117(2A)(f) for the Court to have regard to the offer.  The subsection provides that the Court must have regard to “an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer”.  In this case the terms of the “in principle settlement” are not in evidence except perhaps in a most opaque way.  There is some evidence that it may have been an ‘attractive deal’, whatever that may be, however, the precise and clear substance of it was not in evidence before me.

4. However, it remains open for me to have regard to the conduct of the husband in terms of the negotiations and his approach to them under ss 117(2A)(c) of the Act.

5. In 2003 and early 2004 the wife was actively seeking settlement of property on the basis of an equal division.  The husband, once proceedings commenced, was seeking an adjustment in his favour with regard to his ‘special contributions’ and in that regard sought a percentage adjustment to his benefit from as low as 5 per cent to as high as 30 per cent.

6. From the evidence, it appears that the wife, from the start of the proceedings in 2004, sought add-backs in respect of the sum of at least $3.2 million dollars against the husband. Counsel for the wife initially asserted that the wife’s main application, at the commencement of the proceedings, was for an equal division of the property.  That was the application, however, it had to be seen in the context of the broader nature of that application for final orders and the treatment of the add-backs.

7. The wife, in her application filed 11 June 2004, sought final orders namely:-

   The applicant wife receives half of the net assets, income and proceeds of sale in relation to all assets owned or operated by the applicant and respondent or to which the applicant and respondent have an interest.

8. This order sought not just an equal division but the add-back, which the wife asserted, and continued to assert for some time. 

9. In addition, she sought the transfer of properties to her, which was the income earning properties, leaving the significant capital but not income earning properties with the husband.  It is not entirely accurate to say that the wife was simply seeking an equal division.  The wife’s determination to seek an add-back continued throughout the course of the proceedings.

10. It was, at least in part, one of the reasons Mr E was appointed as the single expert and was a significant aspect of the wife’s case and was raised in her counsel’s opening and in closing submissions.  Some of those add-backs were allowed, such as the helicopter, rent on a number of properties and other areas. 

11. The wife’s counsel referred me to the husband’s financial statement filed 30 June 2004, in particular the second last page of the annexure to that document.  Counsel for the wife submitted:-

    the significance of it is at the second-last page is the second page of an annexure to the financial statement headed [Pilot Group Asset Sales] April 2002 to June 2004.  And what it shows is that by June 2004 Mr Pilot had net proceeds of $2,037,650. [6]

    [6] Transcript of proceedings 15 March 2011, page 3 lines 43 to 46.

12. This complaint was dealt with by the investigations undertaken by Mr E.

13. In the years after separation from 2002 through to the commencement of proceedings in 2004, the parties were sending each other mixed messages.  It is clear that the wife wanted the income earning assets and made that desire well known to the husband.  The husband was in the midst of endeavouring to complete the development of the Suburb K sub-division.  He resisted settlement so that he could maximise the capital returns to the parties.

14. It was over this period and, no doubt combined with the relationship breakdown, which the parties’ mutual distrust grew. 

15. As I said earlier, I am satisfied that the husband resisted settlement over that period of time because of his desire to maximise the capital that would be available to the parties.  I have no doubt that the wife wanted assets at that time, being those assets which were producing income.  She lacked insight into the need for capital and income to enable the completion of the Suburb K development.

16. Once proceedings were commenced, the parties’ positions became polarised.  They engaged in litigation before Hannon J and maintenance orders were made.  The wife declined to facilitate the re-financing of the Perpetual Trustee loan and as a consequence, the husband entered into negotiations to dispose of Suburb K.  That putative sale brought about other civil litigation and each party blamed the other for causing those lawsuits. The husband and the wife each profoundly distrusted each other.

17. The husband was criticised by the wife for pursuing his claim for a special contribution in these proceedings.  That was a live issue and it was well within the range for consideration bearing in mind the significant assets the parties had created throughout the marriage.  The fact that his argument in that regard was ultimately unsuccessful it was reasonably arguable.  The ultimate determination was and is a discretionary determination.  The Parliament in enacting the costs provisions under their various forms in the Family Law Act 1975 (Cth) over the years have taken away the common law rules that costs generally follow a successful outcome.

18. The wife’s counsel complained that there was a failure to disclose by the husband and a persistent failure to account.  That, she said, was the reason for the appointment of Mr E, as the single expert, for his report and for the conclusions and observations made by him.

19. At paragraph 453 of my reasons[7], I observed:-

    In terms of contribution I accept the evidence of Mr SD that the husband was contemptuous and dismissive in the way of paperwork and would not access the monthly management accounts which were provided to him. This is also the evidence of the wife.  I accept that evidence.

    [7] For Judgment delivered on 28 October 2010 and 22 November 2010.

1. This finding has to be seen in the context of the whole of the findings throughout those reasons.

2. Senior counsel for the husband provided detailed submission[8] which in terms of chronology are generally factually correct and I have had regard to the relevant facts in respect of each of the issues I have addressed in these reasons.  

   [8] Filed 2 March 2011.

3. In adopting that approach I have been conscious of the caution needed to be taken by a court when dealing with, accepting and adopting parts of extensive written submissions by counsel, as discussed at length by the Full Court in C and B [2006] FamCA 513.  In that case the reasons were said to be inadequate because ‘it was asserted they consisted mainly of reproducing, without attribution, the written submissions of counsel for the wife and that they failed to either deal with or explain adequately or at all why the submissions for the father were rejected’.[9]

   [9] At paragraph 5 of the Reasons.

4. To make it clear I have considered all of the oral and written submission of the husband and the wife.   

5. Senior counsel for the husband relevantly submitted:-

   (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 fact, production of documents and similar matters, particulars of which are summarised below.

   1.The property proceedings were commenced by the wife in June 2004.

   2.The husband’s Application is that from commencement of proceedings to 4 September 2008 each party pay their own costs with the exception of the fees payable to [Mr E], Single Expert[10],  As stated in paragraph 22 of the Judgment the delay in the proceedings failing to come promptly before the Court arose from a number of reasons including: the need for a Single Expert accounting report, the high levels of conflict between the parties and change of legal practitioners and on one occasion the illness of Senior Counsel.  I specially refer to paragraphs 22 to 32 inclusive of the Judgment.

   [10] This submission is dealt with elsewhere in there reason.

   3.The E Report was released on the 7^th August 2008 and followed by a Combined Expert Conference between Mr. E, Mr. R on behalf of the wife and Mr. SD on behalf of the husband.  A Combined Expert Report dated the 4^th September 2008 was then released. 

   4.Apart from a “view” of properties in July 2008 the Trial commenced on the 28^th October 2008 with five days being allocated which represented the original estimates of Counsel.

   5.The Trial occupied Hearing days in October 2008, December 2008, February, March, June, July, September, October and December 2009 together with a re-opening in October 2010.

   6.The Trial eventually occupied six weeks or more of Court Hearing time with evidence being all but concluded by the 28 October 2009.

   7.Although it is conceded on behalf of the husband that the original estimate of five days may have been optimistic, the Hearing time was very significantly increased by the conduct of the wife (as detailed hereunder) which:

   (i)Significantly increased the length of cross-examination of the wife;

   (ii)Necessitated the husband in calling additional witnesses and adducing additional evidence to rebut evidence and argument by the wife both direct, through her accounting expert ([Mr. R]) and her legal Counsel; and

   (iii)Due to a number of Interim Applications and arguments that ought not to have been necessary some of which are identified in the Costs Application and separate submissions herewith[11].

   [11] I accept that the wife, at times adopted an approach which extended the hearing time.  Underlying the extensive time was the high degree of hostility and animosity between the parties.

   8.The said conduct of the wife is the subject of significant criticism by the Trial Judge throughout his 123 page Judgment.

   9.In contrast, it is submitted that:

   (i)The conduct of the husband throughout the Trial is the subject of little criticism; and

   (ii)Despite allegations to the contrary by Counsel for the wife, the conduct of the husband’s witnesses and of the proceedings on behalf of the husband were proper and appropriate, did not unnecessarily add to the length of the Trial and in fact was of assistance to the Court as to the clarification of issues and evidence.

   10.Trial Judge’s adverse comments/findings regarding the wife:

   (i)Paragraph 6 – Wife alleging persistent non-disclosure by husband and consequent incapacity to ascertain assets, borrowing and income.

   (ii)Wife complained that husband concealed assets/income.

   (iii)Paragraph 7 – That the husband, his barrister, his solicitors (both family law and commercial) and/or accountants participated in delaying or frustrating the proceedings and participated in concealing the reasonable provision of financial and other information.

   (iv)Paragraph 32 – Trial Judge states that once the Hearing commenced his worry transmogrified to a fear that the Hearing would never end.

   (v)Paragraph 34 – On 29 June 2009 Trial Judge had to determine an Interim Application by wife filed 31 March 2009 to take control of the [Pilot Group] which substantially replicated an Application which had been dismissed on 25 February 2009 and which was also dismissed.  At which time, the husband also sought permission to sell [A Street] and [L Street] properties which was opposed by wife.  Sale prices were well above Single Expert Valuations.  Court determined that properties ought to be sold as funds were urgently needed.

   (vi)Paragraph 37 – Valuable Trial time was taken up later that week when wife advised there would be an Application for leave to appeal the sale Order for the [A Street] properties and that wife would be seeking a Stay Order.  Apparently the wife incorrectly filed a Stay Application in the Appeals Court but no Stay Application was subsequently filed in this Court.

   (vii)An Appeal was apparently filed but not proceeded with.  However, this issue caused significant delay[12].

   [12] I am not sure that this evidence was before the Court, and in any event if it was an established fact, it would not have had any meaningful impact on this determination.

   (viii)Paragraph 45 – On one occasion wife’s Counsel, presumably on wife’s instructions, wanted to spend days cross-examining [Mr. H] to establish that there was only small working force operating and also a small number of staff outside office.

   (ix)Paragraph 46 – Trial Judge concerned that such cross-examination would have been a very long cross-examination and it served no forensic purpose and did not allow it.

   (x)Paragraph 48 – “I observed the wife, when she gave evidence and noted her approach in respect of the titles to the various properties, including the lodgement of the priority notices with the Land Titles Office in late 2008, her approach with regard to the proposed [J Pty Ltd] sale and her approach to the trial generally.  As I have said later in these reasons, her evidence troubled me as did her approach to the litigation.”

   (xi)Paragraph 48 – Wife complained about valuation at [W Property] and wanted an allowance for work to be carried out.  “A single expert had been appointed and as far as I can discern from the evidence no questions were asked of him under the rules.  The wife wanted her own valuer.  The end result was both delay and an increased valuation on that property, which was contrary to the wife’s financial interests as she has at all times wanted to retain the home.”

   (xii)Paragraph 50 – Trial Judge refers to the opening address by [counsel for the wife] who alleged that the husband consciously and deliberately frustrated settlement and then stated “There were constant difficulties in disclosure and, Your Honour will hear, some criticisms of [the husband] not only of [the husband] but of his lawyers and accountants, who in a sense were part of the style in which [the husband] conducted his affairs and the business affairs in the last six years.”

   Senior counsel for the husband submitted that the allegation was scandalous.  The allegations by [counsel for the wife] were never withdrawn.  This submission was the subject of particular criticism in the Judgment.  The reference is given hereunder.

   (xiii)Paragraph 51 – “Many of the issues raised by the wife’s counsel during the course of the Hearing ought to have been put to [Mr. E]…”

   (xiv)Paragraph 51 – “A number of the wife’s submissions were in a sense the putting of partial information to the Court whereas [Mr. E] in his analysis of the business could have better dealt with those.  The Court was not the place to do an audit or a forensic accounting exercise.  The wife wanted the Court to at some levels engage in that accounting exercise, which course I declined.”

   (xv)Paragraph 52 – “I am satisfied that the wife ran this case for as long as she was able and raised as many issues as she was able.  One of the consequences of this was, at least in part, the inordinate length of the hearing.”[13]

   [13] This was a significant fact in terms of the later determination made by me in these reasons determining a partial costs order in respect of the hearing in favour of the husband.

   (xvi)Paragraph 53 – Contrast the above comment with “… I am not satisfied, on the material before me, that from time to time the husband frustrated the resolution of these proceedings.”

   (xvii)Paragraphs 57 and 58 – Wife’s counsel complained that husband had every advantage in the conduct of the proceedings and wife had considerable disadvantage.  Trial Judge found that at practically all times wife had been represented by well regarded legal practitioners including, F. Dixon S.C., A. Trezise, M. Foster and had assistance from [Mr. S and Mr. R].

   (xviii)Paragraph 59 – “I am satisfied that the husband did not strictly comply with the Orders of the Court but that has to be seen in the context of his legitimate concerns that the wife was providing information to the other parties in the contentious Supreme Court civil litigation.”

   (xix)Counsel for wife complained that [senior counsel for the husband] acted for [Suburb K] in civil litigation and then for the husband in family law litigation and that therefore [senior counsel for the husband] ought to be disqualified.  That Application was dismissed.

   (xx)Paragraph 64 et seq – Counsel for wife complained that husband had failed to disclose a valuation obtained by opposing parties in the Supreme Court litigation concerning [Suburb K].  This complaint was dismissed by the Trial Judge who found that the said valuation had in fact been disclosed when Supreme Court files had been made available for inspection.

   (xxi)Paragraph 81 – “The criticism by counsel for the wife of the husband’s legal representatives in this regard was unnecessary, confrontational and added to the intensity of the litigation.”

   (xxii)Paragraph 83 – “In the absence of substantive evidence the submission ought not to have been made.  It was inflammatory and without adequate foundation and is regrettable.  The submission wasted time in terms of the hearing and unnecessarily added to the task of writing these reasons.  It can only be that such a submission, and confirmation of it at the conclusion of evidence, was made on the express and clear instructions of the wife, and as such it reflects badly on her and was part (although not all) of the material upon which I formed an adverse view of her evidence and conduct.”

   (xxiii)Paragraph 97 – “The wife was not an impressive witness… Time does not enable an exact demonstration of every single unsatisfactory feature of the wife’s evidence which underpinned my impressions of such evidence and the conclusions that I have reached.  My impression was that often when the wife perceived that a fair and direct answer to a question might not be in her interest, she resorted to evasion, non-recollection or denial.  Frequently, when the substance and purpose of a question were obvious, but the language was arguably ambiguous, she would adopt a literal approach, so that her answer was unhelpful.”

   (xxiv)Paragraph 98 – Wife engaged in “obfuscation, confabulation and prevarication… The prolonged cross-examination was directly attributable to her continual failure to listen to and directly answer questions and her refusal to answer questions without elaborate and unnecessary material being presented... despite the fact that on a number of occasions the wife was given explanations by me…”

   (xxv)Paragraph 98 – One example of such inflexibility was when she was shown aerial photographs of [Suburb K] which showed a history of extensive earthworks. Another example was her refusal to acknowledge her reasons for her opposition to the proposed sale of property to [J Pty Ltd].

   (xxvi)Paragraph 99 – “… She was obstinate, and consciously difficult when giving evidence.”

   (xxvii)Paragraph 100 – “During the wife’s cross-examination I endeavoured to reduce time wasting… I am satisfied that this was an approach that the wife put in place to avoid answering questions which she found difficult.”

   (xxviii)Paragraph 101 – “The wife ignored that assistance and those directions and continued on her clearly predetermined course…”

   (xxix)Paragraph 102 – “… I am satisfied that the wife was deliberately obfuscate in giving evidence and engaged in deliberate prevarication during cross-examination.”

   (xxx)Paragraphs 105 et seq – Wife’s denial that she had instructed Fabian Dixon to provide to opposition solicitors in the Supreme Court litigation Family Court documents including an Affidavit by her and an Affidavit by the husband.  This issue took up considerable time in cross-examination and the wife only admitted providing such instructions when she was shown an email from Mr. F. Dixon (paragraph 113).

   (xxxi)Paragraph 119 – “… The evidence of the wife in respect of this aspect and her provision of information to the solicitors in the V Pty Ltd litigation was unsatisfactory.”

   (xxxii)Paragraph 120 – Another example of wife’s unsatisfactory evidence (relating to cash wages).

   (xxxiii)Paragraph 121 – Wife complained throughout the proceedings about the husband’s failure to disclose and provide documents.  “However, when cross-examined she conceded that she had retained wages records in respect of some cash payments… I am satisfied that she understood her requirement to discover and that she did not discover those wage records.”

   (xxxiv)Paragraph 122 – “The wife was cross-examined in relation to the detailed report of [Mr. E], the single expert.  She accepts the accuracy of his report but notes there is some $300,000 which has not been precisely accounted for, yet implicitly she invites the Court to re-undertake that accounting exercise performed by the single expert.”

   (xxxv)Paragraph 123 – “… If the wife had concerns about the material provided to [Mr. E], his processes and conclusions it was up to her to deal with those issues by asking questions of him before the Hearing and/or by cross-examination of him during the Hearing.  It was not open for her to have me deal with isolated issues separate from the complete approach adopted by [Mr. E]…”  “… the wife’s approach to this litigation that in this type of submission she invited me to essentially disregard [Mr. E’s] report (which cost the parties in excess of $100,000) and undertake that task in piecemeal fashion.”

   (xxxvi)Paragraph 124 – The wife never sought to recall [Mr. E].

   (xxxvii)Paragraph 126 – “There is the question of whether it was possible to provide the degree of information which the wife required and whether her requirements were unacceptably demanding.  From time to time her requests for information were unreasonable, for example, when she requested copies of leases which she already had in her possession.”

   (xxxviii)Paragraph 126 – “The wife used the supply of information and the request for the supply of information to further her hostility towards the husband.”

   (xxxix)Paragraph 128 – Wife not willing to concede extent of work done by husband at [Suburb K].

   (xl)Paragraph 130 – Wife’s claim that she did not know what happened to the $1,000,000.00 deposit paid by [T Pty Ltd] when it must have been clear to her that the amount was used to pay part of the Perpetual Trustee debt.

   (xli)Paragraph 133 – “On 11 December 2008 as the trial continued, there was an issue with regard to a priority notice placed by the wife on some titles to [Suburb K]… The priority notice has a sixty day time limit on it and the wife says she instructed her solicitors to lodge another priority notice on in mid October 2008 at the expiration of the first notice.”

   (xlii)Paragraph 134 – “On 27 October 2007 I made an Order removing the injunction with regard to the husband selling some of the real property.  The wife’s evidence was that she had given instructions to lodge the priority notices beforehand but continued to press the issue of the priority notices even after my Order… She was dogged in her determination in that respect and was not concerned about the consequences.  I made an Order restraining her from placing such notices on the titles and other Orders.  As a consequence of the wife’s approach, hearing time was lost.”

   (xliii)Paragraph 135 – “… I am satisfied that she showed a tendency to exaggerate evidence and/or endeavoured to turn innocuous matters into significant issues.  I doubt the reliability and sometimes the honesty, of the wife’s evidence and I treat it with caution unless it was consistent with the probabilities and the contemporaneous documents, or was corroborated by other evidence which I accept.”

   (xliv)Paragraph 149 – “The wife engaged in communication with other parties in the various civil cases which led the husband to fear that this would cause commercial harm to the assets of the parties”.

   (xlv)Paragraph 151 – “The wife complained that the civil litigation arose as a result of the husband’s bad administration, whereas the root of the problem lay in the foundation of the mutual animosity between the parties and the wife’s refusal to refinance a loan.”

   (xlvi)Paragraph 152 – “… Finding minor discrepancies between his [the husband] evidence and that of [Mr. M] on this issue did little to progress the litigation.  Thousands of pages of documents have been created for these proceedings and thousands of pages of documents have been created in the commercial litigation.  It would be astonishing and frankly concerning if there were no differences and no mistakes.”

   (xlvii)Paragraph 154 – “… The wife’s instructions to her legal practitioner to cross-examine and make submissions on this point are troubling and reflect more adversely on the wife than on the husband.”

   (xlviii)Paragraph 159 – “… I have elsewhere made comment on the wife’s persistent demand for documents and disclosure, some of which were unwarranted and reflected the underlying conflict between the parties…”

   (xlix)Paragraph 200 – “The wife’s counsel asserted that ‘the professionals retained by the [Pilot Group] compromised their credibility as independent advisors to the family business’… I make no adverse findings as sought to that end by the wife’s counsel.”

   (l)Paragraph 401 – “Counsel for the wife, in his opening, asserted that the [Supreme Court] litigation could be characterised as a minor commercial dispute.  Presumably, this submission was made in accordance with instructions from the wife.  Senior Counsel for the husband correctly characterised that description as a fatuous remark.  The T Pty Ltd litigation was serious and troubling civil proceedings which were properly addressed by the husband and his advisors.  This reflects positively upon his management of the business over that time.”

   (li)The complexity of this commercial litigation is set out in the Judgment at paragraph 398 where the Trial Judge incorporates a detailed letter from [Mr. M] to Gunson Williams dated 25 August 2008 and which is Exhibit W64.  The characterisation by the wife’s Counsel of the commercial litigation as “minor” is an example of the tactics and manner adopted by the wife throughout the proceedings which protracted them in time and cost which tactics were either entirely or almost entirely unsuccessful and, at the end of the day, ill-advised and which ought not to have been embarked upon[14].

   [14] I accept the accuracy of the factual matters set out above by senior counsel for the husband, and generally accept his submissions, subject to the reservations and limitations set out elsewhere in these reasons, including footnotes.  I have weighted and considered them in the light of the submissions made on behalf of the wife. 

   11.Evidence of wife’s witnesses:

   (a)[Mr R]

   (i)Paragraph 209 – “My initial assessment of his evidence was benign.  My primary concern was that from time to time, he did not seem to have the depth and breadth of knowledge of the parties’ complex financial arrangements as did [Mr. SD], and for that matter, [Mr. E].”

   (ii)Paragraph 210 – “However, when cross-examined by the husband’s senior counsel in October 2009 it became apparent that a significant amount, if not most of the background material he [Mr R) relied upon had been prepared by the parties’ younger daughter, [Ms O].”

   (iii)Paragraph 211 – “Regrettably [Ms O] was enmeshed in the proceeding by being asked to prepare significant background documents and some analysis for these proceedings.  If she prepared material for [Mr. R] it would seem likely that some of that material would have been used by [Ms. P]…”

   (iv)Paragraph 212 – “[Mr. R] could see no conflict or issue about his reliance upon the material provided and/or prepared by [Ms O].  In that regard [Mr. R] was either naïve or disingenuous and as such it reflected on the quality of his evidence.”

   (v)Paragraph 213 – “During his October 2009 cross-examination [Mr. R] was at time defensive, at times aggressive and at other times he used irony.  His evidence was not convincing and I formed the view that he was aligned to the wife’s case and cause.  Senior counsel for the husband submitted that [Mr. R] was a partisan witness and on a number of occasions argued the wife’s case, I accept that submission.  The concern is greater as [Mr. R] endeavoured to cloak his evidence in a veil of objectivity, which fell away with cross-examination.  This had the effect of diminishing the quality of his evidence.  He has to some extent become a supporter of the wife’s cause…”

   (vi)Paragraph 214 – “There was an issue of fact as between [Mr. R] and an ANZ Bank Manager, [Mr. Q]… On Balance, I prefer the evidence of [Mr. Q].”

   (vii)Throughout the Judgment, there were numerous occasions when the Trial Judge needed to decide whether to accept the evidence of [Mr. R] or [Mr. SD].  Almost invariably, he accepted the evidence of [Mr. SD].

   (b)[Mr S]

   (i)Paragraph 233 – “The Affidavit of [Mr. S] was troubling as when he was further cross-examined on 27 February 2009 his letter to the wife’s solicitor [Exhibit H42] became apparent.  There are a number of things in that letter which were not included in his affidavit, namely:-

   i.The complaints made by the husband in relation to the wife’s administration of the business;

   ii.His assertion that the husband should be regarded as one of the best property developers in [Tasmanian] history.”

   (ii)Paragraph 234 – “In this regard [Mr. S] seemed to resile from his letter and said he meant he was talking of the family.  I have concerns about that evidence as it appears that he was backing away from what he said earlier in that week.”

   (iii)Paragraph 235 – The Trial Judge found that [Mr. S’s] Affidavit had been edited by or on behalf of the wife’s legal advisors and that the “editing” was unhelpful.

   (iv)Paragraph 236 – The Trial Judge recorded [Mr. S] as describing the husband as someone who as a developer could “turn a sow’s ear into a silk purse”.  He did not have much to do with the business since separation.

   (v)Paragraph 239 – “I accept that [Mr. S] had maintained capital gains tax records which were available to and of which the wife was aware in relation to the various companies.  This is troubling in terms of the wife’s denial that she did not have access to such information at the time of the proposed [J Pty Ltd sale].”

   (c)[Ms. P]

   (i)Paragraph 280 – “… [Ms. P] was visibly irritated by the questions asked of her by senior counsel for the husband.  She appeared angry when the underlying basis of her report was the subject of robust questioning.”

   (ii)Paragraph 281 – The Trial Judge was not satisfied that the methodology employed by [Ms. P] was robust.  In addition, the underlying facts upon which she relied were based, at least in part, on material from the accountant in her firm, [Mr. R].  “Some of this material was arranged and/or collated by the parties’ child, [Ms O].  As such there could be some underlying errors or bias contained in that material.”[15]

   [15] I accept the accuracy of the factual matters set out in this part of his submissions by senior counsel for the husband. 

   12.Consequences of wife’s conduct:

   (i)Generally a significant lengthening of the Trial, consequent delays, time wasted on unnecessary argument, time wasted on interim Applications/Responses which ought not to have been necessary and significant consequent costs.

   (ii)Lengthy cross-examination of wife.

   (iii)The need to call additional evidence to rebut/challenge wife’s unreasonable and intractable evidence and case management including:

   (a)Adducing significant evidence (including production of aerial photographs) to physically show work done by the husband to [Suburb K] since separation.

   (b)Preparation of Affidavit of [Mr. UC], Engineer and time taken during his evidence in chief and cross-examination to further establish the work done at [Suburb K] since separation by the husband, which ought to have been obvious to the wife and at least substantially accepted by her.

   (c)Preparing Affidavit of Mr U, Manager Development Planning, [Tasmanian] City Council as to zoning and use of [ VV Estate].

   (d)Preparation and hearing of interim Applications and Responses which were either initiated by the wife but dismissed or required by the husband (successfully) due to intransigent positions of the wife and/or which arose due to the need for the husband to continue to manage the [Pilot Group] during the period between commencement of the Trial and final Judgment (two years) together with all necessary Affidavits in support of such proceedings by the husband, Mr. SD, Mr. M and Mr. X.

   (e)The need on behalf of the husband to address evidence and argument by the wife which had not been but which ought to have been put to the Single Expert [Mr. E], which had been substantially answered by him in his Report (but not accepted by the wife).

   (f)Argument as to valuations when the parties had agreed prior to the commencement of the Trial to accept the Single Expert valuations of Esk Property but with the wife still trying to adduce fresh evidence during the Trial as to the value of [W Property] and [Suburb K] together with the wife’s argument that the Trial Judge ought substitute his own valuation for [ VV Estate].

   (g)Counsel for the husband and the Trial Judge having to deal with unnecessary distractions and issues such as the scandalous allegations made by Counsel for the wife against the husband’s legal and accounting representatives[16].

   [16] As I have said elsewhere the wife must accept some and perhaps significant responsibility for the length of the hearing, but this was added to and assisted by the hostility and the conflict between the parties.

   13.Trial Judge’s comments/findings regarding the husband:

   (i)Paragraph 53 – “I am not satisfied, on the material before me, that from time to time the husband frustrated the resolution of these proceedings.

   (ii)Any interim Applications/Responses of the husband during the course of the Trial were substantively (if not entirely) successful.

   (iii)Paragraph 141 – “The husband was very direct when he gave his evidence.”

   (iv)The Trial Judge was particularly critical of the behaviour of the husband and of parts of his evidence in 2010 relating to:

   (a)His failure to refund to the wife One Hundred and Thirty Two Thousand Dollars ($132,000.00) mistakenly paid to the husband by [Mr. M] from the proceeds of sale of the [A Street] properties; and

   (b)Failure by the husband to disclose settlement with [DD Pty Ltd] of the [Z Street dispute] and as to how the compensation monies from [DD Pty Ltd]were disbursed. 

   However, the Trial Judge directly addressed these issues in paragraphs 3, 4 and 5 of the final Orders.  Although these matters were dealt with upon a re-opening of the case in October 2010, re-opening was necessary in any event to bring to the attention of the Court significant developments that had occurred in the twelve months following the conclusion of evidence and final submissions and in context did not add (certainly not significantly) to the length of the Trial.[17]

   [17]I repeat the previous footnote.

   (v)The other area in which the Trial Judge did not accept the evidence of the husband was in relation to the ownership of [I Street] which had been the childhood home of the husband.

   (vi)Paragraph 159 – The Trial Judge stated “I find that the husband has from time to time been slow and somewhat obstructive in some aspects of financial disclosure for a variety of reasons.  However, that finding made, I am not satisfied that the husband has failed to provide full disclosure, except with regard to [I Street]…”

   (vii)Paragraph 165 – “I am not satisfied that this was an attempt to hide transactions, I am satisfied that it was a genuine misunderstanding by the husband.”

   (viii)Paragraph 166 – “… I am not satisfied that the husband knowingly gave incorrect evidence.”

   (ix)Paragraph 170 – “… Whilst I prefer the evidence of [Mr. M] I am not satisfied that the evidence of the husband was “flagrantly false” as is asserted on behalf of the wife.”

   (x)Paragraph 171 – “… I find this is indicative of a failure of memory rather than “flagrantly false” evidence of the husband.”

   (xi)Paragraph 173 – “… Whilst I prefer the evidence of [Mr. SD] and the documentary evidence the difference is not such as to make the positive findings of false evidence as sought on behalf of the wife.”

   (xii)Paragraph 174 – “… I take this to be that this is evidence that the husband has given flagrantly false evidence.  It is not so.  The husband has difficulties reading and writing and I am satisfied with the flood of correspondence and documents arising out of a plethora of litigation the husband needed staff and advisers to provide oral explanations of such written material.  The husband may not recall all correspondence which was brought to his attention at that time.”

   (xiii)Paragraph 175 – “… is again not evidence of flagrant untruthfulness on the part of the husband.  On balance, I prefer the evidence of [Mr. M] but I am not satisfied that the husband intentionally mislead the Court in this regard.”

   (xiv)Paragraph 176 – “… There is, however, a difference in the finding that the husband has not provided disclosure at the times and to the extent envisioned by the Court to a positive finding that he deliberately flouted a Court Order.  To be clear I am satisfied that the husband has not provided disclosure at the times and to the extent envisioned by the Rules of Court, however, I make no positive finding that he deliberately flouted that Court Order.”

   (xv)Paragraph 189 – “The husband endeavoured to answer all questions.  He appeared to be careful and deferred to experts when he was unsure and, from time to time, when it was a difficult question.”

   (xvi)Paragraph 191 – “The submissions of the husband’s Senior Counsel was that where I had doubts or where I was unable to accept the evidence of the husband then such evidence could be “treated in isolation without tainting his credibility generally”.  On observing the husband over a long period throughout the Trial I accept and adopt that submission.”

   (xvii)Paragraph 193 – “The husband was not as careful as he should have been in terms of his evidence.  At times he endeavoured to reconstruct his evidence to fit the case he was promoting.  However, I am not satisfied, on balance, that the husband has deliberately misled the Court although I have concerns about some of his evidence.”

   (xviii)Paragraph 194 – “In many ways both the husband and wife undermined their evidence by their endeavours to promote their own case and diminish that of their former spouse.  The husband’s evidence had many unsatisfactory features.  His evidence in later affidavits filed after June 2010 are troubling and are in some respects unreliable, such as his assertion that he could not repay to the wife her share of the sale proceeds of the [K Pty Ltd] properties and his non disclosure and use of the [DD Pty Ltd] funds.  I do not reject all of the evidence of the husband (as I do not reject all of the evidence of the wife).  I am cautious of the weight I attach to the husband’s evidence and, likewise, the wife, I treat their respective evidence on a fact by fact basis.  I have doubts as to the reliability and sometimes the honesty, of the husband’s evidence, unless it was consistent with the probabilities and the contemporaneous documents, or was corroborated by other evidence which I accept.[18]”

   [18] I accept the accuracy of the factual matters set out in paragraph 13 above by senior counsel for the husband, and generally accept his submissions, subject to the reservations and limitations set out elsewhere in these reasons, including footnotes. I have weighted and considered them in the light of the submissions made on behalf of the wife. 

   14.Judge’s comments/findings as to manner in which the husband’s case was conducted:

   (i)Unlike the Trial Judge’s criticisms of the wife, there is no criticism of the way in which the husband’s case was conducted.

   (ii)Significantly, there is no criticism that the conduct of the case of the husband in any way improperly contributed or intended to contribute to unnecessary delays or length of Hearing.

   (iii)Indeed, it is submitted on behalf of the husband that the manner in which his case was conducted was conducive to attempting to define and explain issues and to adduce clear and cogent evidence.

   (iv)In a very lengthy Trial involving a large number of witnesses (with some exceptions as to the evidence of the husband identified above) the evidence adduced on behalf of the husband was generally accepted and where it conflicted with evidence by or on behalf of the wife, it was generally preferred.

   (v)The wife was the Applicant, the proceedings were to resolve financial matters.  There is an inherent obligation on behalf of the Applicant at the commencement of the Trial to explain clearly and concisely what the Applicant is seeking.  Clearly, the Court needs to be informed by the Applicant as to what it is being required to determine and the Respondent is entitled to know what is being sought and what arguments it needs to address

   (vi)The wife did not provide any particularised claim:

   (a)     At the commencement of the Trial;

   (b)    During the course of the Trial; or

   (c)    By way of final submissions.

   (i)The wife conducted her case on the basis that she was unable to provide such particulars due to the failure of the husband over the preceding six or more years to make disclosure and due to the husband having treated the joint property as if it was his own and wrongfully appropriated for his own benefit vast amounts of money.  The wife persisted in this approach throughout the Trial.  However, the Trial Judge ultimately found that the husband had made disclosure, the [E Report] determined that there were not significant unaccounted monies, the wife substantively failed in her claims for add-backs and the Court refused the invitation of Counsel for the wife to disregard Single Expert valuations and to substitute his own values.

   (ii)It is open to Your Honour to find that it was this style of case management that very substantially caused the complexities in the case and the length of the proceedings[19].

   [19]  I repeat that the length of the trial was a combination of factors to which I have earlier alluded. 

   (b)Husband’s witnesses:

   [Mr M], Solicitor:

   (i)[Mr. M] gave evidence from time to time throughout the proceedings as and when it became necessary due to issues that arose from time to time.

   (ii)Paragraph 197 – “Counsel for the wife submitted that [Mr. M’s] evidence ought to be impeached…”

   (iii)Paragraph 199 – “I am satisfied that [Mr. M] acted in the best interests of the corporations for whom he acted (to the advantage of both the husband and the wife).  On the evidence before me I find that he maintained professional objectivity and integrity as a court would expect from a senior member of that profession.  His evidence impressed me as being frank.  That did not change bearing in mind his frank disclosure about the mistakes on the sale of the [A Street] properties.”

   (iv)Paragraph 201 – The Trial Judge found that [Mr. M] was not in any way impeached in his evidence and he was accepted as a witness of honesty.

   (v)Paragraph 202 – His Honour found from [Mr. M’s] evidence that the [T Pty Ltd] litigation was a sound commercial settlement.

   (vi)Paragraph 207 – “It is clear that [Mr. M] endeavoured to keep his role, as commercial legal advisor, separate from his role in the family law matters.  On the evidence before me I am satisfied that he acted appropriately and ethically (albeit carelessly in very recent times) in relation to the dealings of the relevant companies and its sole director.”

   (vii)It is evident from the Judgment that His Honour found the evidence of [Mr. M] to be helpful and of assistance in relation to many issues in this complex case and in relation to the various Applications in a Case[20].

   [20] I was critical of Mr M in terms of his dealings with the sale of some real property and disbursal of funds in mid 2010.

   Mr SD:

   (viii)Paragraph 222 – “The wife’s counsel submitted that as a consequence of [Mr. SD’s] conflicting responsibilities, in his dual role as accountant for the family business as well as managing and advising the husband, I should treat his evidence with some caution, particularly where it involves the expression of opinion.”

   (ix)Paragraph 223 – “The wife’s counsel further submitted that [Mr. SD’s] evidence was compromised as in recent times he had been involved in a project with the husband in the development of some [Suburb K] land…”

   (x)Paragraph 224 – “It was also submitted that [Mr. SD’s] evidence was unreliable because in his evidence he ignored the wife’s requests to him by letter of 28 June 2006 for information.”

   (xi)Paragraph 227 – “[Mr. SD] was not shaken in cross-examination.  Whilst he is the husband’s accountant, I am satisfied that his evidence is reliable… [Mr. SD] presented as an enormously competent and capable accountant with a deep knowledge and understanding of the [Pilot Group] and his evidence was of significant assistance.”

   (xii)Paragraph 229 – “[Mr. SD] did not endeavour to veil his activities in a cloak of impartiality.  His evidence impressed me as being frank and professionally based.  I am satisfied that he gave evidence in a truthful way, albeit coloured by his professional support of the husband.”

   (xiii)Paragraph 230 – “[Mr. SD’s] evidence and the way he gave it and conducted himself was impressive.  I am satisfied that his evidence was reliable.”

   (xiv)Paragraph 231 – “From hearing the evidence of [Mr. R] and [Mr. SD] and my observations of them I am satisfied that [Mr. SD] had a deeper knowledge of the finances of the various entities owned or controlled by the parties, although I am not convinced that [Mr. R’s] memory was, from time to time, as good as he asserts.  I generally prefer the evidence of [Mr. SD] to [Mr. R], when there is a discrepancy in their evidence.”

   Michael Trezise, Solicitor

   (xv)Paragraph 240 – He gave evidence as to the J Pty Ltd offer of $3,200,000.00.  His evidence was not challenged with the exception of the Capital Gains Tax calculations, in which he was misinformed.

   [Mr EE]

   (xvi)He was not required for cross-examination.  His evidence was admitted without controversy.

   [Mr FF]

   (xvii)He was not required for cross-examination.  He provided historical perspectives.  The nature of his evidence was something of a “cheer squad” type character.

   [Mr H]

   (xviii)Paragraph 247 – “Counsel for the wife submitted that [Mr. H’s] evidence should be treated with great caution because of his compromised position.”

   (xix)Where the evidence of [Mr. H] was in dispute, the Trial Judge generally accepted his evidence.

   (xx)Paragraph 254 – “It is clear that [Mr. H] and the husband are close.  They have almost a ‘father and son’ relationship.  However, after listening to his evidence, observing his demeanour in the witness box (particularly through intense cross-examination) and comparing some aspects of his evidence against objective standards, I formed the view that he was endeavouring to tell the truth.  Whilst I need to take care that his ‘truth’ was given through the prism of his own subjective background, I generally accept his evidence as frank and reliable.”

   [Mr UC]

   (xxi)Paragraph 256 – Counsel for the wife complained about the late provision of evidence by [Mr. UC].  His Honour determined that some of this evidence arose in the context of the wife’s rigid and sustained evidence that not much work had been done to the [Suburb K] site between separation and the date of the Hearing.

   (xxii)Paragraph 259 – “I am satisfied that he is a witness of truth and that his evidence is reliable.”

   Ms CC

   (xxiii)She is the Manager for Development Planning at the [Tasmanian] City Council.

   (xxiv)She was not required for cross-examination.

   (xxv)Her uncontested evidence was that [ VV Estate] … is prone to flooding.  She provided evidence as to zoning and that there are no applications for change of zoning before the Council.

   (xxvi)[Ms. CC] was not originally a witness for the husband.  Her evidence became necessary because of the wife’s case that [ VV Estate] ought to be given some value above the Single Expert valuation to reflect what Counsel for the wife referred to as “Value to the husband”.  Such submission was unsuccessful.  [Ms. CC’s] evidence was substantially to rebut such submission.  Mr. Foster did not seek to cross-examine her.

   [Mr GG]

   (xxvii)He was an employment expert.

   (xxviii)[Mr. SD] had originally asked [Mr. GG] to prepare an opinion as to the husband’s notional salary in running the various businesses.  [Mr. E] informed the parties that he intended to rely on that report.  The wife objected to [Mr. E] relying on the report of [Mr. GG] and consequently [Mr. E] commissioned a second report from [Mr HH] of [II Pty Ltd].

   (xxix)Ultimately, evidence was given by four (4) employment experts.

   (xxx)Mr. [GG] gave detailed evidence of the significant time he took to follow the husband over the period of days.  The Trial Judge stated (paragraph 275) that [Mr. GG’s] evidence was impressive.

   (xxxi)The Trial Judge accepted [Mr. GG’s] evidence that the husband’s notional earnings would be $270,000.00 per year.

   (xxxii)[Mr. GG’s] evidence was preferred over the evidence of [Mr. HH], the said [Ms P] and [Mr. JJ].

   [Mr. JJ]

   (xxxiii)The Trial Judge accepted that he was qualified and his evidence was truthful.  He was challenged by cross-examination by Counsel for the wife but his evidence was not impeached.  However, the evidence of [Mr. GG] was preferred. [21]

   [21] At page 4 of the husbands written submissions filed the 2 March 2011.

   (d)Whether the proceedings were necessitated by a failure of a party to the proceedings to comply with previous Orders of the Court:

   Not relevant.[22]

   [22] There were breaches by the husband of directions and orders made by the Court, including the requirement to promptly and regularly provide accounting and bookkeeping records and the sale of a property in the face of an order to the contrary.  I have had regard to those matters in this determination. 

   (e)Whether any party to the proceedings has been wholly unsuccessful in the proceedings:

   1. Husband:

   (i)The husband has not been wholly unsuccessful in the proceedings and, indeed, has substantially been successful.

   (ii)There were two fundamental issues in dispute, namely:

   (a)What does the property pool consist of and what is its net value; and

   (b)What percentage distribution is appropriate?

   (iii)At the commencement of the Trial the husband clarified that he was seeking a 55/45 per cent distribution in his favour.  Although the husband was not ultimately successful on this point it is submitted that he had a very arguable case and that it was well within the proper range that a Court could be expected to exercise its discretion.

   (iv)However, the content of the property pool was by far the most substantial issue.  At all times, the husband’s case was that Exhibit H1.2 (the financial statement attached to the Combined Expert Report) represented the assets and liabilities of the parties.

   (v)Due to the complexity of the financial affairs of the parties and the length of the Trial, H1.2 needed to be amended from time to time during these proceedings (for example to reflect the sale of a piece of real estate).  The husband, through Mr. SD, updated this document as necessary on behalf of the husband.

   (vi)It is submitted that the property pool as determined by the Court and as particularised in paragraphs 587 to 589 inclusive of the Judgment are substantially as submitted on behalf of the husband throughout the Trial as clarified from time to time by Mr. SD.  At all material times Mr. SD was able to provide expert evidence as to identification and variation of that pool.  Throughout the Judgment, where there was any dispute between Mr. SD and Mr. R as to a financial matter the evidence of Mr. SD was accepted.

   2.Wife:

   (i)The wife was not wholly unsuccessful.

   (ii)However, the wife was substantially unsuccessful as to the content of the property pool where that differed from the husband, for example:

   (a)The wife unsuccessfully argued that there should be an add-back to the husband’s account concerning Mr H’s house.

   (b)The wife unsuccessfully argued that there should be an add-back to the husband’s account of One Million Three Hundred and Seventeen Thousand Seven Hundred and Eighty Dollars ($1,317,780.00) for  VV Estate.

   (c)The wife unsuccessfully claimed that there should be an add-back to the husband’s account for drawings of “just under $2,000,000.00” - paragraph 11(l).

   (d)The wife unsuccessfully claimed that there should be an add-back to the husband’s account of about Three Hundred Thousand Dollars ($300,000.00) in expenditure identified by Mr. E.

   (e)There was an issue as to whether there ought to be and if so the value of an add-back to the husband’s account in relation to the helicopters.  Although the Court determined there ought to be an add-back it was significantly less than claimed by the wife and was in accordance with evidence from the husband’s accountant Mr. SD.

   (f)From the way in which the wife’s case was presented it is difficult to calculate the precise amount of add-backs she was unsuccessful in seeking but they totalled about Four Million Dollars ($4,000,000.00).

   (g)In addition, the wife claimed a continuing add-back from the 1^st July 2009 until final Orders of Twenty Five Thousand Dollars ($25,000.00) per month.  That claim was unsuccessful.

   (h)The Trial Judge allowed an add-back in relation to I Street.

   (i)The Trial Judge allowed an add-back for some rent for I Street and also for Z Street.

   (j)There was also an agreed add-back of Fifteen Thousand Dollars ($15,000.00) for money invested by the husband in I Securities Pty Ltd.

   (k)However, the add-backs determined by the Trial Judge to be proper were for very small amounts compared to the add-backs claimed and size of the property pool.  This took significant Trial time and cost.

   (l)Therefore, it is submitted that the wife was substantially unsuccessful.

   (iii)The above submissions as to the conduct of the wife in these proceedings are repeated to the extent to which they show that the wife was unsuccessful (for example, her failure to acknowledge work done by the husband at Suburb K or the work generally done by the husband in managing and promoting the family group of companies whilst the wife was plotting tactics under the very dark cloud hovering over W Property).

   (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:

   1.The parties made numerous attempts to settle this matter from the date of separation and up to the commencement of the final Hearing but so far as the current Solicitors and Counsel for the husband are aware:

   (a)Neither party filed any Offers of Settlement as contemplated by Section 117C.

   (b)Although there would have been numerous full or part settlement offers made between solicitors from time to time current Counsel/Solicitors for the husband are not able to produce any firm settlement offer which had sufficient certainty that it could be carried into effect.  We seek leave to tender any such written offers should they come to hand by the time of the Hearing.

   (c)The parties attempted settlement or mediation negotiations from time to time which included use of the services of John Harry, Partner to Page Seager Barristers & Solicitors but such efforts were ultimately unsuccessful.

   (d)On many occasions throughout the history of the proceedings the husband has offered to settle on the basis of an equal distribution of net property as it existed at the time of such offer.  However, settlement negotiations would generally break down because the wife would insist on the property pool being fixed and valued as at the date of separation and the wife alleged that since separation the husband had mismanaged the company group and misappropriated large amounts of money.  As a result, in dollar terms, the parties remained significantly apart and the matter proceeded to Trial[23].

   2.On the first day of Trial (which was after the release of the Single Expert Report and the Combined Expert Report) through his legal representatives and accountant the husband offered to settle on the basis of an equal division of the net property as it then stood without any allowances for add-backs and relying on the Single Expert valuations.  Such offer was oral and was not accepted.

   3.On the 30^th June 2009 and after the Hearing had been stood down for a lengthy period to allow settlement negotiations, a written offer was received from the wife …

   4.The husband accepted the substance of the offer and consequently re-drew the terms of the offer in a more appropriate form which provided for the transfers between the parties of relevant entities so as to give effect to the wife’s offer.  …

   However, the wife withdrew her offer and the Trial continued.

   5.From the point of view of the husband, the claim by the wife was always unreasonable to the extent that the wife sought considerable add-backs and remained dogged in her view that the husband had misappropriated large amounts of monies even after the Single Expert Report and Combined Expert Report.  Given this circumstance, it was not seen by the husband or his Counsel that any written offer of settlement would have had any realistic chance of being accepted.

   [23]In terms of these particular submissions, b, c and d, I have given them no weight as they are not relevant to this particular determination. Similarly I have not given any weight to submissions 19, 20 and 21. I have earlier set out the basis for such offers to be a factor in such a determination.

   (g)Such other matters as the Court considers relevant:

   Throughout these proceedings the husband has had to continue to manage the group of eighteen companies.  This task has proven considerably more difficult by the time that the husband has had to devote to the current proceedings, not the least of which, has been continual (and often unreasonable) requests for discovery.  Alternatively, the husband’s capacity to properly prepare and conduct his case in these proceedings has significantly been made more difficult by the fact that he has had to continue to operate eighteen companies and by the wife’s (at times unreasonable) demands for discovery.[24]

   [24] In terms of this submission, I have given it no weight.

1. I accept the submission made by senior counsel on behalf of the husband that it ought to have been evident to the wife and/or her legal advisers that the husband had leave to sell the A Street properties.  Although the husband had made an effort to offer these properties to the wife, she rejected that offer, and although the wife put a counter-offer to the husband, there was never any obligation on him to accept and the husband rejected the wife’s counter-offer.  Finally that the husband had entered into a legally binding contract with an independent third party and consequently the wife and/or her legal advisers ought to have known that the Court either did not have the jurisdiction to interfere with the rights of the independent third party on the circumstances as outlined above or if it did have that power, it ought not to do so in any event.

2. I am satisfied that neither of the wife’s applications could have succeeded.

3. I am satisfied that in the overall circumstances of this particular application for costs that I ought to make an order for costs in favour of the husband.  Such costs order will be on a party/party basis.

(b)That the wife pay the Single Expert fees of and incidental to the Report of Mr E dated the 7 August 2008 and made pursuant to paragraphs 4 and 5 of the Orders made by Deputy Registrar Weidmann on the 16 October 2006

1. The husband relied upon an affidavit of Michael Trezise, Legal Practitioner, which provided a history as to the reason for the appointment of Mr E as the single expert, the reason for Mr E’s specific terms of reference for an extremely detailed audit of all Pilot Group entities between 2002 and 2007 and a history explaining the evolution of the notional wage argument which ultimately involved four (4) expert witnesses.  From that affidavit and the submissions of senior counsel for the husband it seems that:-

   ·At the request of solicitors for the wife, solicitors for the husband consented to a Single Expert Report from Mr NN.

   ·One of the basis for the report was to determine the merits of the allegations of the wife as to improper management of the Pilot Group by the husband and significant misappropriation of funds by him.

   ·A Consent Order was made on 20 February 2006 appointing Mr NN and provided that all the costs of the report be paid by the husband with such costs being properly taken into account in the ultimate property settlement.

   ·The terms of reference to Mr NN were drafted by the solicitors for the wife and were agreed to by solicitors for the husband.

   ·Mr NN subsequently advised that the terms of reference were impractical, would take a team of accountant’s months to complete and would be excessively expensive.

   ·Mr NN suggested more realistic terms of reference which were accepted on behalf of the husband but were rejected by the solicitors for the wife who insisted that the original detailed terms of reference were required.

2. An Order was made by consent on 16 October 2006 substituting Mr E for Mr NN but restating that the husband pays all the valuation costs with them being properly taken into account in the ultimate property settlement.  Mr NN’s costs were $3,137 and Mr E’s total costs were $102,818.50.

3. The final E Report was released on 7August 2008 and consists of three (3) substantial volumes.  It covers the period 1 July 2002 to 30 June 2007.  It was a detailed report.

4. On 4 September 2008 and following a meeting between Mr E and Mr SD, accountant for the husband, and Mr R, accountant for the wife, the said accountants produced a document referred to throughout the Trial as the “Combined Experts Report” which became Exhibit H1.  At the commencement of this Report it is stated “Consolidated view of [Pilot] Family entities taken.  Areas where there are differences have been noted below, together with action taken.”

5. I accept the submission of senior counsel for the husband that ‘there is nothing in the Single Expert Report or the Combined Expert Report to substantiate the claims of the wife as to improper management or misappropriation.  This issue was pursued by senior counsel for the husband in cross-examination of [Mr E]”.[64]

   [64] At page 65 at paragraph 7 of the husband’s written submissions filed 2 March 2011.

6. Senior counsel for the husband also noted that:-

   ·At paragraph 445 of the Judgment the Trial Judge stated “The wife submitted that the husband had access to the funds of the business which he used essentially for his own personal purposes.  In many regards this submission and the wife’s evidence upon which it is based has been negated by the evidence of [Mr. E] and [Mr. SD].”

   ·At paragraph 446 of the Judgement the Trial Judge quoted part of the cross-examination of [Mr. E] by [senior counsel for the husband] as follows:

   MR GUNSON:                 Thank you.  Are you aware that one of the issues raised by [the wife] is what I will loosely call unaccounted for moneys said to be somewhere in the order of 3 million to $4 million?  In other words, she alleges or contends that her husband has had the benefit of these funds?

   [MR E]:I can’t recall those sums being mentioned to me, but I can recall a number of discussions with [the wife] and I had the same issue.  Where has the cash gone?  Where is the cash from this transaction?  They basically concerned sale of properties and dealing with the proceeds of those properties.  That’s the main - --

   MR GUNSON:                 To use a colloquialism, is there any identifiable black hole?

   [MR E]:Would you define what you mean by a “black hole” in terms of dollar terms.

   MR GUNSON:                 Is there any evidence of money going missing in large sums that simply cannot be accounted for?

   [MR E]:Given the areas which I looked at which dealt with the majority of the turnover of the Pilot family entities, my answer to that question would be no, I have not found a black hole in the sense of there being a sum of three to $4 million which is not accounted for.  I would say that there are probably much lower sums that are not adequately accounted for, but they would be in the low six-figure sums – one to $300,000, something of that sort. [65]

   ·At paragraph 447 of the Judgment the Trial Judge stated that “Having had regard to this and other evidence, I am not satisfied that there was a sum of $4 million wasted, frittered away and/or hidden.”

   ·At paragraph 448 of the Judgment the Trial Judge stated that “The wife was cross-examined in relation to the detailed report of [Mr E].  As I said earlier, she accepts the accuracy of his report but noted there is some $300,000 which has not been precisely accounted for.  [Mr E] was questioned in respect of that sum and was not overly concerned bearing in mind the context of the period of six years and millions of dollars passing through the accounts.  He made no recommendation about any repayment.”

   [65] Ibid at paragraph 8 and pages 66 and 67.

7. From the evidence it was clear that the financial affairs of the husband and wife are complex.  It was reasonable that a Single Expert Report from an accountant be obtained. 

8. Senior counsel for the husband submitted that it was unreasonable for the wife to seek such a detailed forensic audit and examination, particularly, after receipt of the advice from Mr NN that such report was impractical, would be extremely time consuming and extremely expensive.  I am not so sure that it was unreasonable in the circumstance known to the wife at that time.

9. It was submitted on behalf of the husband that the wife should have accepted the advice that a less detailed report was appropriate.  In the then circumstances of the parties I am not so sure that she should have accepted that advice at that time.

10. It was submitted by senior counsel for the husband that taking ‘into account your general findings as to the completely unsatisfactory nature of the evidence of the wife and the manner in which she sought to conduct these proceedings in therefore determining that the [E Report] was in many respects brought about by the wife’s irrational and unreasonable stance and her unshakable desire to conduct a witch hunt regardless of the expense’.[66]  I am not persuaded by this submission as the conflict and lack of trust together with the husband’s reluctance to provide support were significant features.

    [66] Ibid at page 67.

11. There was evidence that Mr E said of the wife in terms of his work that he “found [Mrs Pilot] very helpful” and that the documents that she had were “generally in good order”

12. I accept that there was some delay in the completion of Mr E’s report as a consequence of the husband’s delay in promptly providing information and at times providing partial information.

13. It was submitted by counsel for the wife that the task of the single expert was made more “difficult and therefore longer and more expensive, because of the Husband’s contempt for record-keeping and business administration”.[67]  I do not accept this submission to the degree that it is put.  Both parties contributed in their own way to the complexity and delay in the start of the hearing.  

    [67] At page 14 at paragraph 3.3 of the wife’s written submissions filed 9 March 2011.

14. Counsel for the wife submitted that the husband not only supported the wife’s application but claimed that the husband had always made it clear that he agreed to the appointment of a single expert and that it was the husband “who has always suggested that the valuation/audit by [Mr NN] go back as far as 1  July 1999.”[68]

    [68] Ibid at page 14 at paragraph 3.2.

15. Counsel for the wife argued that the single expert’s task was made more difficult, longer and more expensive, because of the husband’s contempt for record-keeping and business administration.  He submitted that if the husband had included in the MYPB records all transactions of the Pilot Group and had made them immediately available the single expert and the wife on a monthly basis, as required by the court order, “some years of uncertainty and suspicion, not to mention considerable cost and delay would have been avoided”.[69]

    [69] Ibid at page 15 at paragraph 3.4.

16. The report of Mr E, the single expert, was necessary and having regard to the whole of the submissions and the overall findings I am not satisfied that there should be any further costs order with regard to Mr E's fees. The husband was running the businesses and whilst I can see why he may have been reluctant to provide financial information to the wife, notwithstanding that reluctance he had obligations to do so under the orders of the Court and under his general obligation to make full and frank disclosure.

17. In coming to these conclusions and making these determinations I am conscious that costs orders are not punitive and are designed to be recompense.  That being said it is clear that the legislation in s 117(2A) looks to the conduct of the parties as a feature.

18. In these applications conduct has been and is a very relevant feature. 

Costs in respect of the costs applications

1. Each of the parties spent about half a day of court time arguing the costs applications and had spent significant time preparing their respective costs applications.

2. Neither party was entirely successful or unsuccessful.  Each will benefit from and bear the expense of the differing costs orders.

3. Neither parties conduct in the context of this litigation escaped unscathed.  

4. In terms of offers a submission made on behalf of the wife was that she had made an open offer to the husband that the costs issue be resolved on the basis that each party pay their own costs and that the husband rejected that offer. That offer is not relevant to this determination having regard to the outcome.

5. Having regard to the principles set out earlier and the various submissions of the parties, the findings evaluations and determinations made in respect of the costs questions and exercising the broad discretion that the Court has with regard to costs, the Court determines that each party should pay their own costs of the costs applications.  As such the application by each of the parties for costs on the costs applications are dismissed.

I certify that the preceding one hundred and sixty nine (169) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 24 June 2011

Associate:

Date:  24 June 2011