RESTIC & CARLTON

FAMILY COURT OF AUSTRALIA

RESTIC & CARLTON

[2013] FamCA 124

FAMILY LAW – PROPERTY – Sale or retention of real property – Payment of outstanding Line of Credit accounts for pool property – Whether repayments to maintain Line of Credit account ought be borne jointly

FAMILY LAW – COSTS – Whether indemnity costs ought be granted – Absence of any ‘exceptional’ circumstances

Family Law Act 1975 (Cth) s 117(2A)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
D & D Costs (No. 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin & Limousin (Costs) (2008) 38 Fam LR 478

APPLICANT:

Mr Restic

RESPONDENT:

Ms Carlton

FILE NUMBER:

BRC

10903

2011

DATE DELIVERED:

1 March 2013

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Hogan J

HEARING DATE:

18 February 2013

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Self represented

COUNSEL FOR THE RESPONDENT:

Mr Cooper

SOLICITOR FOR THE RESPONDENT:

Emerson Family Law

Orders

IT IS ORDERED THAT

The Application in a Case filed 29 November 2012 is dismissed.

AND IT IS FURTHER ORDERED PENDING FURTHER ORDER THAT

The Applicant cause to be paid, within seven (7) days of them becoming due and payable, all monies payable to Bank of Queensland in respect of the parties’ joint Bank of Queensland Line of Credit facility identified by account number …72;
In the event that there are, as at the date of this Order, any arrears owing by the parties to the Bank of Queensland pursuant to the joint Bank of Queensland Line of Credit facility identified by account number …72 the Applicant shall cause such arrears to be paid within fourteen (14) days of the date of this order.
In the event that the Applicant fails to pay all monies owing to the Bank of Queensland by the parties pursuant to the joint Bank of Queensland Line of Credit facility identified by account number …72 within seven (7) days of each such amount becoming due and payable, the Respondent shall be at liberty to list for sale by private treaty, at her nomination, any of the following properties:
(a)C Street, Suburb D in the State of Queensland;
(b)B Street, Suburb A in the State of Queensland;
(c)E Street, Town F in the State of Queensland;
(d)G Street, Suburb H in the State of Queensland.
For the purposes of appointment of the said agent, within seven (7) days the Respondent shall provide the Applicant with a name, professional address and phone contact number for three (3) agents for the sale of each of the four (4) properties.
The Applicant shall nominate one (1) of the proposed agents for each property to undertake the sale.
In the event the Applicant fails to nominate an agent within seven (7) days, the Respondent shall nominate the agent for each property.
The parties shall then do all things and sign all documents within fourteen (14) days of the agreement to the appointment to have the properties listed for sale by private treaty.
The properties shall be listed at a price as agreed between the parties, or in the absence of agreement within seven (7) days at a price nominated by the real estate agent appointed to undertake the sale.
For the purpose of the sale, the parties shall each co-operate in every way with the agent including, but not limited to:
(a)making keys available to the agent;
(b)allowing inspection of the properties at all reasonable times requested by the agent;
(c)doing or saying nothing to hinder or prevent a sale being effected;
(d)ensuring that the properties, including the grounds, are to the extent practicable in a neat and clean condition at the time of inspection by the agent and prospective purchases; and
(e)signing all documents requested by the agents in relation to the listing for sale of the properties except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
The parties shall each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the parties.
In the event the parties are unable to agree upon a solicitor to undertake the sale of the properties then:
(a)The Applicant shall provide the Respondent with a panel of three (3) law firms to undertake the said conveyancing with the Respondent to nominate one (1) of the proposed firms to undertake the said sale for all the properties; and
(b)In the event the Respondent fails to nominate a firm within seven (7) days of receiving the information referred to above, the Applicant shall nominate the said firm.
The parties shall jointly instruct the solicitor/conveyancer and such instructions shall be in writing and that no verbal instructions shall be provided to the solicitor/conveyancer and/or the agent from the parties and/or any third parties.
In the event any property is not sold by private treaty within a period of eight (8) weeks from the date of listing, then:
(a)the parties shall list the property(s) for sale by public auction with the agent;
(b)the reserve price for the purpose of the auction shall be agreed and failing agreement, at a price nominated by the real estate agent appointed to undertake the sale;
(c)in the event that the bidding at the auction does not reach the reserve price, the parties may negotiate with the highest bidder and any other interested person and effect the sale of the property at a price which is not more than 5% below the reserve price or as agreed by the parties;
(d)if the property remains unsold, the parties shall do all acts and things and sign all documents necessary to immediately re-list the property for sale by auction again on a date nominated by the agent, but within six (6) weeks of the date of the auction;
(e)the reserve price for the auction above shall then be agreed by the parties and failing agreement, shall be at a price nominated by the real estate agent appointed to undertake the sale.
Upon completion of the sale of a property or the properties pursuant to these Orders or otherwise, the parties shall do all acts and things necessary to cause the proceeds of the sale to be paid and distributed in the following manner and priority:
(a)payment of fees due for the nominated real estate agent, their commission and legal costs and disbursements incurred in relation to the sale
(b)payment of all monies owing to any mortgagee in relation to any loans secured by the mortgage registered on the title of the property;
(c)in adjustment of rates if any;
(d)unless otherwise agreed, the balance being invested in an interest-bearing account via Emerson Family Law, Solicitors, with any funds to be released to the parties only on written agreement from the parties, or further Order of the Court.
The Applicant pay or cause to be paid as and when such payments fall due, in relation to all real estate owned by the parties or either of them, all mortgage repayments, insurance premiums, maintenance costs, council rates and water rates.
The Applicant continue to pay the premium levied by Medibank Private Health Insurance Policy (“the Policy”) fees in order to maintain the Respondent’s entitlement to such cover under the existing Policy and he is further hereby restrained from taking any steps to cancel the Policy which is currently in existence.
Save in accordance with paragraphs 14 to 15 above, each party is, unless otherwise agreed between them in writing, hereby restrained from transferring, assigning, granting any charge or mortgage over, further encumbering or otherwise dealing with all of their right, title and interest in the following properties:
(a)C Street, Suburb D in the State of Queensland;
(b)B Street, Suburb A in the State of Queensland;
(c)E Street, Town F in the State of Queensland;
(d)G Street, Suburb F in the State of Queensland;
(e)I Street, Suburb D in the State of Queensland.
The Applicant pay the Respondent’s costs of and incidental to the Application in a Case filed 29 November 2012 on a standard basis and, if agreement is reached as to the amount to be paid, such payment to be made within twenty-eight (28) days of the agreement.
In default of agreement as to the amount of costs payable by the Applicant pursuant to this Order, such costs be assessed on a standard basis and paid by the Applicant within twenty-eight (28) days of the Applicant being provided with a copy of the assessment.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: (P) BRC 10903/2011

Mr Restic

Applicant

And

Ms Carlton

Respondent

REASONS FOR JUDGMENT

Whilst the Applicant and the Respondent are not in agreement as to the value of the properties described in the Application before the Court, the Respondent estimates that they have a combined value of about $1,600,000.00. Whatever their actual current value, the parties are indebted in the amount of about $1,020,000.00.
The Suburb H property (valued by the Respondent at about $230,000) and the Town F property (valued by the Respondent at about $50,000) are not the subject of mortgage. The Suburb A property (valued by the Respondent at about $320,000), the I Street property (valued by the Respondent at about $550,000) and the C Street property (valued by the Respondent at about $450,000) are the subject of mortgage held by the Bank of Queensland and represent the security which supports the Bank of Queensland Line of Credit facility …72 (“the Line of Credit facility”).
The Applicant remained living in the I Street property after the parties separated and continues to reside there. The remaining properties are rented. All rental receipts are deposited in the Line of Credit facility and used to meet the repayments to the facility itself as well as to pay the costs associated with the ownership of the properties.
The Applicant does not want to sell any of the properties and seeks to retain all of them in the property settlement proceeding between the parties.
In February 2012 (after the separation of the parties), the Respondent withdrew the sum of $45,000 from the Line of Credit facility. Following this, the Applicant withdrew about $45,000 from the Line of Credit facility which took it to its limit. The Applicant retains, in a bank account in his name, the sum of $33,785.77 which is mostly sourced from his withdrawal.
On 17 April 2012, Spelleken FM ordered, by consent, that, until 1 June 2012 (when the parties were to attend a Conciliation Conference), the parties pay the amount of $588.16 each per week toward the expenses (which included mortgage repayments, rates, insurances, health insurances and water) and that they do so by payment of that amount into the Line of Credit facility.
Both parties complied with this Order.
The parties attended at a Conciliation Conference on 1 June 2012 but no agreement was reached. Further orders were made to facilitate the valuation of assets in preparation for a final hearing of the matter.
On 4 June 2012 the Respondent made a payment into the Line of Credit facility for the week of 1 June 2012. She has made no further payment since then. She asserts that her financial circumstances are such that she cannot afford to make a contribution to the Line of Credit facility and that, if the Applicant cannot (or will not) meet the entirety of the necessary payments and costs of owning the real properties, the properties should be sold and the nett sale proceeds used to reduce the level of joint debt.
On 8 June 2012, the Applicant made a payment into the Line of Credit facility in the amount of $588.16 and continued to make payments until 2 July 2012 at which time he ceased making any further payments.
Save for the payments referred to below (made periodically to bring the Line of Credit facility into account at certain times) the Applicant has made no further payments into the Line of Credit facility since 2 July 2012 and, as at 28 November 2012, the arrears owing in respect of the Line of Credit facility amounted to $3,099.05.
On 28 February 2013, the Applicant acted to bring the Line of Credit facility into order. He informed the Court that, as that was the case, it would be 60 days from that date before the Bank would take any action in relation to the facility.
The Applicant asserts that, as the Line of Credit facility is a joint liability, both parties should be required to bear equally the costs of the facility and the costs associated with ownership of the properties.

The Applicant’s Orders sought, case and submissions

By Application in a Case filed 29 November 2012, Mr Restic (“the Applicant” sought Orders that provide, in essence, that until further Order:
a)he and the Respondent pay all the expenses due and payable from the parties joint Bank of Queensland Line of Credit account …72 including but not limited to:
i)Medibank private health insurance fees;
ii)All outgoings including but not limited to the mortgage repayments, rates, insurance and water payable for the following properties as and when they fall due:
1.I Street, Suburb D, Qld – the property in which he resides;
2.C Street, Suburb D, Qld – rental property
3.B Street, Suburb A, Qld - rental property
4.E Street, Town F, Qld - rental property
5.G Street, Suburb H, Qld - rental property.
b)each party pay into the Bank of Queensland Line of Credit account …72 every Friday commencing from the Friday immediately following the date of the Order the sum of $588.16 per week each until a further order is made in respect to the payments outlined above;
c)with respect to the arrears of the Bank of Queensland Line of Credit facility …72 each party make such contribution to bring the Line of Credit arrears into line in proportion relative to contributions already made by the parties since the Order made 17 April 2012 in the Federal Magistrates Court;
d)with respect to items paid singularly by either party since 17 April 2012 with respect to items listed in paragraph 1 above the parties shall make contribution to the Bank of Queensland Line of Credit facility …72 so as to give a net result of 50:50 servicing of such expenses since 17 April 2012;
e)each party seeking contribution of funds to the Bank of Queensland Line of Credit facility …72 paid singularly by that party with respect to items listed at paragraph 1 above shall tender a list of the items within 14 days of the Order;
f)each party shall make a contribution to facilitate payment of the arrears of the Bank of Queensland Line of Credit facility …72 within seven (7) days of the tendering of the list such that the payment will facilitate equal servicing of the items listed;
g)neither party shall withdraw funds from the Bank of Queensland Line of Credit facility …72 for any purpose without written agreement from the other party other than for the purpose of facilitating payment of the expenses outlined in paragraph 1 above or facilitating payment of expenses in relation to the maintenance of the properties listed above.
The Applicant relied on the following material at the hearing of the Application:
a)an Application in a Case filed 29 November 2012;
b)his affidavit filed 29 November 2012;
c)a further affidavit sworn by him on 18 February 21013 (and filed by leave on 18 February 2013.
Whilst the Applicant took issue with the level and extent of disclosure made by the Respondent in the matter, no specific Orders were sought by him in the Application before me in relation to this matter.
During the course of the hearing before me, the Applicant asserted that, on the evidence, the amount of the required contribution to the Line of Credit facility was $491.00/week such that the Order he sought should be amended to reflect a payment of $245.50/week from each party.
The Applicant made the following submissions in support of his application:
a)he sought, by way of final order, property orders which would see him receive 99% of the value of 3 properties and 50% of the value of 2 properties;
b)that, in so far as the Respondent asserts that she is unable to afford to make any contribution, this alleged inability arises because of her decision to spend her money on ‘discretionary’ matters rather than on servicing the debt;
c)he did not want to place the properties on the market at present because it was not a financially appropriate time to dispose of them;
d)he was not asserting that he could not afford to meet the entirety of the payments required to keep the Line of Credit facility in order but rather that it was appropriate that both parties make repayments because it is a joint liability;
e)it would be a stretch for him to make the entirety of the repayments but he could do so;
f)he believed, given his assertion as to the Respondent’s failure to disclose documents to him, that she had placed funds into the Trust Accounts of the solicitors and that such funds could be used to meet the debt obligations;
g)that the Court should be prepared to infer, from the asserted lack of disclosure on the part of the Respondent, that she has available to her greater funds than she has disclosed;
h)that whilst the $45,000 withdrawn by the Wife from the Line of Credit facility may have gone, it has gone on paying for her lawyers;
i)that the Respondent has the capacity to meet repayments from funds under her control;
j)that the funds of corporate entities are not his funds as he is only one shareholder in such entities and there is another shareholder;
k)that not all the money shown in the table contained in the Respondent’s affidavit was money available to him;
l)that he used the cash at bank in the Bank of Queensland account …00 mainly to pay the monies due and owing to Bank of Queensland in respect of the Line of Credit facility and that this fund had, itself, come mainly from a draw down by him from the Line of Credit facility;
m)that since July 2012 he had made 5 payments totalling $9,220.50 in order to bring the line of Credit under its limit and protect the assets of the parties;
n)that he could, at the present time, act so as to bring the line of credit into order;
o)that it was appropriate that he have available for his use in meeting repayments to the Line of Credit facility monies drawn down by him against that facility but that the Respondent not benefit from this because she had squandered the money drawn by her from the Line of Credit facility;
p)that the Respondent has always had and retains a capacity to pay money into the Line of Credit facility but, because of an asserted lack of documents provided by her, he is unable to assess her capacity to pay;
q)that the Respondent could sell the motor vehicle she purchased in order to meet her obligations to the Line of Credit facility;
r)that the funds held by him (mostly sourced from the Line of Credit facility itself) should not be used to meet the ongoing obligations in respect of the joint Line of Credit facility because both parties have the capacity to pay and the point is that the Line of Credit facility is a joint liability.
The Applicant asserts that, as a consequence of him making payments in the amounts deposed to after 1 June 2011 he has paid $2,354.62 more into the Line of Credit facility than the Respondent. This ‘issue’ can be properly taken into account at the final hearing of this matter at which time the Court can determine how to treat this asserted additional contribution in all of the circumstances of the case including that the Applicant has continued to live in one of the properties used as a security for the Line of Credit facility whilst the Respondent lives in rented premises at a cost of $400.00/week.

The Applicant asserts that, at the time he swore his affidavit on 28 November 2012, he had not received any response from the Respondent in relation to correcting the over draw on the Line of Credit facility …72.
However, I find that the Respondent’s position about the manner in which the overdrawn Line of Credit facility was to be managed was made clear to the Applicant in the correspondence forwarded to him on 20 November 2012. It was, simply, a position with which he did not agree.

The Respondent’s Orders sought, case and submissions

In a Response to an Application in a Case filed 11 February 2013, the Respondent sought Orders that, in essence, provide that until further Order:
a)the Applicant notify the Court at the hearing of the Application whether he was agreeable to the sale of the properties situated at: C Street, Suburb D; B Street, Suburb A; E Street, Town F: and F Street, Town H;
b)in the event that the Respondent does not agree to the sale of the properties, he pay all outgoings (including but not limited to the mortgage repayments and including but not limited to the Line of Credit facility), rates, insurance and water charges in relation to the properties and the I Street property (in which he lives);
c)the Applicant continue to pay the Medibank Private Health Insurance fees.
The Respondent also sought, in the event that there was agreement as to the sale of one or all of the real properties mentioned above, that the Court make a series of machinery-style orders to regulate the manner by which such property was to be sold. The ‘machinery-style’ orders for sale sought are fairly standard in nature and would see any nett sale proceeds (being gross sale price received less costs associated with sale, repayment of loans secured by mortgage registered over the property, and payment out for adjustment of rates if any) placed into an interest bearing account with her solicitors and released only on the written agreement of both parties or further order of the Court.
Consistent with her position overall, the Respondent sought an Order requiring the Applicant to pay all expenses due and payable in relation to the properties pending their sale or the sale of any of them.
The Respondent also sought an Order which would restrain both parties, pending the finalisation of the matter, from further encumbering any of the properties without the consent in writing of the other party and that the Applicant pay her costs of and incidental to this Application on an indemnity basis or otherwise as ordered by the Court with there being a certification that Counsel’s appearance was necessary on the hearing of the Application.
The Respondent relied on the following material at the hearing of the Application:
a)a Response to an Application in a Case filed 11 February 2013;
b)her affidavit filed 11 February 2013;
c)her Financial Statement filed 11 February 2013;
d)the Applicant’s Financial Statement filed 15 February 2013;
e)the Applicant’s Financial Statement filed 24 January 2012;
f)an affidavit by Mr J affirmed 18 February 2013 (and filed by leave on 18 February 2013);
g)the Order of Registrar Stoneham made 30 October 2012.
The Respondent is currently on extended sick leave and is supported by payments from K Super Fund. This is not, as I understand it, disputed by the Applicant.
She says that she is struggling to meet her financial demands given her restricted income and further asserts that the constant financial pressure is placing a further burden upon her and creating further stress.
The Respondent asserts that:
a)at the time the order was made on 17 April 2012 she had the capacity to make some payments to the Line of Credit facility because she had available to her the sum of $45,000 which she had withdrawn from the Line of Credit;
b)that sum of $45,000 is now spent;
c)she did not have a credit card debt when she filed her previous Financial Statement on 1 December 2011 but now is indebted in the sum of $7,000.00.
The Respondent says that the Applicant has access to all the business finances and is in a position to meet repayments for the Line of Credit facility at least until there is a settlement between them.
The Respondent asserts that, after separation in September 2011, the Applicant transferred approximately $297,400 from business accounts and a line of credit account into an account in his own name. There is no documentary evidence before me to corroborate this assertion. She says that he told her that he had done this in order to prevent her from accessing the money held in those accounts.
Mr Cooper, who appeared on behalf of the Respondent made the following submissions in support of the orders sought by her:
a)she could not afford to contribute to the repayments required by the Line of Credit facility and so sought the sale of some or all of the investment properties (two of which are unencumbered) in order to pay down the level of joint indebtedness;
b)if the Applicant sought to retain all of the properties, he should meet the costs of retention as he is in a position to do so;
c)by virtue of the fact that the entirety of the rental monies are paid into the Line of Credit facility the Respondent is already contributing to the meeting of joint liabilities and cannot make any further contribution to the same;
d)whilst seeking a final order that would see him receive 99% of some the real properties, the Applicant is seeking an order that the Respondent be responsible for 50% of the cost of the same (including the costs of his residence whilst she is left to fund her own accommodation form her sole income);
e)that as long ago as 20 December 2012 the Respondent asserted that she could not afford to meet the liability and suggested that the parties dispose of a property and use the sale proceeds of the same to pay down some debt;
f)that the Applicant had, at the time he brought the Application, a clear capacity to pay the entirety of the amounts needed to keep the Line of Credit facility in order;
g)that the Applicant, as the controller of the parties’ property portfolio, the occupier of the former matrimonial home and an operator of the business, is in a significantly superior financial position compared to the Respondent who is, at present, in a precarious financial position;
h)the evidence clearly established that there is no way that the Respondent can make a weekly payment in the amount sought by the Applicant;
i)that in so far as the continued payment by the Applicant of the Medibank private health insurance cost is concerned, the evidence clearly established that there is no difference between the cost of the existing Policy and one from which the Respondent was removed;
j)that despite the assertion that the Applicant made on more than one occasion that he was willing to pay 50% of the monies required into the Line of Credit facility, he ceased paying completely after June 2012;
k)that the stance adopted by the Applicant in bringing the Application was one of ‘principle’ rather that common sense;

Discussion

The Court has the power to grant an injunction by interlocutory order or otherwise in any case in which it appears to the Court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the Court considers appropriate.
Whilst the Applicant originally sought an order requiring the payment by each party of $558.16/week into the Line of Credit facility and later adopted a figure of $245.50/week each, my further consideration of the figures sworn to by Mr Restic in his Financial Statement filed 15 February 2013, persuades me that the actual shortfall between total rental received from external sources (i.e. other than either of the parties) and the amount required to be paid into the Line of Credit is $413.32/week [being the total costs of $1,573.32 less the total rent received of $1,160.00]. Thus, an Order which required an equal contribution to the Line of Credit would see each party pay $206.66/week into the Line of Credit facility.
I accept and find that on 13 June 2012, the Respondent informed the Applicant by email[1] that, since she had very limited funds available to her, she could not continue to ‘keep up’ with the payments previously made by her to the Line of Credit facility in accordance with the Order made 17 April 2012 and further acknowledged that she understood that once the parties reached settlement ‘this’ would be adjusted since the Applicant would be paying the outgoings.
[1]Annexure ‘L’ to the Applicant’s affidavit filed 29 November 2012
I accept and find that on 3 September 2012, the Bank of Queensland emailed both parties advising that the Line of Credit facility had been overdrawn. A further email was sent to the parties on 2 October 2012 to the same effect.
I accept and find that on 2 October 2012, the Applicant received a telephone call from L Collection Agency advising that the matter of the overdrawn Line of Credit facility had been placed in their hands for ‘follow up’ and further that he advised L Collection Agency of, inter alia, his desire to continue making payments to the Line of Credit facility in the amount of 50% of that which was due and payable. I also find that, despite this asserted desire, he made no further payment to the Line of Credit facility at that time.
I accept and find that on 8 October 2012, the Applicant wrote to the Bank of Queensland[2] about the payment of the Line of Credit facility and reiterated his desire to continue paying into the facility an amount which represented 50% of that which was due and payable. I accept that he asserted this, while he was ready to make equal contribution to the facility, he would not do so unless the Respondent did the same and that unless she was willing to do the same, he ‘must decline’ the offer to bring the facility into line.
[2] Annexure ‘Q’ Applicant’s affidavit filed 29 November 2012
I find, I think importantly, that the Applicant did not assert to the Bank at this point that:
a)he could not afford to meet the entire obligation without the contribution made by the Respondent; or
b)he was financially incapable, by his own actions, of bringing the facility into line.
I accept and find that again, despite his reiteration of a desire to pay something toward meeting the Line of Credit facility, the Applicant made no payment at all at that time to the Line of Credit facility.
I accept and find that each week since 8 October 2012 the Applicant has been contacted by L Collection Agency in relation to the over-draw of the Line of Credit facility and that he has been asked when the facility will be brought into order.
I accept and find that on 20 November 2012, the Respondent’s solicitor informed the Applicant by email[3] that:
a)the Respondent did not have the capacity to make payments to the Line of Credit facility; and
b)as the Applicant had access to the ‘matrimonial business and its income’ he make the payments in the meantime or provide a proposal to sell one or more of the real properties in order to use the proceeds to reduce the Line of Credit facility; and
c)if he proceeded to file an Application, the Respondent would rely on the correspondence to seek costs on an indemnity basis (including the costs of Counsel who, it was advised, would be briefed to appear).
[3] Annexure ‘C’ to the Applicant’s affidavit filed by leave on 18 February 2013
I accept and find that on 21 November 2012, the Respondent’s solicitor forwarded correspondence[4] to the Applicant in which the Applicant was asked why, given his assertion that he could pay half of the payment, this had not occurred. Further, I find that the Applicant was put on notice in this correspondence that the Respondent would seek costs against him in the event that he sought to proceed with his foreshadowed Application.
[4] Annexure ‘LMC3’ to the Respondent’s affidavit filed 11 February 2013
I accept and find that by email correspondence dated 21 November 2012[5] the Applicant rejected the Respondent’s proposal to dispose of property to facilitate the servicing and reduction of the Line of Credit facility.
[5] Annexure ‘LMC4’ to the Respondent’s affidavit filed 11 February 2013
I accept and find that as at 28 November 2012, the Bank of Queensland informed the Respondent that the Bank did not intend to approve her request for financial hardship but that such application would be reviewed if a property was listed for sale with the aim of achieving an unconditional contract of sale to reduce the commitments to the Bank.
I accept and find that on 30 November 2012, the Respondent’s solicitor wrote to the Applicant attaching correspondence she had received from the Bank of Queensland (dated 28 November 2012). I also accept and find that, in this correspondence, the Applicant was asked to advise, by no later than 4 December 2012, whether he would pay the money due and payable to the Line of Credit facility and, if not, whether he agreed to the sale of the Suburb D and/or Suburb A properties in order to reduce the parties’ indebtedness.
The Applicant does not accept that the Respondent cannot make payments into the Bank of Queensland Line of Credit facility …72. He asserts that she has failed to provide bank statements and, as such, has not evidenced an incapacity on her part to contribute equally to the cost of maintaining the properties. He asserts that, despite numerous requests, he is yet to receive full disclosure from the Respondent and that this failure means that he has no way of determining whether, in fact, (as opposed to as is contended for by the Respondent) she has no capacity to meet the payments toward the Line of Credit facility in the amount and manner that he seeks.
However, I consider it apparent[6] that, by 24 November 2012, the Respondent had provided to the Applicant, amongst other things:
d)bank statements for the Bank of Queensland account numbered …68 for the period from 9 May 2012 until 8 November 2012; and
e)various statements for the ING account including statements from 1 January 2012 until 31 October 2012.
[6] Respondent’s affidavit filed 11 February 2013
Further, after correspondence dated 3 December 2012, and 14 December 2012 the Respondent’s solicitor, in correspondence dated 20 December 2012, asked, amongst other things, that the Applicant provide a list of documents that he asserted ‘remain not provided’ to him. Such document is not before the Court.
Given that neither party sought orders for further disclosure from the Court, it is unnecessary that I consider this issue further save to conclude that I am persuaded there was available to the Applicant, at the time the matter was heard by me, sufficient information from which to ascertain that the Respondent did not have the capacity to contribute to the Line of Credit payments. He simply considered, in essence as a matter or principle, that as the Line of Credit is a joint liability, each party should make equal contributions to it.
Even if I am wrong in these conclusions, I consider that:
a)the Applicant knew that he remained resident in the jointly owned I Street property (a property which provided security for the Line of Credit); and
b)the Applicant knew that the Respondent rented alternative accommodation at a cost of $400.00/week; and
c)the Applicant should have been aware, given the figures he deposed to in his Financial Statement filed 15 February 2013, that the shortfall to be met after the receipt of rental monies was $413.32/week in total– an amount eerily similar to that paid by the Respondent for the rental of the premises in which she resides.
Whilst the Applicant, in the affidavit filed by leave on 18 February 2013, lists the items he identifies as constituting ‘discretionary’ spending by the Respondent, as I pointed out to him in the course of the hearing, payments toward the maintenance of rental properties are, themselves, payments of a ‘discretionary’ nature in that they cannot be seen as payments necessary for the support of either party.
It is clear[7] that, in his period from 18 April 2012 until 19 November 2012, rental payments from the rental properties were deposited in the Bank of Queensland Line of Credit facility …72. These rental receipts are monies in respect of which both the Applicant and the Respondent have an interest as joint owners of the real properties used to generate the rental receipts. In addition, for the period covered by the Order made 17 April 2012, each party deposited the amount they were ordered to deposit.
[7] Annexure ‘J’ to the Applicant’s affidavit filed 29 November 2012
It is also clear that payments were made out from the Bank of Queensland Line of Credit facility …72 for expenses such as ABC Suburb D (presumably to meet the costs of daycare) Ezipay, some transfers out to other specified accounts, rates owing and small payments to a Bank of Queensland Visa card account.

It is clear, therefore, that both the Applicant and the Respondent have, in fact, been contributing to repayments made to the Line of Credit facility and to payments made in respect of the maintenance of their children and the properties.
The accretion of interest payable on the Bank of Queensland Line of Credit facility …72 in August[8] caused it to go ‘over the limit’ with the consequence that the parties became subjected to default penalty interest. This position repeated itself in September 2012.[9] Despite previous assertions made by the Applicant that he intended to pay 50% of the amount payable to the Bank in respect of the Line of Credit facility, the Applicant determined to continue with his approach that it was appropriate, because the Line of Credit is a joint debt, that the parties meet their obligations in respect of it jointly and equally. Consistent with this view, he maintained the position that he would make no payment into the Line of Credit facility.
[8] Annexure ‘M’ to the Applicant’s affidavit filed 29 November 2012
[9] Annexure ‘O’ Applicant’s affidavit filed 29 November 2012
The Applicant also refers to the Respondent’s transfer to her solicitors of an amount of $3,414.00 on 6 January 2013 as evidencing her capacity to make contribution to the joint liability.
However, the Respondent’s Bank of Queensland Day2Day Plus Account Bank Statement for the period from 9 December 2012 until 8 January 2012[10] establishes that the Respondent received a deposit of $3414.64 into her account from an ING account and this was then paid by her to her solicitor. Whilst the Respondent has an account with ING I am unable, on the evidence before me, to determine whether the funds deposited into her Bank of Queensland account represent the balance of funds drawn down by her from the Line of Credit or funds lent to her by a family member ($5,000 for legal costs[11]).
[10] Annexure ‘D’ to the Applicant’s affidavit filed by leave 18 February 2013
[11] Item 54 Respondent’s Financial Statement filed 11 February 2013
Irrespective of this, the Respondent swears, in her Financial Statement filed 11 February 2013 that the only funds at bank available to her at that time totalled approximately $1,121.00. There is nothing in the evidence before me to persuade me that I should not accept her evidence in this regard.
Excluding the rents from the rental properties and the expenses associated with them, the Applicant receives average gross weekly payment from the Restic Family Discretionary Trust of $1,617.00/week and $64.00/week Family allowance. He pays tax of about $245.00/week leaving $1,436.00/week available to him. His total average weekly expenses[12] listed under Part N are about $922.00 (inclusive of costs for the children of $272.50/week). On these figures the Applicant has about $514.00/week available to him. He has $33,785.77 in a Bank of Queensland account and $984.34 in an ANZ bank account. He has shares valued at about $4343.95.
[12] Applicant’s Financial Statement filed 15 February 2013

Excluding the rents from the rental properties and the expenses associated with them, the Respondent receives $1022/week (nett of tax) from an Income Protection Plan and Family Assistance Benefit payments. She pays $400.00 per week rent, $21/week for car and contents insurance, $16/week for motor vehicle registration and $150/week toward her credit card. Her total average weekly expenses[13] listed under Part N are about $594.00 (inclusive of costs for the children of $145.00/week). On these figures the Respondent has a deficiency of income compared with expenses. She owns a motor vehicle (which she values at about $15,000 and a Personal loan in the amount of $26,500 ($21,500 being referrable to the motor vehicle). She has credit card debt of $7,027.00.
[13] Listed in Part N of her Financial Statement filed 11 February 2013
As noted in paragraph 34 above, I am persuaded, on the Applicant’s Financial Statement, that the actual shortfall between total rental received from external sources (i.e. other than either of the parties) and the amount required to be paid into the Line of Credit to meet the Line of Credit facility repayments and the costs of insurance and rates is $413.32/week.
I find, on the evidence before me and as outlined above, that the Applicant has the capacity to meet the entirety of the payments required to keep the Line of Credit facility in order and also to meet the entirety of the costs of insurances and rates associated with the retention of the real properties as sought by him. I find, on the evidence before me, that the Respondent does not have the capacity to contribute to the repayments required to be made to the Line of Credit facility.
Consequently, I am persuaded that, in order to ensure the preservation of the properties pending trial so as to afford to the Applicant the opportunity he seeks (namely to retain all of the properties as part of a property settlement) it is just or convenient that I make orders in the terms of the Orders set out at the commencement of the Reasons for Judgment.
I am fortified in the conclusions I have reached and the Orders I have determined to make by the submissions made by the Applicant himself (as recorded in paragraphs 18d, 18e, 18m and 18n above) and the comment made by him during the course of the hearing to the effect that he was ‘willing to catch that’ (being a reference to meeting the entirety of the monies required to be paid into the Line of Credit facility in order to enable to retention of the property) but it would be a stretch.
Should the ‘stretch’ become too great, the Orders I have made should facilitate a proper disposal of some or all of the properties in order to reduce the debt burden for each of the parties.

Costs

Should the Applicant be ordered to pay the Respondent’s costs of the Application?

In the event that she was successful, the Respondent sought an order that the Applicant pay her costs of and incidental to the Application (including a certification for Counsel) on an indemnity basis and, if the Court was not persuaded as to this basis, on a standard basis.
Mr Cooper’s submissions in support of this part of the Respondent’s Application were as follows:
a)the Respondent had raised her inability to contribute toward the Line of Credit facility on about 20 November 2012 prior to the Application being filed;
b)the Application was doomed to fail and should never have been brought - the Applicant was made aware that this was the position the Respondent would take prior to the filing of the Application;
c)the Application could never have succeeded given the income disparity between the parties and incapacity on the part of the Respondent to pay anything more than the contribution she was making by directing her ‘share’ of the rental receipts to meeting the joint liability;
d)that whilst the Applicant is self-acting, this is no ‘shield’ to an order for costs should one otherwise be determined to be proper.
The Applicant opposed the making of any order for costs adverse to him for the following reasons:
a)he had been compelled to bring the Application because the Respondent did not want to engage in discussing a resolution of the matter with him;
b)the Application was necessitated by the Respondent’s failure to make payments toward the Line of Credit (a joint liability) after June 2012;
c)there is nothing in the conduct of this matter which would persuade the Court to divert from the usual position that parties bear their own costs;
d)he has acted for himself in order to minimise legal costs and should not then find himself in the position of having to pay the Respondent’s costs;
e)the Respondent had been given an opportunity to act (by paying money into the Line of Credit facility) to prevent the bringing of the Application and had failed to do so;
f)both parties have a joint responsibility to service the joint Line of Credit facility and that ‘responsibility’ was the point.
The general rule in proceedings under the Family LawAct 1975 (Cth) (“the Act”) is that each party bears his or her own costs. However, if the Court is of the opinion that there are circumstances that justify it in doing so the Court may, subject to certain considerations, make such order as to costs as the Court considers just.
In considering what order as to costs, if any, to make, the Court shall have regard to a number of specified matters prescribed by s.117(2A) of the Act.
As noted above, Mr Cooper submitted that the Applicant is in a significantly superior financial position to that of the Respondent. I accept this submission. I am satisfied on the material before me that the Applicant’s current financial position is stronger that that of the Respondent. I am also satisfied, given her level of income and the costs of legal proceedings so far (as evidenced by annexures to the Applicant’s affidavit) that the costs of this proceeding would impose a significant burden on the Respondent. I am also satisfied, given the Applicant’s assertion that he would seek to retain all of the properties (and assume the associated debt of some $1,020,000.00) that his financial circumstances are such that would not preclude me from making an order that he pay the Respondent’s costs if I were otherwise persuaded that circumstances justify such an order.
Neither party is in receipt of assistance by way of legal aid.
I am not persuaded that there is anything in the conduct of either party in the prosecution of their competing positions before me that is relevant to a determination of whether the circumstances justify a departure from the starting premise that both parties bear their own costs.
There was no order in existence at the time the Application in a Case was filed by the Applicant which required either party to make payments to meet a joint liability and, as such, this proceeding was not necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.
The Applicant’s Application in a Case was wholly unsuccessful. He was clearly put on notice from 20 November 2012 (prior to the time he filed the Application) and on occasion after that that the Respondent asserted that she could no longer afford to contribute to the payment of the Line of Credit facility. I have accepted this contention.

Given my findings as set out in paragraph 49 above, I am satisfied that the provision of documents and those described in the various attachments to the affidavits of the Respondent and Mr J is such that it is more likely than not that the Applicant had sufficient information to be able to determine not to press his ultimately unsuccessful Application. It was, as fell from him, not so much a matter of an inability on his part to ‘pick up the slack’ but a desire to ensure that the Respondent assumed, from his perspective, her share of the ‘responsibility’ for the Line of Credit facility.
Further, the Applicant’s own submissions to me clearly established that his case was not one of being unable to pay the full amount needed to meet the Line of Credit facility obligations but rather that he was unwilling to do so in order to see the Respondent bear her share of the ‘responsibility. I consider that he decided to put principle before practicality.
I find that the Applicant determined to bring the Application in a Case rather than accept either of the alternative proposals proffered by the Respondent, and in so doing acted unreasonably and caused the Respondent to incur costs which could easily have been avoided.
I accept the submission made by Mr Cooper that whilst the Applicant is self-acting, this is no ‘shield’ to an order for costs should the circumstances otherwise justify the making of such an Order.
For the reasons outlined above, I am satisfied that the circumstances are such as to justify the making of an order that the Applicant pay the Respondent’s costs of and incidental to the Application filed 29 November 2012.
I turn now to consider the basis upon which such costs should be paid.

Should the costs be indemnity costs?

Mr Cooper submitted that the following matters compelled the making of an order for indemnity costs:
a)the Application was filed without any or any “pre-procedure” type of notice;
b)the Respondent was only served with the Application on 20 December 2012 despite it being filed on 26 November 2012;
c)the basis on which the Application was brought by the Applicant (namely, because he determined it was appropriate that both parties contribute to the payments for the Line of Credit facility because it is a joint liability rather than because he also couldn’t afford to make the entirety of the repayments) was such that it warranted an order for costs on an indemnity basis;
d)the Respondent had acknowledged that, in the event that the Applicant met the entirety of the costs associated with the retention of the properties pending resolution of the property settlement proceedings between the parties, appropriate recognition of this contribution could be made at that time;
e)the Respondent had proffered a suggestion for the resolution of the issue (namely, the sale of property) which the Applicant refused.
The Applicant opposed the making of an order on an indemnity basis for the following reasons:
a)the Application was not ‘doomed to fail’ nor was it one that should never have been made;
b)the Respondent had funds available to her at the time she claimed she did not and she still retains the a capacity to contribute to the joint liability;
c)there was every reason for the Application to be successful;
d)this case was not exceptional in any relevant way so as to lead to an order for indemnity costs;
e)there were grounds to believe that the Application may well succeed.
I do not accept the contentions that there was every reason for the Applicant to believe that the Application would succeed. However, unless there are exceptional circumstances, an order for costs should be made on a party and party basis.
I have had regard to D & D Costs (No. 2) (2010) FLC 93-435 in which the Full Court reviewed extensively earlier authorities, including Limousin & Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.
There is no evidence before me to establish the actual quantum of costs which would be payable by the Applicant to the respondent if I was persuaded to make an order for indemnity costs.

I have concluded that, whilst the course adopted by the Applicant was ill-conceived and he imprudently refused an offer to deal, in a pragmatic and practical way, with the issue I have determined, I am not persuaded, on the evidence before me and given that the Applicant has appeared on his own behalf, that the circumstances of this case are ‘exceptional’ circumstances which warrant the making of an order for costs on an indemnity basis.

I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 1 March 2013.

.

Associate:

Date: 01 March 2013

[2013] FamCA 124

Key Legal Topics

Areas of Law

Family Law

Property Law

Civil Procedure

Legal Concepts

Costs

Jurisdiction

Remedies

Procedural Fairness

Appeal