Popovski & Mabon (No 2)
[2024] FedCFamC1F 457
•9 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Popovski & Mabon (No 2) [2024] FedCFamC1F 457
File number: SYC 7140 of 2018 Judgment of: ALDRIDGE J Date of judgment: 9 July 2024 Catchwords: FAMILY LAW – COSTS – Application by the wife for indemnity costs – Where the husband required the wife to prove ownership of property he previously conceded he was not entitled to – Husband failed to accept a reasonable offer of settlement – Wife’s claim for indemnity costs overstated – Husband to pay the wife’s costs in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Popovski & Mabon [2024] FedCFamC1F 270
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 28 Date of last submission: 19 June 2024 Date of hearing: Determined in chambers on the papers Place: Sydney Counsel for the Applicant: Mr Stapleton Solicitor for the Applicant: Robertson Saxton Osborne Lawyers Solicitor for the Respondent: Long Saad Woodbridge Lawyers ORDERS
SYC 7140 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR POPOVSKI
Applicant
AND: MS MABON
Respondent
ORDER MADE BY:
ALDRIDGE J
DATE OF ORDER:
9 JULY 2024
THE COURT ORDERS THAT:
1.The applicant shall pay the respondent’s costs of the final hearing fixed in the sum of $10,000 within 28 days in the following manner:
(a)Prior to the distribution of the proceeds of sale of the Suburb B property under Order 2(c) made 24 April 2024, by deducting the amount from the applicant’s share of the proceeds and paying it to the respondent; or
(b)In the event the distribution of the proceeds of sale of the Suburb B property has already occurred, by paying the amount to the respondent.
2.Each party shall bear their own costs of the costs application.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Popovski & Mabon has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
On 24 April 2024, I made final property settlement orders in proceedings between Mr Popovski (“the husband”) and Ms Mabon (“the wife”) (Popovski & Mabon [2024] FedCFamC1F 270). The wife now claims that the husband should pay her costs of the proceedings on an indemnity basis, or in several other ways put forward as alternatives.
It is not necessary to rehearse the details of the hearing which can be found in the original reasons. The parties had only one property available for division along with relatively small sums of cash and superannuation. One of the major issues was whether certain loans owed by the wife actually existed and, if they did, whether they should be taken into account in the division of property. On this, each party had some measure of success.
So explained, the case appears to be one to which the provisions of s 117(1) of the Family Law Act 1975 (Cth) would apply. In considering whether to make a costs order, the Court must take into account the matters set out in s 117(2A) of the Act.
One matter that might provide circumstances which would justify a different order was the ownership of a property in Country K. The wife’s unchallenged evidence, and that of her parents, was that the parents had paid for the property in question, paid all its outgoings and lived there. The property was put in the wife’s name to minimise the payment of tax. An unchallenged report by an expert lawyer from Country K opined that on these facts the courts in Country K would regard the property as owned by the wife’s parents.
Again, the fact that a party who was the registered proprietor called evidence to establish that he or she has no interest in the property other than the bare title would not normally justify a different costs order. That is so even where, as here, the husband delayed in conceding the point until the morning of the hearing.
However, in early 2009, the husband signed a “Marital Property Agreement” in Country K by which he disavowed any interest in the Country K property. On 14 October 2020, the husband admitted that he signed the document and that he had made no contribution to the acquisition of the property. He did not assert that the wife had made any financial contribution to its acquisition.
This combination of facts points to the conclusion that there was no justification for the husband requiring the wife to prove the actual ownership of the property. The position was that neither the husband nor the wife had made any contribution to its acquisition. Even if it was taken that the wife was the owner of the property in Country K, the lack of any contribution to it by the husband would, most likely, see the wife retain the property, subject to whatever interest the parents might have, with little effect on the division of the remainder of the property. This was because the balance of the property was sufficient for a just and equitable division to be made from it. Further, if the property was included as an asset to be divided it would be treated as being entirely contributed by the wife, leading to an overwhelming contributions based entitlement in her favour.
All this was known to the husband, at least from October 2020. The real cost incurred on this issue, however, was the obtaining of the evidence to make good the wife’s contention.
The Financial Statements of the parties reveal that the husband has a higher income than the wife, however, neither could be regarded as having a high income. The property pool was modest and the wife received the lion’s share of the non-superannuation assets. The husband received $208,683.10 in cash and $188,560 in superannuation.
The wife’s primary claim for costs is in the sum of $243,984.53, which would exceed the husband’s available assets. His financial position points to some care needing to be taken in determining what order is just.
The wife points to three aspects of the husband’s costs which would justify a costs order being:
(a)The claim as to the property in Country K;
(b)The post-separation loans of the wife; and
(c)The issue of a subpoena to the accountant of the wife’s boyfriend.
I have already dealt with the first two. As to the third, the husband issued the subpoena as described but delayed in providing the conduct money so that the documents were produced on the first morning of the hearing, delaying its commencement by a couple of hours. There is no indication that this caused the parties to incur a further days’ legal fee given the hearing still ran to conclusion on that day.
The husband raises that the wife did not press her claim for a child support departure order at the hearing as conduct also relevant to costs, but that was a minor issue.
The wife referred to eight offers of settlement that she made between 16 July 2020 and 17 March 2024 and four offers made by the husband between 2 April 2019 and 5 February 2024.
The three offers made by the wife in 2024 were based on a value of available assets close to that ultimately agreed upon by the parties. The husband would have received a better outcome (46 per cent on the last offer) had he accepted any of those offers and not pursued the matter to a final hearing.
The husband’s response to this is to point out that the property pool was not settled until the first day of hearing.
This brings me back to where I began. The husband submitted that he acted reasonably in requiring the wife to prove her case. He said that it was not until after 6 March 2024, when he received answers from the expert lawyer, that it was accepted he could not succeed in the claim against the property in Country K. The questions had been asked in November 2023.
That is not an explanation of the failure to accept the last offer made by the wife on 7 March 2024. It also ignores the admissions made in October 2020.
I note that the last offer by the wife included an uplift of $20,000 for counsel’s fees. It is difficult to ascertain what further costs were incurred by the wife because of the refusal of the offer. Presumably, at least, that would be the costs incurred by the wife’s solicitor attending the hearing.
A costs letter of 11 March 2024 indicated that for a two-day hearing, as this was expected to be, these cost would be of the order of $5,840. However, the hearing ultimately only ran for one day. There would have been some additional costs for preparation.
At the least, the husband should pay half of the costs of the Country K law expert (total cost $1,186) and the Country K property valuer (total cost $1,775). They should have been single experts engaged by the parties jointly. However, for the reasons given earlier. I consider that he should pay the full costs of them as they were unnecessary given his 2020 admissions.
The wife’s last offer was reasonable and there is no reason why it should not have been accepted.
As I have said, the husband’s cash position must be considered.
Taking these matters into account, I am persuaded that the circumstances justify a modest costs order in favour of the wife. Doing the best I can, I assess the costs at $10,000. I am satisfied that, provided the distribution of the proceeds of sale from the Suburb B property between the parties under Order 2(c) made on 24 April 2024 has not yet occurred, the $10,000 should be deducted from the husband’s share of the proceeds prior to the distribution.
Indemnity costs are awarded only in exceptional circumstances (Kohan and Kohan (1993) FLC 92-340; Yunghanns v Yunghanns (2000) FLC 93-029; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225).
Nothing in this rather run-of-the-mill case was exceptional. The costs order that is being made is made primarily to reflect the costs of the experts in Country K and the failure to accept an offer made just before the hearing.
The claim for indemnity costs was misconceived and over-blown. The same might be said of the claim for the entire costs of the hearing.
Each party will bear his or her costs of this application.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 9 July 2024
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