RAMETTA AND ORS & RAMETTA
[2020] FamCA 377
•19 May 2020
FAMILY COURT OF AUSTRALIA
| RAMETTA AND ORS & RAMETTA | [2020] FamCA 377 |
| FAMILY LAW – INJUNCTIONS – where husband seeks a release of funds to which he is entitled pending determination of wife’s s 79A application – relevant considerations – injunction dissolved and funds paid to husband FAMILY LAW – COSTS – where wife seeks $200,000 to fund her s 79A litigation which was brought 13 years after orders were made by consent– where court’s power is confined to costs power in s 117 – relevant considerations – where there is a vast disparity in financial positions of the husband and the wife – where costs may be disproportionate to proceedings. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Strahan & Strahan (Interim Property Orders) [2011] FamCAFC 126 |
| 1st APPLICANT: | Mr Rametta |
| 2nd APPLICANT: | B Pty Ltd |
| 3rd APPLICANT: | C Pty Ltd |
| RESPONDENT: | Ms Rametta |
| FILE NUMBER: | MLC | 9433 | of | 2017 |
| DATE DELIVERED: | 19 May 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
| HEARING DATE: | 16 April 2020 |
REPRESENTATION
| COUNSEL FOR THE 1ST, 2ND AND 3RD APPLICANT: | Mr Puckey with Mr Schmidt |
| SOLICITOR FOR THE 1ST, 2ND AND 3RD APPLICANT: | Slater & Gordon Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Wilson |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
Orders
Within 7 days, the wife's solicitors disburse from the funds held by them in a controlled monies account with the National Australia Bank in the name of Kennedy Partners Lawyers PL CMA ATF Ms Rametta pursuant to paragraph 2(e)(i) of the Order made on 6 September 2018, to the extent that there are sufficient funds available in that account and in the following order of priority:
(a)$688,486.00 to Slater and Gordon on account of outstanding fees and disbursements owed to the firm by the Rametta Parties;
(b)$210,196.93 to Slater and Gordon on account of unbilled work in progress and disbursements incurred by Mr Rametta in respect of this proceeding;
(c)$325,565.30 to Slater and Gordon on account of unbilled work in progress and disbursements incurred by the Rametta Parties in respect of the 'inactive matters";
(d)$102,213.07 to Slater and Gordon on account of unbilled work in progress and disbursements incurred by the Rametta Parties in respect of the 'active matters";
(e)$279,950 to the Slater and Gordon Law Practice Trust Account on behalf of the husband;
(f)$514,950 to the Slater and Gordon Law Practice Trust Account on behalf of the Rametta Parties and
(g)$290,828.21 to the husband.
Any party wishing to make an application for the other party to pay his or her costs of in relation to the applications disposed of by this Order be at liberty to make that application by including in his or her affidavit of evidence in chief or the next affidavit which he or she is going to make and file in this proceeding, the following:
(a)the amount of costs sought;
(b)any evidence in support of the application for costs;
(c)without prejudice to the basis upon which the applicant for costs seeks costs be calculated, an annexure which is a memorandum of costs sought which is drawn in accordance with the Scale of Costs in Schedule 3 to the Family Law Rules 2004.
Any party opposing an order for costs or making a cross application for costs include in his or her affidavit of evidence in chief or next affidavit which he or she is going to make and file in this proceeding, the following:
(a)Any concession by him or her to payment of the other party’s costs and/or the amount of costs sought by way of cross application;
(b)any evidence in support of the orders sought as to costs;
(c)without prejudice to the basis upon which the cross-applicant for costs seeks costs be calculated, an annexure which is a memorandum of costs sought which is drawn in accordance with the Scale of Costs in Schedule 3 to the Family Law Rules 2004.
The husband’s Application in a Case filed 1 April 2020 be otherwise dismissed.
The wife’s Response to an Application in a Case filed 14 April 2020 be and is hereby dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rametta and Ors & Rametta has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9433 of 2017
| Mr Rametta and B Pty Ltd and C Pty Ltd |
First Applicant
And
B Pty Ltd
Second Applicant
And
C Pty Ltd
Third Applicant
And
| Ms Rametta |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties attended a private mediation with Mr Dickson QC on 15 April 2020 at which the matter was not resolved. This financial matter will proceed to a final hearing before me, electronically, starting on 22 June 2020. In the meantime, an interim dispute has arisen for determination.
The first applicant and respondent are customarily known by a shorter version of their family name, that is, “Rametta” so that is how I will refer to them or, alternatively, as “the husband” or “the wife” notwithstanding that their marriage is long since dissolved.
By Application in a Case filed 1 April 2020, Mr Rametta seeks the disbursement of monies which are held by the Ms Rametta’s practitioners and which represent some of the proceeds of sale of property owned by him. Ms Rametta opposes Mr Rametta’s application and by her Response to an Application in a Case filed 14 April 2020 seeks that $200,000 of the proceeds of sale be paid to her under the Court’s power to make such order for costs under s 117 of the Family Law Act 1975 (Cth) (“the Act”) as it considers is just. Mr Rametta opposes the orders sought by Ms Rametta.
This matter was heard by me electronically. Mr Puckey and Mr Schmidt, of counsel, appeared on behalf of the applicants. Mr Wilson, of counsel, appeared on behalf of the respondent wife. Both parties and their respective solicitors observed the proceedings through the Courts use of the Microsoft Teams platform.
The husband relied on his affidavit affirmed on 27 March 2020 and the affidavit of his solicitor Mr Mark Walter sworn on 26 March 2020. The wife relied on her affidavit affirmed on 14 April 2020 and the affidavit of her solicitor Mr John Spender sworn on 14 April 2020.
Neither party sought to cross examine the other although there was the time and capacity for them to do so. The matter proceeded by way of submissions.
I gave the wife leave to make an oral application to extend the time which she must file her affidavit of evidence in chief for the upcoming hearing. There was also an issue of compliance by the husband’s solicitors with my direction for their costs notification to the husband to be provided to the wife.
At the conclusion of the hearing I reserved my decision. Having reflected on the evidence, read the outline of argument relied upon by the husband,[1] and considered the oral submissions of Mr Puckey and Mr Wilson, I am satisfied that it is proper within the meaning of s 114(1) of the Act for me to make orders which are consistent with the husband’s application and to decline to make the orders sought by the wife.
[1] Exhibit “H1”.
Both parties indicated that the final hearing will require more than the five court days which are allocated to it. I will return to the issue of hearing time when I deal with case management issues later in these reasons.
Relevant history
I will set out some of the relevant history in order to give context to this interim determination. I do not, however, make findings now by which I will necessarily be bound later when I consider a final determination. A statement of fact should not be construed as a finding of fact.
The husband is 73 years old. He has re-partnered with Ms D who observed the proceedings at his side. The wife is 69 years old and has not re-partnered. The husband and wife were married in 1969. They separated in 2005 and in 2007 they entered into final property orders. Those were made by consent on June 2007. They have four adult children who, in order of age, are Ms E, Mr F, Ms G and Mr H. None of the children are aligned with the husband and two are involved in proceedings or legal processes against the husband. The youngest son, Mr H, is aged in his 40s and there are collateral proceedings in the Supreme and County Courts concerning Mr H and the ownership of the family business. There are criminal proceedings brought against the husband alleging that he sexually assaulted the parties’ daughter, Ms G, when she was 13 years old.
The parties implemented the financial orders in 2007. In broad terms the wife retained $1.3 million in cash and some Tasmanian properties. The wife retains property at Location J in which she resides, which she says is worth about $600,000, and a property at Location K which she says is worth about $75,000. The balance of the wife’s real properties at Location L and Location M and a boat have been liquidated and her holdings of cash are all but depleted. The husband retained a business called “C Pty Ltd” which was a going concern.
In 2017 two sets of proceedings were instituted. The wife filed this application seeking to set aside the 2007 orders under s 79A of the Act on the basis of nondisclosure about an aspect of C Pty Ltd as at 2007. The second were proceedings taken by the son of Mr and Ms Rametta, Mr H, in the Supreme Court of Victoria. That matter involved a challenge to ownership of the trust or control of the trust that owned the business in which Mr H had continued to work. The proceedings involving Mr H are now finalised.
The husband describes the litigation in which he has been involved over the last three years in his affidavit affirmed on 27 March 2020. He deposes:
6.Since October 2017, when these proceedings were issues, I, or the entities which I have control, have been a party to the following proceedings:
6.1 these proceedings in the Family Court of Australia;
6.2W Shire Council v Ms D, Rametta and C Pty Ltd (“Shire Council Proceedings”);
6.3Mr H v Mr Rametta and Ors – Supreme Court Proceeding No. …37 (“Trustee Proceedings”)
6.4Mr Rametta v N Pty Ltd and Ors – Supreme Court Proceeding No. …12 (“Receivership Proceedings”)
6.5C Pty Ltd v Mr P & Co – Supreme Court- Costs Court SCI …38 (“Taxation Proceedings”);
6.6N Pty Ltd v Q Pty Ltd and Ors – Supreme Court Proceeding No. …38 (“Injunction Proceedings”);
6.7R Pty Ltd and Ors v N Pty Ltd County Court Proceeding No …53 (“Debt Recovery Proceedings”); and
6.8Criminal proceedings in the County Court of Victoria (“Criminal Proceedings”).
7. The above proceedings (except for the Taxation Proceedings, the Shire Council Proceedings and the Criminal Proceeding) are interconnected, insofar as they are disputes with family members over assets held by me or by various entities and trusts with I control.
8.Slate and Gordan acts, or has acted, for me and the entities which I control in respect of the proceedings listed above, except for the Criminal Proceedings. O Lawyers acts for me in respect of the Criminal Proceedings.
Central to the case of the s 79A application is the impact on the value of C Pty Ltd of a contract entered into in December 2006 which was the largest contract of its kind in Australia for a task which had not then been attempted by anyone on such a scale. The contract was won approximately six months prior to the final property orders being sought, and made, by consent. The wife alleges the husband failed to disclose the value of the contract to C Pty Ltd.
It is the husband’s case that, within six or so months of commencing work, C Pty Ltd was shut out of the site and the contract with T Ltd came to, what Mr Puckey describes as, a very messy end. Three years of litigation ensued in various courts as a result of which Mr Rametta and C Pty Ltd are said to have incurred very substantial losses.
It is common ground that the husband told the wife about the contract and that the wife did not pursue or investigate how the contract impacted on the value of C Pty Ltd. The wife relies on a representation made by the husband to her at the time the consent orders were made, and recorded in them, which was:
The husband has represented to the wife and the wife has relied upon the husband’s representation that the value of the entities is $2,526,212 inclusive of the value of the Location U properties, the value of which is estimated to be 885,000.
The parties have a single expert witness’ retrospective valuation of C Pty Ltd which, on one view, puts the value of C Pty Ltd at between $17.5 million and $34 million, as at 30 June 2007, based on anticipated profits from the T Ltd contract and before T Ltd discontinued its relationship with C Pty Ltd. The single expert also opines that on a hindsight valuation, the value of C Pty Ltd, as at 30 June 2007, would have been between $2.9 million and $3 million which, Mr Wilson contends, is $2.1 million more than “the parties based their consent orders on.” Mr Wilson described the “real nub” of the wife’s case about the husband’s misrepresentation as being the husband’s failure to tell the wife about how successful the T Ltd contract was at a time when he must have known it was very successful but withheld that information from her. In particular, that the sales of C Pty Ltd had increased from $4 million in 2006 to $11.5 million in 2007. Mr Wilson submitted:[2]
My client’s evidence and that of people who worked for the husband at the time the trial will be the man in charge, he had access to all the financial records. It’s unthinkable that he didn’t know that their sales had nearly tripled in the space of financial year. It’s a very strong case of misrepresentation.
[2] Transcript in Confidence, 16 April 2020, p. 35, 38-42.
As indicated, the consent order was made on 14 June 2007 and the wife initiated proceedings to set aside that order on 12 September 2017.
In the course of proceedings a property owned by the husband was sold realising $3.6 million. Pursuant to an Order made on 6 September 2018, the husband has had $1.8 million of the proceeds of sale and $200,000 was directed to a taxation liability of the husband. The balance, now about $1.8 million, is held in the trust account of the husband’s solicitors.
Orders sought by the husband and wife
Relevantly the husband seeks that monies held in trust be distributed to his solicitors and payment of costs of various legal actions and the payment of the balance to himself. The payments sought by the husband total $2,412,190 which amount exceeds the amount held in trust. In discussion with counsel it was agreed that, if I acceded to the husband’s application, the monies were to be disbursed in the order of priority set out in the husband’s application.
The wife sought the following orders:
1. That the applicant in a case of the respondents (“the interim application”) filed on 9 April 2020 be dismissed.
2. That pursuant to s 117 of the Family Law Act 1975, order 2(e) of the orders made in these proceedings on 6 September 2018 (“the September 2018 orders”) be varied to provide as follows:
(a)That Kennedy Partners Lawyers may apply and pay the sum of $200,000 (“the lump sum”) from the funds invested by that firm pursuant to the September 2018 orders with the National Australia Bank (“the invested funds”) towards the legal costs of the applicant in these proceedings;
(b)That the lump sum be characterised as a payment of interim costs by the respondents to the applicant;
(c)That the invested funds otherwise remain invested until further order in these proceedings; and
(d)That the September 2018 orders otherwise remain in full force and effect.
3.That the respondents pay the costs of the applicant of and incidental to the interim application and this response.
4. Such further and other orders as this Honourable Court thinks fit.
Discussion
I will determine the husband’s application, filed first in time, and then the wife’s application.
Husband’s application
The Court’s power to make orders enjoining the husband’s use of the funds is s 114(3) of the Act, which enables the Court to make such order or grant such injunction where it appears to the Court to be just and convenient to do so.
The husband wants to pay for legal costs for proceedings in which he is involved, personally and/or through entities associated with him. The funds held in trust are, in every sense, the husband’s funds. There has already been an alteration of property interests as between the husband and the wife. The wife must set aside the final property order before she can assert an entitlement to any of the husband’s property. If the husband applies the funds he seeks to legal costs, it is conceded that he still has adequate real and personal property to meet any order the Court could make in favour of the wife.
The wife contends that if the husband has access to his funds for legal costs, there will be no cash funds from which even part of the wife’s eventual claim can be satisfied and that real property would most likely have to sold to satisfy what, if any, entitlement she has. The wife would prefer to be able to attach some cash immediately after judgment, even if only in partial satisfaction of her entitlement with any further funds due to her coming from the orderly sale of other assets of the husband. As Mr Wilson put it, retaining some of the invested funds would:[3]
…achieve an appropriate balance in my submission so that if my client is successful there’s a cash sum available to go to meet part of her entitlement. Not the whole of her entitlement but part of her entitlement. And, of course, if your Honour makes no order for costs in my client’s favour today, as soon as the case is finished and she succeeds as we contend that she will, she will be in need of cash to pay her lawyers for the work that they’ve done, if they were, as your Honour puts it, to punt on it.
[3] Transcript in Confidence, 16 April 2020, p. 40, 23-29.
I can see why preservation of the funds meets the wife’s convenience and that of her solicitor. However, depriving the husband of the use of funds to which he is entitled is not just and convenient vis a vis the parties, within the terms of s 114(3) of the Act, particularly as the wife concedes that the husband does not have access to other cash with which to pay his legal costs or an ability to borrow at this time.
Mr Wilson submitted that, if I acceded to the husband’s application for release of funds, “there won’t be enough money; the cash will all be gone. What [the wife] will have to do is get an order and hope to execute it against one of his properties.”[4] However, it is conceded that the husband has a current net worth of more than $11 million. Mr Wilson does not submit that there will be insufficient funds to satisfy his client’s claim, merely that she will have to await the sale of property by the husband to realise her entitlement. Mr Puckey informed me that the most likely property to be sold, if needs be, would be one described as the “V Street” property as at para 33.2 of the husband’s affidavit in support of this Application. The husband deposes that based on a recent valuation for the purposes of these proceedings, V Street is valued at $4,610,000.
[4] Transcript in Confidence, 16 April 2020, p. 30, 36-38.
It would not be proper to deprive the husband of the use of his funds at this point in time in order to preserve a cash fund for the wife to access if, or when, an order for a further alteration of property interests is made in her favour.
I take into account that the husband is already had an amount equivalent to the invested funds accessible to him and that he is used some of that to pay legal costs. That was $1.8 million. However, the husband has been involved in litigation on all fronts and his legal costs are very significant. There are orders preserving assets which could be accessed by the wife in the event that she succeeds.
I conclude that it is not proper for the husband to be restrained from using his own funds at this time. I will accede to the husband’s application subject to my consideration of the wife’s cross application that some of the funds be paid to her.
Wife’s application
The wife seeks that $200,000 of the husband’s money in trust be paid to her, to be applied to her legal costs in this case. The wife relies solely on s 117 of the Act which enables the Court to make such order as to costs and security for costs as the Court considers just. In Strahan & Strahan (Interim Property Orders) [2011] FamCAFC 126 the Full Court considered the exercise of the Courts costs power to make a litigation funding order. Consistently with Strahan’s case and within the framework of s 117, I must consider the disparity of financial circumstances and each parties’ respective ability to meet their own costs.
Relevantly, s 117(1) of the Act provides that, subject to s 117(2), each party shall bear his or her own costs. Section 117(2) provides that where the Court is satisfied that there are circumstances which justify an order for costs, the Court may, subject to s 117(2A), make an order that one party pays the costs of the other party. Section 117(2) is silent on the matters which may inform the Court’s deliberations about the justification for a costs order to be made. I will take into account matters raised which are relevant and not extraneous.
If I am satisfied that an order for costs should be made at this time, I have regard to the matters set out in s 117(2A) when considering what (if any) order should be made as to costs. I infer that I can have regard to all the relevant matters described in s 117(2A) when considering whether the circumstances of the case justify a costs order under s 117(2) of the Act.
Counsel for the wife relies principally on the vast disparity in the financial circumstances of the parties to justify an order for costs within the meaning of s 117(2).
Counsel for the husband opposes the relief sought by the wife on the basis that it amounts to an application for indemnity costs. That is to give the wife $200,000 on the basis that she will pay her outstanding costs means that the wife has her costs paid as charged rather than any lesser bases such as a party/party costs. Counsel for the wife did not demur from the proposition that the more exacting test justifying indemnity costs was not made out in this case. Instead, he submitted that the application by the wife for $200,000 to pay $200,000 in legal expenses does not amount to indemnity costs in circumstances where the wife has already paid some $400,000 in legal costs. His point was that the $200,000 is to be looked at in the context of the wife’s overall costs liability which will be, according to her solicitor’s estimate of costs, in excess of $600,000.
Mr Wilson submitted, and I accept, that the wife has no income, no ability to borrow against the security of the home. The wife is almost 70 years of age, she is applying the Centrelink benefits, she has health difficulties. However, the wife has had the same legal practitioners throughout these proceedings. Presumably, the legal practitioners have known her financial situation as she has sworn a number of documents prepared by them in that regard. I do not understand how some greater proportionality of costing was not brought to bear in this case when they have already billed and received the not insubstantial sum of $400,000 in legal costs. The practitioners have been under a duty to keep the wife advised of her liability for costs both at various intervals as well as an estimate of all anticipated costs. None of the wife’s circumstances could take her practitioners by surprise.
Counsel for the husband submitted that the wife likely has had access to more funds than she has seemingly accounted for, but I cannot conclude that is the case. In any event, it was not put that the extra money equated to $200,000.
Mr Wilson submitted that the implication of no monies flowing to the wife at this time could be dire, in terms of her ongoing representation, but quickly qualified that position to be that the wife being left without representation for the final hearing is only a “theoretical possibility”. The about-turn was in the context of his instructor, Mr Spender, having stated in his affidavit for this application that:
10. I say Kennedy Partners is unable to continue acting for the wife unless arrangements are put in place for fees outstanding to Kennedy Partners to be paid and for the anticipated fees through to the conclusion of this trial of this matter to be paid.
It does not make sense to me that Mr Spender’s statement is merely a “theoretical possibility”. Where, as here, the wife’s solicitor swears to one proposition in absolute terms and counsel for the wife all but negates his instructing solicitor’s evidence on this point, I cannot be satisfied that the wife’s ability to be legally represented is conditional upon the wife putting her solicitors in funds to the extent sought or at all.
Mr Wilson pointed to the husband’s solicitor having made a statement similar to Mr Spender’s paragraph above. The husband’s position is clearly distinguishable from that of the wife. The husband cannot pay his legal costs at this time but could do so if he has access to the balance of the enjoined funds (which is what he seeks). There is no inconsistency with the evidence of the husband’s solicitor and Mr Puckey’s submissions.
Mr Wilson confirmed that, if the wife is unsuccessful in this proceeding, she will have to sell her modest home to pay her further legal costs as well as face a potential application by the husband that some or all of his costs be paid by the wife. Furthermore, that if the wife is unsuccessful in her s 79A application the husband would then have to seek an order against the wife for repayment of the $200,000 she now wants paid to her. In short, the wife’s case was not put on the basis that she should have $200,000 now and the husband can be assured of having that money repaid to him later regardless of the outcome of the proceedings.
Mr Wilson referred me to the Full Court’s decision in Strahan’s case as authority for the proposition that I need not be unduly concerned that the wife seeks a costs order in an amount which could exceed her eventual entitlement. Counsel for the wife quoted from the Full Court’s reasons:
95. While the conclusion in relation to the uncertainty of the amount of the applicant’s eventual property settlement may be fatal to an application under section 80(1)(h), it is not necessarily so to an application under section 117(2). It is just one of the matters to be balanced in the exercise of the discretion under the latter subsection.
Taking the above matters into account, I am not satisfied that the circumstances of this case, viewed as a whole and in the context of s 117(2), justify an order for costs being made in favour of the wife at this time. However, in case I am wrong, I will look at what order (if any) could be made.
I have regard to the matters to which I am directed by s 117(2A) of the Act. That includes the disparate financial circumstances of the husband and the wife (s 117(2A)(a)). That is not simply a comparison of current income and capital positions; in which respect the husband is in a far superior position to the wife. The husband can pay some monies on account of his own costs by virtue of the injunction being dissolved. The husband’s capital position exceeds the wife’s position by a factor of fifteen. He receives regular income. On the other hand, the wife is yet to meet the threshold issue of setting aside the final property order made in 2007. There is no guarantee that the Court’s power to adjust property interests will be revived and any further order made in her favour.
Section 117(2A)(a) requires that I look at the parties respective financial circumstances now and prospectively, particularly as the wife is not offering and security for the repayment of the $200,000 if her case fails and she recovers nothing. I distinguish between cases where reliance is placed on the costs power for litigation funding where the party seeking the funds is going to obtain some adjustment in his or her favour and proceedings, like this, where a threshold issue means that it is conceivable that the proceedings could be concluded with the applicant having no further entitlement.
Mr Wilson submits that the wife’s case, to set aside the extant order and have the court re-exercise its discretion in her favour, is “a strong case of misrepresentation”. If that is the view of his instructing solicitors, it is open to them to back their instinct and take a chance on the wife’s claim. Finally, it is conceded that, if the wife is wholly unsuccessful at the final hearing, she will oppose any application of the husband for costs on the basis of her significantly inferior financial circumstances and that any costs order would, together with payment of her own costs, require her to sell her modest home.
Neither party is in receipt of assistance from a legal aid body (s 117(2A)(b)).
I was not addressed on the conduct of the parties to various issues in the proceedings (s 117(2A)(c)) as being a relevant factor. I note, however, that the wife’s application is by way of a response to the times abridged Application in a Case of the husband. Mr Puckey, for the husband, asked me to infer that the wife would not have sought $200,000 if the husband had not initiated this round of interlocutory proceedings, that the wife would have been content to proceed on the basis that the husband’s invested funds remained intact and beyond his reach until a final decision. I will not draw that inference in its entirety, but I note that the wife did not issue first, her case requires preparation and the final hearing in in July 2020.
These proceedings were not necessitated by the failure of a party to comply with previous orders (s 117(2A)(d)). Likewise, s 117(2A)(e) considerations do not figure in these applications.
I was not addressed on any offer to settle these interlocutory proceedings as contemplated by s 117(2A)(f).
In relation to any other relevant matter (s 117(2A)(g)), I take into account that it appears as though the wife and the wife’s practitioners may not have paced themselves well and rationed the wife’s financial resources prudently. The wife has already sold real and personal property to pay her lawyers a sum just shy of $400,000 less $13,000 paid by the son of the husband and wife on behalf of his mother. Instructions given and advice received between the wife and her solicitors about costs is not accessible. The wife bears the onus of persuading me to make the order she seeks because it is just and convenient to do so.
At the end of his submissions, Mr Wilson sought, in the alternative, that the wife be paid $80,000 from the husband’s funds in trust to ease her financial burden to pay costs for the trial. Mr Wilson said, “…and then she would have to find another way to raise the other $120,000.” The sum of $80,000 was said to be the wife’s costs calculated on a party/party basis on scale which Mr Wilson said would be about 40 per cent of the wife’s actual costs. I do not accept that scale costs would be $80,000. Moreover, a lesser amount of costs still offends the fact that the wife has yet to re-enliven the Court’s power to further adjust property interests.
Mr Wilson submitted that to deny the wife $200,000 from the invested funds at this time is:[5]
…not an appropriate approach in a case where the litigation is complex, and both sets of instructing solicitors say that they require proper arrangements for payment of their fees. [The wife] is not asking for anything more than the husband can easily avail himself of.
However, he omitted to support the submission with any legal principle.
[5] Transcript in Confidence, 16 April 2020, p. 30, 25-29.
It is common ground that the husband has already paid $1.3 million in legal costs, mostly for other proceedings in which he is involved but to the same firm of solicitors who act for him in this case. There was the following interchange:[6]
MR WILSON: […] But it’s important that your Honour remembers that that represents 50 per cent of the assets that have been sold and the money invested in accordance with the order. So he has already had an equivalent amount of $1.8 million, the sale of assets since the commencement of these proceedings and the only evidence he tells us about where that’s gone is he says, I spent $1.305 on legal costs. So there’s another half million dollars during the currency of these proceedings the husband has had that he gives no explanation as to where that has gone, and again ‑ ‑ ‑
HER HONOUR: Mr Wilson, you’re losing sight of the fact that it’s his money for goodness sake.
MR WILSON: I agree. It is his money, your Honour, but what it demonstrates is the ease with which he can conduct these proceedings. His much superior financial position against my client who is applying for Centrelink benefits and has a modest home.
HER HONOUR: And she will have the company of two instructing solicitors to run her trial and she won’t even be with either of them because she will be in Tasmania. Come now, Mr Wilson.
MR WILSON: Your Honour, in my submission, she meets the criteria for a cost order pursuant to section 117 because of the disparity in the parties financial circumstances and the injustice of saying to her: well, that’s your problem; you talk to your lawyers or you represent yourself. In my submission, that’s not an appropriate approach in this case where the husband is in so much a better position than the wife.
HER HONOUR: Okay. I’m not saying to her run your own case; your instructors are saying that, and they’ve said it in paragraph 10 of Mr Spender’s affidavit sworn a few days ago.
[6] Transcript in Confidence, 16 April 2020, p. 33, 3-33.
It is more appropriate for the wife to look to her solicitors to conserve costs for the forthcoming trial than it is for her to require the husband to pre-pay those costs as contemplated by her application.
Having regard to all relevant s 117(2A) factors, I am not satisfied that any order requiring the husband to pay the wife’s costs in the sum of $200,000 or any other amount is justified or just at this time.
Extension of time for wife to file trial material
The wife is required to file any amended application initiating proceedings and her affidavit evidence (from all expert and on expert witnesses) by 11 May 2020. Counsel for the wife sought an extension of time in which the wife could comply by 14 days, making the due date of her documents 25 May 2020. It was proposed that the husband would then be able to respond by 2 June 2020.
At the hearing of this matter I indicated that I would not be extending the time in which the wife has to comply. Costs in this matter appear to be accumulating disproportionately. Quite frankly the wife cannot afford to have the lawyers working for an extra 14 days preparing documentation. I am concerned about the amount of costs incurred in this matter and will revisit the topic at the final hearing.
Notifications as to costs
I directed that each party be provided with a notification of costs by 22 April 2020, which was prior to the than proposed date for the parties’ private mediation. The parties then changed the date of the mediation to be earlier than the date specified for delivery of the costs notification. The practitioners for the wife provided the wife with the notification prior to the recent mediation as contemplated by my direction. The husband’s solicitors did not.
Apart from my direction, Part 19.2 of the Family Law Rules 2004 (Cth), requires legal practitioners to provide a costs notification to their client and a copy of it to the Court and the other party before each Court event. Even if the mediation was not construed as a “court event”, this interim hearing is a Court event for the purpose of r 19.04(3) Family Law Rules 2004 so a costs notification should have been generated for the husband.
The husband’s practitioners must still comply with my direction for the filing of notification as to costs. I will not look at the notification for the purpose of this decision but it will be served on the other parties and remain on the court file for the final hearing.
Case management
I have already informed the parties that this matter can, and most likely will, be heard electronically using the Microsoft Teams platform. Participants need an electronic device which is video and audio capable and have an email address. Participants do not need to purchase any software but it is essential that the participants have a reliable internet connection.
No parties, practitioners or witnesses will be able to attend the Melbourne Registry of the Court. My Chambers will support the parties’ use of court books from which documents may be tendered into evidence. Any party relying on a court book is to ensure that the pages are sequentially numbered. I have already excused the parties from compliance with the rules in relation to annexures. If an affidavit is not accepted on the Court’s portal because of annexures, the body of the affidavit should be filed and the annexures emailed promptly and separately to my associate (and any party to be served). My Associate will put the annexures with the affidavit. Any annexures must be sequentially numbered.
Where practicable, documents produced on subpoenae and released for inspection will be paginated, scanned and distributed to the practitioners for each party. The practitioners will receive the guidelines for witnesses who give evidence remotely. Close attention should be paid to those guidelines.
Any objections to affidavit or documentary evidence are to be the subject of discussions and, if necessary, determination by me well prior to the start of the final hearing. I will not waste a day dealing with strike out applications when all practitioners know what constitutes admissible evidence (and what does not).
This matter was set down for final hearing before me to commence on 22 June based on an estimate of the hearing time of five days. Counsel for Mr and Ms Rametta now say that it is likely to take longer than five days. They would like a further week.
Counsel for Mr Rametta said that, in any event, it may not be practicable to complete the hearing in one sitting. It was suggested that, on one scenario, we might get some three or four days into the final hearing and not be able to identify the husband’s assets and liabilities such as is required for me make a finding under s 79A or a consequential order for an alteration of property interests. Mr Puckey also stated that it might be necessary to adjourn these proceedings part way through, “depending on the outcome of the Supreme Court proceedings which will potentially have a significant impact on the financial circumstances of the husband.” Mr Wilson, for the wife, submitted that his client should be assured that the case can be finished before she is required to start the case. I agree.
I made clear to the parties that I am not prepared to commence a trial that cannot be completed in one sitting or such other dates as are convenient to the Court. A split hearing must be approached with caution. A split hearing is usually juridically unfair to the parties and to the Court and usually prejudices one party more than it prejudices others. It can mean that a party’s case is closed whereas the other party is advantaged by a break before being required to present his or her case. It may also be that cross examination or evidence in chief of a party is incomplete by the time the first tranche of hearing dates concludes. In this situation a party, including the second and third respondents, would not be able to give instructions on the conduct of the case or even enter into negotiations through their legal representatives because of the general prohibition against witnesses discussing proceedings partway through their evidence. Routinely, all parties want another bite of the cherry during the second tranche of the proceedings.
I have informed the parties and their legal representatives that, at this juncture, it would be relatively easy for me to find hearing dates for the case later in the year. None wanted a later date for trial. Further, if there is any doubt that the matter cannot be completed in one, albeit extended, sitting, it should not be commenced.
If counsel commence the final hearing, they are warranting that there is enough evidence for me to determine all matters in issue between the parties. If the legal representatives of the parties are not confident that the final hearing can commence and conclude in the sittings commencing on 22 June 2020, they should seek an alternate listing now. The last thing these parties need is to incur costs which are wasted.
I have considered whether the parties should be directed to attend a further mediation. They have already had two mediations, the most recent being the day before this hearing with Mr Dickson QC. A foundational concept in Australian family law is to encourage parties to reach a principled resolution themselves and thereby conserve the emotional and financial expense of a hearing and having to wait out any delay until judgment. I have already expressed concern about the amount of costs incurred in these proceedings. The costs notification of the wife for all the conduct of the proceedings, including the conduct of the mediation, has been an eye-opener. I am confident that the husband’s costs notification would have been equally illuminating had it been prepared (as it should have been). The last mediation cost the wife some $47,000. Considering the Court’s responsibility to ensure that each case is resolved in a just and timely manner and at a cost to all parties and the court that is reasonable, I will not incentivise Mr and Ms Rametta’s participation in a third mediation.
Costs of this application
In Ms Rametta’s Response to an Application in a Case, Ms Rametta seeks an order that the husband pay her costs of this application on an indemnity basis. The husband makes no application for costs this application filed on 1 April 2020 or this day.
Any party who wishes to make or press an application for costs can do so in accordance with the timetable I have ordered. I excuse them from filing a specific application for costs and will take their evidence in the next affidavit which he or she files.
I have not had the benefit of argument from counsel in relation to costs. I have an open mind, but the unusual and exceptional circumstances which would necessarily attract an order for costs to be awarded on an indemnity basis are not apparent to me at this time. I may well be satisfied after receiving submissions.
In the meantime, I note that it is inappropriate to seek orders which are inflammatory and without justification. Neither the parties nor the Court are assisted by ambit claims. I suspect that a client who reads an application drafted by their solicitor for indemnity costs assumes that there is a realistic prospect of them being awarded such costs and may even be consoled by the belief that they will be relieved from paying costs as set out in the costs notification. If the application is made in the exercise of professional judgment for principled reasons, it can be argued and determined. However, if an indemnity costs order it is part of a pro forma application adopted through a lack of zeal, that is unprofessional and any such practice should cease.
In the event that either party seeks an order for costs, the applicant and respondent to that application should include in their submission the basis on which their solicitor considered that it was appropriate to make an application for indemnity costs as opposed to party/party costs and do so regardless of whether costs are still sought on that basis or at all.
Conclusion
I am satisfied that this Order is proper within the meaning of s 114 of the Act vis a vis the relief granted to the husband. I consider that the refusal of the wife’s application is a just outcome within the meaning of s 117 of the Act in the particular circumstances of this case.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 19 May 2020.
Associate:
Date: 19 May 2020
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