Seow and Huat

[2020] FamCA 134

FAMILY COURT OF AUSTRALIA

SEOW & HUAT [2020] FamCA 134

FAMILY LAW – COSTS – Application dismissed for want of jurisdiction – Where the husband made an application for costs – Where that application was dismissed.

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

APPLICANT: Mr Seow

RESPONDENT: Ms Huat

FILE NUMBER: SYC 6862 of 2015

DATE DELIVERED: 26 February 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING: Dealt with in chambers by written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Winfield

SOLICITORS FOR THE APPLICANT: Wentworth Lawyers & Partners

SOLICITOR FOR THE RESPONDENT: Mr Stan

SOLICITORS FOR THE RESPONDENT: Jackson & Associates Solicitors

Orders

1. That the Response to Application in a Case filed on 13 December 2019, for the wife to pay the husband’s costs of her Application in a Case filed on 6 December 2019, be 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 Seow & Huat 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 SYDNEY

FILE NUMBER: SYC 6862 of 2015

Mr Seow

Applicant

And

Ms Huat

Respondent

REASONS FOR JUDGMENT

The proceedings

1. On 3 July 2019 I made final orders by consent for alteration of property interests, during the course of a trial.  Inter alia, these orders provided for a sale of the property C Street, Suburb D and a distribution of the proceeds.

2. Relevantly for present purposes, the Orders of 3 July 2019 provided as follows:

   2.On obtaining the Occupational Certificate the parties forthwith and no later than within 7 days the parties shall do all such acts and things and sign all such documents, instruments and authorities as are necessary to cause the property situated at and known as C Street, Suburb D in the State of New South Wales being all that land contained in Folio Identifier … to be placed on the market for sale at no less than $2,000,000 (being a price obtained from valuation) and the proceeds of sale be disbursed in accordance with Order 6 hereof.  Pending the sale of C Street, the Wife is solely liable to pay the mortgage interest to B Bank which mortgage is registered on C Street.

   ...

   6.From the sale of the property C Street, the proceeds of sale be disbursed as follows:

   a.pay any outstanding mortgage registered on C Street to B Bank;

   b.to pay the selling commission of the agent or reasonable auction expenses of the agent together with the reasonable auction expenses and promotional charges of the agent and auctioneer who effected the sale;

   c.to reimburse the parties equally as to the pre-paid reasonable commercial advertising and auction expenses and the costs of obtaining the Occupational Certificate;

   d.to adjust municipal rates and water rates with the purchase in accordance with the relevant provisions of the contract and pay any outstanding land tax;

   e.to pay the Wife's solicitor who performs the principal role in the conveyancing aspect of the sale his proper costs and reasonable expenses including the costs and expenses of any aborted sale process;

   f.to pay the Husband's solicitor his reasonable fees in respect of the supervisory function of such solicitor;

   g.to pay sums up to and including $1,000,000.00 (1 million dollars) to the Husband and in the event of any shortfall the balance to be paid by the Wife within 60 days of settlement.

   h.the balance to the Wife.

3. Contracts for sale of the property at a price of $2,000,000 were exchanged on 27 September 2019 and a settlement date was fixed for 20 December 2019.  On 6 December 2019 the applicant wife filed an Application in a Case by which she sought the following orders and declarations which are relevant for present purposes:

   3.Declaration that the taxation liability arising as a result of the Foreign Resident Capital Gains Withholding Rate Variation Notice issued to the Respondent on or about 21 October 2019, varying the withholding rate to 1% of the Respondent's $1,000,000.00 share of the sale price of the $2,000,000.00 for C Street, Suburb D in the State of New South Wales due for settlement on 20 December 2019 is the sole personal liability of the Respondent.

   4.Order that the sum required pursuant to Foreign Resident Capital Gains Withholding Rate Variation Notice issued to the Respondent on or about 21 October 2019, varying the withholding rate to 1% of the Respondent's $1,000,000.00 share of the sale price of the $2,000,000.00 for C Street, Suburb D be deducted either:

   (a)by the conveyancing solicitor from the Respondent's proceeds of $1,000,000.00 from the sale proceeds of C Street, Suburb D, or in the alternative

   (b)by the Applicant from the sum payable by the Applicant to the Respondent pursuant to order 10 made 3 July 2019.

   5.Declaration that the Centrelink debt notice for an amount of $4,616.23 issued to the Respondent on or about 4 October 2019 is the sole personal liability of the Respondent.

   6.Order that the sum of $4,616.23 payable to Centrelink by the Respondent together with any increase in the debt accumulated from 4 October 2019 to the date of payment be deducted either:

   (a)by the conveyancing solicitor from the Respondent's proceeds of $1,000,000.00 from the sale proceeds of C Street, Suburb D, or in the alternative

   (b)by the Applicant from the sum payable by the Applicant to the Respondent pursuant to order 10 made 3 July 2019.

4. The respondent husband filed a Response to Application in a Case on 13 December 2019.  He sought orders that the wife's Application in a Case be dismissed and that she pay his costs.

5. On 13 December 2019 I dismissed the wife's Application in a Case, on the basis of lack of jurisdiction. I took the view that the orders sought by the wife exceeded the parameters of "enforcement or implementation" and, rather, amounted to a variation of the Orders of 3 July 2019 which could only be achieved pursuant to section 79A of the Family Law Act.

6. The husband sought an order that the wife pay his costs in the sum of $11,910.92 in respect of the Application in a Case filed on 6 December 2019.  On 13 December 2019 I directed that the husband file and serve his evidence and submissions in relation to costs by 20 December 2019.  A direction was made that the wife do likewise by 20 January 2020.  I indicated that I would list the issue of costs only if I required further submissions and that otherwise I would determine that matter on the papers.

Background

1. The solicitor with carriage of the sale, Ms D, affirmed an affidavit on 6 December 2019 in support of the wife's Application in a Case.  Ms D deposed to the following inter alia:

   ·from 1 July 2017, any vendor of Australian real property with a market value of $750,000 or more is required to hold 12.5% of the purchase price and pay these funds to the Australian Taxation Office ("the ATO"), unless the vendor provides to the purchaser an ATO clearance certificate

   ·the sale price of the property C Street was $2,000,000, thus the Foreign Resident Capital Gains Tax Withholding regime ("FRCGW") applies to this transaction

   ·on 21 August 2019 the ATO issued a clearance certificate to the wife

   ·on 2 September 2019 Ms D requested that the solicitors for the husband obtain a clearance certificate

   ·on 4 October 2019 Centrelink issued a Debt Notice to the husband for a sum of $4,616.23

   ·on 21 October 2019 the husband's solicitors provided to Ms D a Foreign Resident Capital Gains Tax Withholding Rate Variation Notice dated 18 October 2019, which fixed the rate at 1% of the purchase price

   ·on 25 October 2019 Ms D requested that the husband's solicitor advise whether he would execute a deed by which he agreed to receive his share of the sale proceeds less the withholding amount and the Centrelink sum of $4,616.23 or consent to a variation of the Orders of 3 July 2019

   ·on 28 October 2019 the husband's solicitor indicated that he refused to agree to either of these alternatives and insisted he receive his full share of the sale proceeds pursuant to the Orders of 3 July 2019

   ·on 27 November 2019 an ATO employee informed Ms D that the withholding amount of 1% was the husband's liability as a taxpayer and that he may be able to reclaim some or all of these funds when he lodges a tax return

   ·only the husband could claim a credit for the withholding amount because the variation notice was linked to his tax file number.

2. The wife's family law solicitor, Mr John Jeong Ho Park, swore an affidavit on 20 January 2020 in support of her opposition to the husband's application for costs.  Mr Park indicated that the wife paid a sum of $10,000 on account of the husband's FRCGW so as to enable settlement of the sale to take place on 20 December 2019.

Consideration

1. Applications for costs are governed by section 117(2A) of the Family Law Act which provides as follows:

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

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings

1. Each of the parties will receive or has received substantial liquid funds or assets pursuant to the consent orders of 3 July 2019.  In my view, this consideration favours neither party.

Section 117(2A)(b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party

1. Neither party was in receipt of a grant of legal aid.

Section 117(2A)(c)  the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters

1. In my view, this consideration ultimately favours the wife.  It is true that she filed an Application in a Case in circumstances where the court lacked jurisdiction to grant such relief.  By contrast, however, the husband has acted in a manner which shifted his liability for the $10,000 FRCGW debt to the wife.  On his behalf his solicitor advanced an argument that the husband had no such "debt" at the time the Orders were made on 3 July 2019.

2. In my view this argument on the husband's behalf might charitably be described as an artifice.  There is a real prospect that the husband's conduct will result in an injustice to the wife, as she has effectively paid a sum of $10,000 on his behalf to the ATO and he has real prospects of recouping some or all of that amount.

Section 117(2A)(d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. Neither party failed to comply with a previous order of the court.

Section 117(2A)(e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The wife was wholly unsuccessful in her Application in a Case.  On the other hand, she sought further relief in consequence of the husband's uncooperative behaviour and specious interpretation of the final orders.

Section 117(2A)(f)  whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

1. There were no relevant offers of settlement.

Section 117(2A)(g)  such other matters as the court considers relevant

1. There are no further matters relevant to the consideration of the issue of costs.

2. Having taken into account all of these matters, I dismiss the husband's application that the wife pay his costs of her Application in a Case filed on 6 December 2019.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 26 February 2020.

Associate: 

Date:  26 February 2020