Silver and Woden

[2017] FamCA 97

FAMILY COURT OF AUSTRALIA

SILVER & WODEN [2017] FamCA 97

FAMILY LAW – COSTS – Where the wife seeks costs in relation to the substantive property proceedings between the parties – Where it is found that the husband should pay costs resulting from his non-disclosure, failure to comply with orders and directions, and failure to appear – Where there are no “exceptional circumstances” to justify an order for indemnity costs – Where the parties have a limited asset pool – Where a set amount is ordered to be paid to the wife by way of costs.

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

Parentage & Parentage (2013) FLC 93-544

APPLICANT: Ms Silver

RESPONDENT: Mr Woden

FILE NUMBER: WOC 367 of 2013

DATE DELIVERED: 24 February 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 22 February 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Rebecca Bailey & Associates

SOLICITOR FOR THE RESPONDENT: In Person

Orders

IT IS ORDERED

1. That within 60 days the husband pay to the wife by way of costs the sum of $15,000.

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 Silver & Woden 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: WOC 367 of 2013

Ms Silver

Applicant

And

Mr Woden

Respondent

REASONS FOR JUDGMENT

1. On 22 August 2016, judgment was delivered and orders made in property settlement proceedings between Ms Silver (“the wife”) and Mr Woden (“the husband”).

2. The wife, by an Application in a Case filed 15 September 2016, seeks orders that the husband pay costs of $100,000; or in the alternate that he pay costs on a solicitor/client basis; or in the alternate that he pay costs on a party and party basis. The husband resists those applications.

3. Each party has filed an affidavit and written submissions.

4. The application falls to be determined pursuant to s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) which provides:

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

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

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

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

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

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

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

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

5. The financial circumstances of each of the husband and the wife are set out in the judgment of the substantive application at paragraphs 67 to78 inclusive.

6. Neither the wife nor the husband provided full disclosure of her or his circumstances. The husband did not file a Financial Statement or an equivalent affidavit in the substantive proceedings but he is 65 years old and told the Court he planned to retire. The wife did not provide evidence of the current income of her de facto partner. The Court was left to speculate in relation to both of them.

7. The husband filed a Financial Statement sworn on 16 February 2017. He deposed to a weekly income of $2,443 and expenses of $2,681. His 2016 tax return was attached to the Financial Statement. In order to reach his taxable income for the purposes of the Financial Statement, the husband relied on his tax return. In his tax return he claimed as an expense some of the expenses he also claimed in his Financial Statement.

8. It was submitted on behalf of the wife that his claimed expenses are excessive but no specific expense was identified.

9. I note, however, that he claimed motor vehicle expenses in Part N of his Financial Statement while at the same time claiming those expenses, and the interest on the car loan, as a tax deduction in the attached tax return. To that extent, his expenses should be reduced by $13,451 per annum or $258 per week. He also claimed the costs of the F Town property both as expenses in his Financial Statement and as tax deductible expenses. His expenses should therefore be reduced by a further $29,175 or $561 per week leaving the allowable expenses to be $1,862 per week. Thus the husband has a disposable income of about $581 per week. It is likely that the husband has a superior income to that of the wife and her de facto partner but his income is modest.

10. The Orders made in the substantive proceedings provide that the husband retain assets of greater value than does the wife but those reflect his greater contribution.

11. Neither party was in receipt of legal aid.

12. The wife alleges that the husband’s conduct of the proceedings should be considered. The procedural history of the matter is set out at paragraphs 4 to 31 of the judgment. There is no doubt that the husband’s conduct, and in particular his lack of compliance with procedural Orders and directions, exacerbated the costs of the proceedings and unnecessarily prolonged the matter.

13. The husband unsuccessfully and unreasonably defended the wife’s application for a superannuation flagging order in circumstances where he was about to become eligible to receive a payment.

14. The wife was required, in the absence of co-operation by the husband, to instruct values in relation to the husband’s company interests and to pay for valuations. Had the husband co-operated with the valuation process, he would have been required to pay half of the costs of the valuations. The wife paid $6,600 for the valuation.

15. By letter dated 13 June 2014, the wife offered to accept that, for the purposes of the proceedings, the husband’s corporate interests had a value of $600,000. At trial it was found that the value was $667,641. In that same letter, the wife made an offer of settlement wherein she proposed that she receive 25 per cent of the net asset pool reflected in her offer as $150,000 and $20,000 in a superannuation split.

16. The wife also seeks to rely on the conduct of the husband in interlocutory applications in which he was unsuccessful. Applications for costs in relation to those applications are out of time and I do not propose to take them into account. .

17. Prior to the commencement of the proceedings, in 2013, the husband made an offer of settlement whereby he would sell the home and divide the net proceeds of sale equally with the wife. In his letter of offer he estimated that the net proceeds would be $200,000 and the wife would therefore receive $100,000.  At the time he valued the house at $1,050,000 and the mortgage to be $980,000. There is no evidence that the wife responded to that offer.

18. The only offer of settlement then made by the husband was that the wife receive no payment from his assets and retain only her personal effects.

19. The wife, at trial, sought orders that the husband pay her $120,000 and a superannuation split of a further $120,000.

20. The final determination was that the wife receive 20 per cent of the net asset pool which was effected by a superannuation split of $125,000.

21. A significant portion of the wife’s case was her allegations of family violence and her allegation that family violence exacerbated her mental health issues. That issue is dealt with at paragraphs 112 to122 of the judgment. The wife did not establish her allegations.

22. It is appropriate that the husband pay a proportion of the wife’s costs to compensate her for the money paid in procuring the valuation of his corporate interests and for costs incurred as a result of his persistent non-compliance with Orders, failure to provide proper disclosure, and failure to appear.

INDEMNITY COSTS

1. The law in relation to indemnity costs has been exhaustively stated in recent decisions of the Full Court of the Family Court of Australia.

2. It is sufficient to say for present purposes that there must be circumstances within the factors set out in s 117(2A) of the Act which enliven the discretion to depart from the general rule that each party pay his or her own costs; and there must be exceptional circumstances to justify the award on indemnity costs or solicitor and client costs (see, for example, Prantage & Prantage (2013) FLC 93-544).

3. The conduct of the husband in these proceedings, although unsatisfactory, does not constitute “exceptional circumstances”.

QUANTUM

1. The wife deposed that she has incurred costs of $125,000. The costs incurred include costs associated with an appeal lodged by the husband and withdrawn; costs in relation to spousal maintenance which order was ultimately vacated because of the wife’s failure to disclose that she was in a de facto relationship; costs in relation to interlocutory applications in which the husband was unsuccessful but in relation to which any application is out of time; and costs in relation to third party debt notices.

2. On 21 February 2017, the day before the hearing, the wife filed Amended Written Submissions which annexed an assessment of costs at scale totalling $59,448.

3. It is not possible to ascertain what costs the wife incurred as a result of the husband’s failure to comply with orders and provide proper disclosure, however I do not propose to require the wife to file an assessment of costs limited only to those costs.

4. Having regard to the very limited asset pool of these parties, and their limited assets and income, I propose to fix the amount payable to the wife by the husband at $15,000.   

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 24 February 2017.

Associate: 

Date:  24/2/2017