Sommer & Sommer

Case [2021] FedCFamC1F 37

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Sommer & Sommer [2021] FedCFamC1F 37

File number(s): SYC 2639 of 2016
Judgment of: HENDERSON J
Date of judgment: 13 September 2021
Catchwords:

FAMILY LAW – COSTS – Costs arising from a final application – Where the second and third respondents to the substantive application seek the wife pay their costs on an indemnity basis – Where the husband seeks the wife pay his costs on an indemnity basis from a particular date – Where the conduct of the wife throughout the course of the litigation warrants the Court departing from the usual course – Where multiple offers of settlement made – Order for indemnity costs of the second and third respondents – Order for the husband’s costs in a fixed sum

FAMILY LAW – PRACTICE AND PROCEDURE – Solicitor’s lien – Where the wife’s former solicitors claim a lien over unpaid legal fees – Consideration of relevant principles – No lien established

FAMILY LAW – PRACTICE AND PROCEDURE – Slip Rule – Where application to amend the sum referred to in Order 6(a)(i) and (e) of final orders granted under rule 10.14(b) and 10.13(h) – Question of whether pursuant to rule 10.13(h) and/or 10.14(b) the slip rule applies in respect of paragraph 170(m) of the final judgment and Order 6(a)(i) stood over for submissions

Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 12.17(1)(a), 10.13, 10.14

Cases cited:

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Firth v Centrelink (2002) 55 NSWLR 451

Jackson v Richards (2005) NSWSC 630

J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2) [1993] FCA 70

Kohan & Kohan (1993) FLC 92-340

Leamey v Heath [2001] NSWSC 1095 (Campbell J, 22 November 2001, unreported)

Marsh & Marsh [2014] FamCA 361

Moorcroft & Moorcroft [2017] FamCAFC 147

Munday v Bowman (1997) FLC 92-784

Nada & Nettle (Costs) (2014) FLC 93-612

Penfold v Penfold (1980) 144 CLR 311

Phillips & Hansford (2020) FLC 93-941

Rankin & Rankin (No. 3) [2019] FamCAFC 133

Sfakianakis & Sfakianakis (2019) Fam LR 419

Smith & Fields (third party costs) [2013] FamCA 505

Vadisanis & Vadisanis and Anor (2015) FLC 93-671

Worth & Worth (No. 2) (2019) FLC 93-910
Division: Division 1 First Instance
Number of paragraphs: 146
Date of last submission/s: 6 July 2021
Date of hearing: 29 March 2021
Place: Sydney
Solicitor for the First and Second Applicants: York Law Family Specialists
Counsel for the Third Applicant: Mr O’Reilly
Solicitor for the Third Applicant: One Group Legal
The Respondent: Self-Represented Litigant
Counsel for the Intervener: Mr Lawrence
Solicitor for the Intervener: C Pty Ltd T/As C Lawyers

ORDERS

SYC 2639 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR N SOMMER

First Applicant

P PTY LTD

Second Applicant

MR SOMMER
Third Applicant
AND:

MS SOMMER

Respondent
AND:

C PTY LTD T/AS C LAWYERS

Intervener

ORDER MADE BY:

HENDERSON…

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AGLC
Sommer & Sommer [2021] FedCFamC1F 37
Case
[2021] FedCFamC1F 37
Decision Date

CaseChat Overview and Summary

In the case of Sommer & Sommer, the Federal Circuit and Family Court of Australia (Division 1) dealt with a complex family law dispute involving the ownership and management of two properties. The wife, who was the respondent, joined her brother-in-law and his company as respondents in the litigation, asserting that she and her husband each owned 33 per cent of the properties, while the brother-in-law and his company owned the remaining 33 per cent. The husband and the second and third respondents contended that they owned 50 per cent of the properties, and the court found this contention to be the correct legal position, supported by clear and overwhelming evidence. The court further found that the wife's assertions and claims were not truthful, and her conduct throughout the litigation was egregious.

The court was required to determine several legal issues, including whether the wife should pay the costs of the second and third respondents on an indemnity basis, whether the husband should be entitled to costs from the wife on an indemnity basis from a particular date, and whether the wife's former solicitors were entitled to a lien over unpaid legal fees. The court also needed to consider an application to amend the final orders and determine whether the slip rule applied to the costs of the final hearing and the costs of the slip rule application.

The court concluded that the wife's conduct warranted the court departing from the usual course of awarding costs. It ordered that the wife pay the costs of the second and third respondents on an indemnity basis, but it assessed and fixed the husband's costs at a fixed sum. The court found that the intervener, the wife's former solicitors, did not have a lien over the wife's verdict for their unpaid costs. Additionally, the court granted an application to amend the final orders and found that the slip rule applied to the costs of the final hearing and the costs of the slip rule application.

In summary, the court ordered that the wife pay the costs of the second and third respondents on an indemnity basis, but fixed the husband's costs at a sum of $76,000. The court also found that the wife's former solicitors were not entitled to a lien over unpaid legal fees. The court granted an application to amend the final orders and found that the slip rule applied to the costs of the final hearing and the costs of the slip rule application.

Orders

Orders of the court

SYC 2639 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR N SOMMER

First Applicant

P PTY LTD

Second Applicant

MR SOMMER

Third Applicant

AND:

MS SOMMER

Respondent

AND:

C PTY LTD T/AS C LAWYERS

Intervener

ORDER MADE BY:

HENDERSON J

DATE OF ORDER:

13 SEPTEMBER 2021

THE COURT ORDERS THAT:

1. That pursuant to Rule 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 Orders 6(a)(i) and 6(e) of 18 February 2021 be amended as follows:

“6(a)…

(i) The Court notes the monies paid by Mr N Sommer to C Lawyers are part of the wife’s verdict of $452,354 $404,306.80 to be paid by him to the wife reducing the sum then payable by Mr N Sommer to the wife accordingly;

…

(e) Simultaneously with the husband’s compliance with Order 5 herein pay to the husband the sum of $276,229 $247,400.69 and his entitlement pursuant to order 6(c) herein less…”

2. The wife’s application to release $20,000 to her from monies held in trust is dismissed.

3. The Court declares the intervener does not have a lien in respect of the wife’s verdict for their unpaid costs.

4. The Court finds the costs of Mr N Sommer and P Pty Ltd on an indemnity basis for the final hearing are fixed at $161,676.30.

5. The Court finds the costs of Mr N Sommer and P Pty Ltd for the slip rule application are assessed at $11,000.

6. The application by Mr N Sommer and P Pty Ltd for the costs of the costs application is dismissed.

7. The Court finds the husband’s costs are assessed and fixed at $76,000.

8. The Court notes the intervener’s costs claimed are $236,238.81.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

Thus the question now is whether I order indemnity costs be paid or some lesser costs. The relevant facts Dealing with the wife's joinder of the second and third respondents and their claim for indemnity costs. The wife joined the second and third respondents to the litigation on 11 January 2018, contending that she and her husband each owned 33 per cent in two properties at Q Street Suburb D (“the Suburb D properties”) and her brother-in-law and his company the remaining 33 per cent. The wife later sought a declaration to that effect by way of further amended response filed on 27 August 2018. It was the husband and second and third respondents’ contention, unwavering throughout the litigation, that consistent with the liability in respect of the mortgages held over the Suburb D properties and the initial contributions to the acquisition of the properties that the husband and wife owned 50 per cent of the properties and had liability for 50 per cent of the total mortgages, the second and third respondents owned the remaining 50 per cent and had liability for 50 per cent of the mortgages. I found the husband and second and third respondents’ position was the only position at law that was supported on the evidence, that this had always been the case and that the evidence to support this finding was clear, apparent and overwhelming at the time the wife joined the second and third respondents to the litigation. Further, I found from paragraph 14 of the final judgment that the wife maintained her scurrilous assertions at the trial concerning her brother-in-law, the second respondent, including that he had fraudulently dealt with her interest in the properties at Suburb D and going so far as to make a complaint of fraud against him to the ANZ bank, which bank in his business as a mortgage broker he has a relationship with, and maintained her former husband was complicit in this and maintained her assertions were supported by the following:a)By Mr N Sommer having conversations with the ANZ Bank without her knowledge;b)By Mr N Sommer changing the ownership of the 2 Q Street property to a company owned by him without her knowledge or consent;c)Mr N Sommer and the husband being party in part to a forgery in that the wife asserts her signature does not appear on the Deed of Novation, which was exhibited in these proceedings;d)That Mr N Sommer has rented the property for an undervalue, the wife asserting the property could have been rented for $2,150 per week, when it was only rented for $1,000 per week;e)That Mr N Sommer and the husband have failed to include her in important decisions regarding the property;f)That Mr N Sommer’s actions have negatively affected her credit rating by claiming hardship in respect of the loans due to COVID-19, and having those loans paced into a hiatus in relation to payment of the mortgage and the like;g)That the husband has been receiving cash payments from the rental of the properties, and this has not been disclosed;h) That the husband purchased a boat worth $110,000;i)That the husband lives a luxurious lifestyle in a penthouse apartment and has holidays overseas and at other locations in Australia;j) That the husband has failed to declare his real income;k)That the husband has not been open and honest or forthcoming disclosing what his income is to the Child Support Agency or this Court;l)That the husband and Mr N Sommer have conspired to minimise the matrimonial pool for division, and minimise her interest in the properties. 15. As the evidence unfolded, it is the wife that has behaved in a most egregious fashion towards Mr N Sommer and, to a lesser extent, her former husband. 16. After hearing the evidence, the wife’s case and her evidence being tested and in reading the voluminous documents produced by the parties, I have unfortunately formed the view the wife is not a witness of truth, and will simply lie to continue her unsupported, ill-informed and totally unfounded allegations against Mr N Sommer and her former husband of fraud, poor behaviour, mishandling of money and endeavouring to cheat her out of her entitlement to property.17. The legal fees expended in this matter are approaching, between all parties, a million dollars and that is an absolute travesty as the pool of assets for division as between the husband and wife ultimately amounted to just over $1 million. There is perhaps 2 million dollars in net assets as between the three parties to this litigation. 18. Nothing arose from testing the evidence of the husband or Mr N Sommer as it became apparent that their position regarding the properties, their acquisition, the beneficial ownership of the properties and their management was the correct position and the wife’s a mere fiction.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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