SNIDER & SNIDER (No.3)

[2019] FCCA 1863

FEDERAL CIRCUIT COURT OF AUSTRALIA

SNIDER & SNIDER (No.3) [2019] FCCA 1863

Catchwords:
FAMILY LAW – Costs.

Legislation:

Family Law Act 1975 (Cth), s.117

Cases cited:

Penfold v Penfold (1980) FLC 90-800 @ 75,053

Applicant: MS SNIDER

Respondent: MR SNIDER

File Number: HBC 873 of 2014

Judgment of: Judge McGuire

Hearing date: 24 June 2019

Date of Last Submission: 24 June 2019

Delivered at: Launceston

Delivered on: 6 August 2019

REPRESENTATION

Counsel for the Applicant: Mr M Foster

Solicitors for the Applicant: Murdoch Clarke

Counsel for the Respondent: Mr M Verney

Solicitors for the Respondent: Matthew Verney Lawyer

ORDERS

1. That the husband pay 85% of the wife's costs of and incidental to the following applications: –

   (a)husband's Application in a Case filed 14 June 2018;

   (b)husband's amended Application in a Case filed 6 July 2018;

   (c)the husband's amended Application in a Case filed 15 August 2018;

   (d)husband’s Application Initiating proceedings filed the 21 December 2018;

   (e)wife’s Response filed 6 August 2018; and

   (f)wife’s Response filed 23 January 2019.

2. That such costs be as agreed or taxed in accordance with Order No. 1 hereof.

IT IS NOTED that publication of this judgment under the pseudonym Snider & Snider (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

HBC 873 of 2014

MS SNIDER

Applicant

And

MR SNIDER

Respondent

REASONS FOR JUDGMENT

Applications

1. The wife, Ms Snider, makes application that the husband, Mr Snider, pay her costs of and incidental to the wife's Enforcement application and the husband's section 79A application (and various interlocutory applications) in a quantum of $42,913.

2. The application for costs is opposed. 

Background

1. The litigation between these two parties has been long and bitterly fought.  The applications in this Court commenced as long ago as 20 November 2014.

2. Both parties lived in Launceston and, until separation, in a home at Property A.  The husband remained in occupation of that home following separation. 

3. Both parties are health care workers and together operated a business at Property B, Launceston under an umbrella of a family trust and trustee company.

4. Relevantly, interim orders were made by consent on 30 May 2017 whereby the parties agreed to sell their major assets being:

   (a)a commercial property at Property B, Launceston;

   (b)the former matrimonial home at Property A; and

   (c)the business.

5. By this time the wife had absented herself from the business and the husband effectively continued to run that business and does so until this day. He also remains resident in the former matrimonial home. The commercial property at Property B has been sold.

6. Further interlocutory consent orders were agreed on 30 May 2017 as follows:

   1.That for the purposes of consultation with each other and agreement in relation to the marketing and sale of the said items each party shall make a bona fide and prompt endeavour to respond to all communications from the other party and in any event will respond in writing within three days of receipt of a communication; and

   2.That the husband shall forthwith make the property at Property A in a condition suitable for marketing and sale.

7. The matter proceeded to trial on the substantive property applications.  Final orders were handed down on 22 August 2017.  Those orders provided inter alia:

   1.  That the husband forthwith authorise the Snider Family Trust (“the trust”) and/or the company Business (“the Company”) to pay to the wife all arrears due and owing under Order No. 2 of the Consent Orders of 4 September 2015.

   The orders of 4 September 2015 at order 2 provide:

   2. That the parties shall do all things so as to cause the Trust to distribute to the wife the sum of $1,500.00 per calendar month commencing from 11 August 2015 and payable on the same date of each month thereafter.

   3.  That the tangible assets of the parties pursuant to the findings in the reasons herein be divided as to sixty-five (65) per cent to the wife and thirty-five (35) percent to the husband and also pursuant to the consent orders for the sale of assets made 30 May 2017…

   6.  That the corpus of the parties’ self-managed superannuation fund known as 'Snider Superannuation Fund' be forthwith divided equally between the parties on terms as agreed and that the parties or either of them have liberty to apply as to the implementation of this order.

   7.  That the interim orders of 4 September 2015 remain in full force and effect until the sale of the business and real estate pursuant to the orders of 30 May 2017 and hence until the execution of Order No.3 herein, in respect of orders No. 2, 3 (b-g), 7, 8, 14 and 16 and in all other respects the orders of 4 September 2015 be dismissed provided that the parties or either of them have liberty to apply in respect of the variation or discharge of this order.

   8.  That there be liberty to the parties or either of them to apply in respect of the sale of real property or the business pursuant to the consent orders of 30 May 2017.

8. The husband subsequently lodged an Appeal against the final property orders but did not in the end prosecute that Appeal.

9. On 14 June 2018 the husband filed an Application in a Case with supporting affidavit.

10. On 6 July 2018 the husband filed an amended Application in a Case supported by further affidavit material. Both applications effectively sought orders permitting the husband to retain the property at Property A and that the parties jointly and at their equal shared expense obtain a valuation on said property to allow this to take place.

11. On 6 August 2018 the wife filed a Response and supporting affidavit seeking the dismissal of the husband's amended Application in a Case.  Further, the wife sought orders of an enforcement type in respect of the sale of the property at Property A and the business.  She also sought that the husband comply with interlocutory orders from 2015 in respect of her superannuation and the payment of $1,500 per month from the business (‘spousal maintenance?’).

12. Directions hearings were held on the husband's application on 9 July and 30 July 2018.

13. On 15 August 2018 the husband filed yet another 'amended amended Application in a case’ supported by further affidavit material.

14. The matter was listed for directions again on 21 August 2018.  The parties were directed to file their trial affidavits by 15 December 2018 and the matter was listed for a two day hearing on 31 January 2019. 

15. On 20 December 2018 the husband filed a fourth application being an Application Initiating Proceedings seeking orders pursuant to s.79A of the Family Law Act 1975 and indicating the abandonment of the applications of 14 June 2018, 6 July 2018 and 15 August 2018. Inter-alia the husband sought an order discharging the order of 27 August 2017 whereby the wife received, in the interim, $1,500 from the business. He sought specific orders in respect of the payment of capital gains tax and, in particular, that the parties share equally in the capital gains tax struck for each of them individually. He sought an order that the business be attributed a value of nil. He sought an order transferring the property at Property A to him at a value nominated by him. He sought an order for the transfer of the Business (at value of 'nil') to him. He sought an order that the wife pay to him a sum of $35,472 ‘being the liability he incurred as a result of her refusal to take steps to minimise the tax incurred from proceeds associated with the Business'.

16. The wife appropriately filed a Response and affidavit material.

17. The matter proceeded to a hearing on 31 January 2019 such being eventually adjourned part-heard.  The hearing then continued on 26 March and 30 April 2019.

18. My judgment was handed down on 15 May 2019.  Specifically, my Reasons provide inter-alia:

    2.  Where the parties, to their credit, have reached consensus on the majority of issues during the course of these current proceedings, essentially, the husband leaves for my determination just the one issue from an Initiating Application filed 21 December 2018 which sought eleven separate substantive orders and which was preceded by no less than three Applications in a Case.

    3.  The wife seeks enforcement/compliance orders on a Response filed 6 August 2018 and in respect of orders made 30 May 2017 and confirmed by the final orders of 22 August 2017 and in particular the following:

    (a)The wife's interest in a self-managed superannuation fund be brought up to date by the payment of instalments totalling $22,725 or such quantum as is owing;

    (b)That the wife have the sole or ultimate responsibility for the management of the sale of the former matrimonial home situate at Property A in Tasmania;

    (c)That the wife have the sole or ultimate management for the sale of the business operated by the Snider Family Trust.

    10. The husband has transparently changed his position in respect of the sale of the former matrimonial home in that he openly now expresses a wish to retain it.  This has been his position for some time.  He remains in occupation and possession of the home.  The wife says that he has failed to positively participate in any genuine attempt to market or sell the property.  She says that the property is not maintained in a fit and proper condition so as to attract a buyer at the optimum price.  She says that the husband's intentions are transparent to retain the property at least return for her interest.

    14. …  on the balance of probabilities I prefer the evidence of the wife in respect of these issues.  Firstly, the husband is in residence of the home and has been since separation and, in particular, since the orders of May 2017.  Mr Snider remains in residence in circumstances where the business effectively meets the mortgage payments for the property.  It is indisputable that he did not prudently co-operate in the basic requirement of the May 2017 orders in authorising the instructions to an agent to market the property.  Indeed, further enforcement applications were necessary to ensure that authority which did not come until January 2019.  Further, it is now transparently clear that his preference is to retain the property with an obvious regret in him of consenting to its sale in May 2017. I am satisfied that his motivation to sell the property is negatively impacted accordingly.

    16. Whilst finding merit in the wife's argument in circumstances where the order to market and sell the property was made some two years ago but where the property is not yet actively marketed and with the husband in occupation…

19. In respect of the consent order for the sale of the business, my reasons state as follows inter-alia:

    17. The wife argues similarly that the husband has not been co-operatively active in the marketing and sale of the business which she still operates with obvious advantages of income and other benefits accruing to him. 

    19. The wife agrees that the property is in the hands of commercial agents for sale and that the market is limited.  She says, however, that the husband has again been dilatory in the provision of financial information to allow up-to-date financials to be completed and in turn to more vigorously market the business to informed potential purchasers.  She says that she herself has been proactive in securing general interest from at least one potential purchaser whose interest has stagnated due to the lack of up-to-date financials. 

    20. Significantly, his application to this Court the husband initially sought an order 'that the Court allocate the value attributed to the business operated by the Snider Family Trust (‘the business’) as nil.'  This together with the husband's general dilatory efforts in respect of updating financial information comfortably satisfies me that he has not and does not intend to be active in the sale of the business and certainly not as active as the wife in the process and leading me to conclude that there is some merit in the submissions of the wife's Counsel that, like the former matrimonial home the husband is perhaps regretting of his decision to consent to its sale and his preferred position is now to retain the business at its lowest possible value to the wife.

20. In respect of the 'spousal maintenance' , more particularly, the consent order that the wife continue to receive $1,500 per month from the business, I note the following from my reasons inter-alia: –

    28.The husband argues generally the business is no longer as  profitable as it was in 2017 (with the implication being that the business can no longer afford to the payment of $1,500).

    29.Significantly, however, I have no evidence of any expert nature before me as to any specifics in respect of an asserted downturn in profitability and the duration of any asserted downturn. Of equal significance is the evidence of Mr Snider in his sworn financial statement of 21 December 2018 that he apparently continues to take benefits from the business himself pursuant to the orders of September 2015 and 31 May 2017.

    30.In summary I see no ground for the removal of an order which preserve some rights for the wife from the business where the husband has had, continues to receive, otherwise the benefits of that business and the use of the home.  Certainly, I do not see any evidence to cause me to consider the provisions of s.79A(1)(b) of the Act. 

21. In respect of the parties’ superannuation interests I note at [34] of my Reasons the following:

    The husband in his affidavit of 20 December 2018 deposes at [62] – [63] under the heading 'superannuation’:

    [62] By virtue of Orders that were made in this Honourable Court on 23 October 2017 the superannuation in our self-managed superannuation fund has been divided on an (sic) 50/50 basis.

    [63] The accountant has completed the superannuation returns and related documents.  Once this is done, all matters in relation to our superannuation are finalised.

22. My Reasons at [35] – [36] note:

    [35]The simple statements in those paragraphs are, in my view, misleading as to what has occurred since the orders of 23 October 2017 and it is clear that the formalities of ‘splitting’ the superannuation fund have not been finalised.

    [36] It is clear from the evidence now before me that, firstly, the financial documents to allow the execution of the superannuation orders were not prudently completed and provided by the husband. 

23. At [[43] of my Reasons I find:

    I am comfortably satisfied, therefore, that the wife's 'contributions’, should therefore have continued in the same sense as those made on the husband's behalf and in the same sense as the other payments/benefits contemplated by order 7 of the final orders of 22 August 2017.

Relevant Law in respect of costs

1. S.117 of the Family Law Act1975 provides for matters of costs.  Subsection (1) provides:

   … Subject to subsection (2), subsection 70NFB(1) and subsections 117AA, 117AB, 117AC, and 118, each party to proceedings under this Act shall bear his or her own costs.

2. Nevertheless, there remains a discretion in the Court to make an award for costs in subsection (2), which provides:

   If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise as the court considers just.

3. Subsection (2A) sets out a number of mandatory references for the Court’s considerations but is not limited, and that the Court can consider pursuant to subparagraph (g):

   … Such other matters as the court considers relevant.

4. The inter-relationship between s.117(1) and s.117(2) was considered by the High Court in Penfold v Penfold[1] where their Honours stated:

   It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2).  As subsec. (1) is expressed to be subject to subsec. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.  Beyond this there is nothing in the subject matter or the inter-relationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs …

   Subsection (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order.

S. 117(2A) Considerations

[1] (1980) FLC 90-800 @ [75,053]

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

1. The husband complains in his affidavit material about a downturn in the business. Nevertheless, I am easily and comfortably satisfied that he is in a better financial position than the wife. He continues to receive the income from the business and his sworn financial circumstances discloses an income in excess of $150,000 per year. He receives benefits of the business including payment of the mortgage on the home in which he resides. He will receive a payment of approximately $40,000 pursuant to consent orders made during these proceedings. I am easily satisfied that he is in a financial position to meet any award for payment of costs.

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

1. Neither party is in receipt of legal aid.

(b)   the conduct of the parties to 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. Generally, the conduct of the parties in relation to their respective applications was satisfactory. It is noteworthy, however, that the husband filed no less than three Applications in a Case prior to abandoning those applications so as to prosecute an Application Initiating Proceedings seeking orders under s.79A of the Act. Despite submissions from the husband's Counsel to the effect that the wife would not be prejudiced by the plethora of applications filed on behalf of the husband in that they eventually were not prosecuted and, in any event, overlapped in the orders sought, I prefer the submissions of Counsel for the wife that it was proper for the wife's legal representatives to take instructions on each application and affidavit filed in support and to consider the relevant law and response in respect of each application and to make formal Response. Consequently, the ultimate abandonment of those applications could not be mitigated or totally mitigated by reason of the eventual application under s.79A.

(c)      whether the proceedings were necessitated by the failure of a party to the proceedings to comply with Court orders

1. The wife's cross-application before me is best referred to as an ‘Enforcement Application'. She says broadly that the husband did not co-operate in the sale of the home and the business and despite he himself seeking and consenting to orders in those terms as long ago as 2017. She says that the husband had not complied with an order for the payment to her of $1,500 per calendar month from the business. She said that the husband had not complied with orders for the continuing payment of her superannuation contributions. Ultimately, my findings justified the wife bringing an Enforcement application and generally I found for the wife in these four enforcement issues. It is not without significance that the husband, by arguing for alternate orders, effectively conceded his lack of compliance with the substantive orders. That is, he sought an order that he retain the former matrimonial home. He sought an order that he retain the business at value of nil. He sought orders discharging the payment of the $1,500 per month. He sought an order that he should not be responsible for arrears in respect of the superannuation payments.

(d)      whether any party in the proceedings has been wholly unsuccessful in the proceedings

1. The husband's Counsel made valiant submissions in respect of this consideration.  Counsel argued that many of the issues before the Court had been settled by consent with or without Court indication and intervention.  It is true that my sometimes vigorous interventions prior to and during the taking of evidence in this matter resulted in some consensus between the parties in respect of specific issues and that each of the parties should be given credit accordingly.

2. Secondly, Counsel for the husband argues that the wife was not 'wholly' successful in respect of the orders she sought for the sale of the home and the sale of the business in that she effectively sought to have sole carriage of both and to exclude the husband absolutely. Whilst there is some merit in this submission, the findings that are evident in my reasons and ultimately the orders made in respect of the sale of both home and business see the wife being substantially successful. To the contrary, however, the husband was unambiguous in the orders that he sought in respect of both home and business. That is, he wanted the business transferred to him at nil value and he wanted the home transferred to him. In these respects he was wholly unsuccessful on his s.79A application and hence the wife was wholly successful in her opposition to that application.

3. Similarly, the wife was effectively wholly successful in respect of the superannuation and 'spousal maintenance' enforcement applications and the husband unsuccessful in his applications to discharge or vary those orders. 

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

1. The nature of the applications before me did not to lend itself to offers of settlement and this is not a relevant consideration.

Conclusion

1. The tenor of my reasons and findings satisfy me that the wife was effectively successful in her Enforcement application.  I am satisfied, in the sense of an Enforcement application, that such application was necessary due to the non-compliance by the husband in respect of the issues set out above.  Whilst it is true that the wife may have sought even more stringent orders than I eventually made, it remains that she was successful in the aim of her application to have the husband comply with his obligations under the various orders.

2. To the contrary, the husband’s s.79A application was unsuccessful in each of its particulars. The home will not be transferred to him save and accept by him being a 'purchaser' in that he has an option to meet any offer accepted by the wife. This is not a situation contemplated by his s.79A application. Similarly, the husband was unsuccessful in having the business transfer to him at nil value. As mentioned above, the husband was unsuccessful in his opposition to the wife's Enforcement applications in respect of 'spousal maintenance' and superannuation.

3. Further, I am satisfied that the husband has caused the wife expense and that being unnecessary expense, by reason of no less than three Applications in a Case which were ultimately abandoned.

4. Consequently, I am persuaded that there are circumstances justifying the exercise of my discretion to make an award of costs in favour of the wife.

5. I note, however, that a number of issues were settled, albeit perhaps only by reason of judicial intervention and, secondly, that the wife did not necessarily obtain the stringent orders that she sought in respect of the sales of the business and the home although ultimately she obtained orders which should give her the result anticipated by her Enforcement application and the substantive orders.  In respect of the first point being that a number of issues settled, the result of that is, of course, that both parties saved the costs of argument on those points.  That is, the costs sought by the wife may well have been greater had those points been argued successfully by her.

6. Taking all of these matters into account I am of the view that the husband should meet 85% of the wife's costs on a party/party basis.  I note that the husband does not accept the quantum of costs set out in the written submissions helpfully provided by the wife’s solicitors and it is proper, therefore, that the order be that the costs be 'as agreed or as taxed'.

I certify that the preceding forty three (43) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date:  6 August 2019