Thomson and Thomson (No 2)

[2010] FamCA 525

FAMILY COURT OF AUSTRALIA

THOMSON & THOMSON (NO. 2) [2010] FamCA 525

FAMILY LAW – COSTS – application for costs on a party/party basis – where the husband frustrated all attempts by the wife to settle the matter – consideration of the father’s obstructive conduct during the proceedings – orders that the husband pay party/party costs

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004

Jones v Dunkel (1959) 101 CLR 298

APPLICANT: MS THOMSON

RESPONDENT: MR THOMSON

FILE NUMBER: ADC 2249 of 2007

DATE DELIVERED: 25 JUNE 2010

PLACE DELIVERED: ADELAIDE

PLACE HEARD: ADELAIDE

JUDGMENT OF: BURR J

HEARING DATE: 25 JUNE 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR BERMAN

SOLICITOR FOR THE APPLICANT: DAVID BURRELL & CO

COUNSEL FOR THE RESPONDENT: MR McGINN

SOLICITOR FOR THE RESPONDENT: MASON WESTOVER HOMBURG

Orders

1. That the husband pay to the wife her party / party costs based on the relevant scale pursuant to the Family Law Rules from 18 June 2008 up to and including today’s application for costs, with such amount to be as is taxed or agreed between the parties and payable by the husband within thirty [30] days of the date of taxation or any agreement reached between the parties.

IT IS NOTED that publication of this judgment under the pseudonym Thomson & Thomson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 2249  of 2007

MS THOMSON

Applicant

And

MR THOMSON

Respondent

REASONS FOR JUDGMENT

1. I have before me today an application for costs formally made by the wife in an Application in a Case filed on 23 March 2010. That application for costs is resisted by the husband formally in his Response to an Application in a Case filed on 17 June 2010. Upon my initial reading of the wife’s application and affidavit in support filed by her solicitor Mr Samuel Burrell on 23 March 2010 I was of the view, given Annexure “E” to his affidavit, that the wife’s application was for indemnity costs. Counsel for the wife assures me today that that is not the application before the Court. The wife is seeking an order for party / party costs based on the relevant scale under the Family Law Rules.

2. The application for costs flows from a determination I made in trial proceedings before me which spanned some 7 days during 2008 / 2009.  My reasons and accompanying Orders were published on 25 February 2010.  The proceedings were disputed property settlement proceedings between the parties involving assets accumulated over time which were principally related to farming activities and business pursuits of the parties.  There were a number of items of real estate and superannuation.  The full details of the asset pool, the liabilities and my general findings are found in the Reasons for Judgment published.

3. In any application for costs I must have regard to the provisions of Section 117 of the Family Law Act and specifically Section 117 (2A) in circumstances where I deem it appropriate that each of the parties is not to bear their own costs.

4. The first of the matters that I need consider is contained in sub-paragraph (a) which is:-

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

This is not an issue that causes me great difficulty in that the determination I made on 25 February 2010 was to the effect that each of the parties was to share in the asset pool equally which resulted in them achieving a settlement each in the order of $1.34 million.  

1. The husband filed an affidavit in relation to the wife’s costs application on 17 June 2010.  In it he indicated that he has suffered some financial reverses since the conclusion of the trial proceedings, specifically in relation to his business of M Pty Ltd. Annexed to his affidavit is a letter from his accountant Mr TH and in that letter of 11 June 2010 particulars of loans and additional liabilities incurred by the husband are disclosed.  I am told in that letter that in the 2008 financial year the husband had operated at a loss of a little over $6,000 and in the 2009 financial year, operated at a loss in the order of $73,900.  It is anticipated that the husband will suffer further operating losses at the conclusion of the 2010 financial year.

2. However, whilst the husband may have suffered a number of financial reverses since the conclusion of the trial proceedings, within the context of the net asset pool and his share of it, those reverses are relatively minor.   If I accept what he and his accountant say about them, he will still be left with a pool in the order of $1.2 million.  Thus he is comfortably in a position to meet any order for costs that I might make.

(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. This sub-paragraph is not relevant for my consideration.

(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. This sub-paragraph is particularly relevant.  I am satisfied that I do not need to refer specifically to the identified items within this sub-section.  It is an accurate overview of my findings in relation to the proceedings generally and the conduct of the proceedings by each of the parties that the husband was guilty of frequent, regular and persistent inaction to the point where the wife’s pursuit of her claim was frustrated, delayed, met with prevarication and with a failure to fully and frankly disclose the accurate position by the husband.  There are a number of quite marked examples of the husband’s conduct which are enumerated in my decision.  This too, against a background of a number of adverse findings made by me as to the husband’s credit.  In a review of my decision it starts with the general overview in paragraph 64 of my Judgment that when any issues of conflict arose as to the evidence between the parties, I preferred the evidence of the wife.  I then make the finding and observation in paragraph 65 of my Judgment as follows:-

   “As the evidence unfolded, particularly during cross-examination of the husband, it became obvious that the husband had failed in many respects to discharge his duty of full and frank disclosure.  This has implications for the manner in which I approach my determination in a number of respects.”

2. I then reviewed the various authorities of the Court in relation to the approach I was directed to take in the face of a deliberate failure by the husband to make a full and frank disclosure.  In short, the authorities encouraged me in cases of non-disclosure to take a “robust” approach as against the person who failed to provide that full and frank disclosure.

3. I was then obliged by the manner in which the proceedings were conducted before me to make a number of findings in order to establish the relevant net asset pool.  In pursuing that exercise I was obliged to make findings of credit in terms of evidence that was offered to the Court and as to the conduct of the parties, but particularly as to the conduct of the husband, not just in areas of a failure to offer full and frank disclosure but in cases of clear non-disclosure and reprehensible conduct.  Without reciting all of those matters which emerge from my Judgment a few examples are:-

   Paragraph 76 on the issue of a number of stone rollers, the finding by me was:

   “ … The husband’s evidence and explanation as to the difference in the two figures (in relation to the differing valuations he proffered in relation to the rollers) was simply implausible.  …”

   In fact, as I read through my Reasons again I was obliged to call upon the decision of the High Court of Jones v Dunkel (1959) 101 CLR 298 in a number of instances in order to make my determination and make my findings given the husband’s deliberate decision or reluctance to offer up potential witnesses who may have assisted the Court.

   Paragraph 77 is another example of me making an adverse finding as to the husband’s credit in relation to an Auger.

   “ …. The husband tendered an invoice dated 18 June 2008 in respect of what he said was the Auger (Exhibit 19).  However, I do not accept the husband’s evidence in that regard for at least a couple of reasons.  For one, the Auger described in the invoice from Mr [F] (Exhibit 19) is described as a 50’ x 10” Auger not a 40’ x 9”.  The Auger in dispute, and the one alleged by the wife to have been sold by the husband was that valued by Mr [W] on 24 September 2007.  To state the obvious, it was simply not possible for the husband to have acquired on 18 June 2008, an Auger valued by Mr [W] on 24 September 2007.  …”

   Paragraph 85  - I again made adverse findings as to the husband’s credit in relation to a John Deere 440 tractor and again was obliged to call upon the decision in Jones v Dunkel (supra).

   “However, I was not satisfied with the husband’s explanation.  The husband acknowledged that he used the tractor during the period of time that it was at his property.  He did not produce any consignment book or any invoices directed to Mr [OS] for the tyres that he allegedly fitted to the tractor.  More significantly, he did not produce Mr [OS].  He did not seek to call him to give evidence either in person or by telephone link.  Again, on the Jones v Dunkel (supra) principle, I am entitled to draw an adverse inference.  I do so and indicate that I am satisfied that the said John Deere tractor is another item which should be included in the net pool of assets for division between the parties.”

   Paragraph 86 – I made a finding as to the husband’s failure to make disclosure as to $15,000 worth of hay lost in a shed fire.

   “The husband acknowledged that in a shed fire on his property he had lost a significant quantity of hay.  He acknowledged further under cross-examination that he intended to make an insurance claim of $15,000 for that hay.  He had not previously disclosed that fact.  It is appropriate to add that sum of $15,000 to the net pool of assets for division between the parties.”

   Paragraphs 88 to 100 inclusive provide another quite explicit example in relation to the findings I made as to crops on the parties’ former farming property,  It was the husband’s case (as is seen from paragraph 88) that the value of the crops and hay was in the order of $136,000.  It was my ultimate finding, as is seen in paragraph 98 of my Reasons, that the crop was in fact worth $300,593.

4. In terms of the issues which oblige my consideration pursuant to Section 117(2A)(c), the reasons provided by me in paragraph 106 provide a very useful, thorough and emphatic summary of the reasons why I believe it appropriate under this sub-section alone to make an order for costs in favour of the wife.

   “106. However, I deem it inappropriate to award any additional loading to the husband.  In my view it would be inappropriate to recognise any additional contributions by the husband in that regard for a wide variety of reasons but specifically:-

   106.1the husband took action to prevent the wife accessing the partnership accounts by driving up the overdraft to its limit;

   106.2the husband permitted the wife to only access the modest income generated through [B] Pty Ltd and not the farming partnership;

   106.3for a lengthy period after separation the wife continued to pay rental from [B] Pty Ltd into the partnership bank account;

   106.4the husband failed to disclose sales of significant assets including plant and equipment and denied the wife any access to the proceeds of sale of same;

   106.5the wife obeyed all Orders of the Court and brought to account all moneys received by her in the operation of [B] Pty Ltd;

   106.6the husband’s conduct in terms of obedience of the Court’s Orders was in direct contrast to that of the wife.  On 30 May 2007 Forbes JR made an order (paragraph 3) restraining the sale of significant plant and machinery.  On 19 March 2009 (paragraph 4) I made injunctions restraining the sale of any remaining plant, machinery, crops, sheep and/or wool.  Despite those Orders, as I indicated earlier and as is clear from the calculation of the net asset pool, the husband completely ignored those Orders and sold significant plant, machinery, crops and livestock without the written permission of the wife;

   106.7the husband had total control of all assets of the parties bar [B] Pty Ltd.  He used that control to benefit himself only;

   106.8his obstructive attitude, deliberate flaunting of the Orders of the Court and failure to provide full, frank and adequate disclosure of all relevant financial transactions and other relevant detail made it extremely difficult for the wife in the presentation of her case to the Court.”

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

1. Any issues of relevance pursuant to this sub-section have been canvassed above.

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

1. This is another matter of relevance for my determination. Counsel for the husband raises an interesting academic argument as to how the word “wholly” might be interpreted within the context of success in this present matter. It was the wife’s contention from at least as early as June 2008 that the net assets of the parties ought to be divided equally between them. In his application run before me during the trial, it was the husband’s case that he was entitled to 55% of the net asset pool and the wife 45%. It was indeed my finding that the parties ought to share the net asset pool equally as was always the wife’s application to the Court. In my view, the husband’s application before the Court in pursuing an order for 55% of the pool was wholly unsuccessful. He did not achieve 55% of the pool. Even if I am wrong about that, there are sufficient other grounds under Section 117(2A) for me to make an order that the husband pay the wife’s costs.

(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. Annexed to Mr Samuel Burrell’s affidavit of 23 March 2010 are letters directed to the resolution of the matter and they are annexures “A”, “B”, “C” and “D” of the said affidavit.  Consistently throughout that correspondence the wife promotes a settlement of equal division of the net asset pool.  She makes a number of attempts to identify that asset pool and indeed in the letter which is annexure “D”, being a letter dated 18 June 2008 from the wife’s solicitors to the husband’s solicitors, she identifies the assets that she wishes to keep and the payment which she seeks.  Whilst in the ultimate determination of the proceedings the wife did not pursue the two investment properties, when one makes an adjustment for the agreed values of those properties as set out in my Judgment and translates that to the cash payment sought by the wife in paragraph 1(g) of annexure “D”, the wife before me was still more successful than the proposal that she put in negotiations.  If there was any need for any further emphasis of that position, paragraphs 3 and 4 of the husband’s affidavit filed on 17 June 2010 demonstrate that any reasonable attempt at a negotiated outcome would have achieved for the wife a figure very much in the order of that which I ordered.

2. Thus I am satisfied that it is appropriate to take account of the wife’s many attempts to resolve the matter and the various offers that she made, offers which in most senses closely approximated my determination at the conclusion of the trial of the proceedings.

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

1. In relation to this sub-section, I believe it is appropriate to observe that from June 2008 there is very clear evidence of genuine bona fides on the wife’s behalf to attempt to resolve the issues by negotiation.  I accept that whilst there would appear, from the materials before me, to have been no formal response to any of the wife’s offers I accept that there may well have been some offers exchanged in the conciliation conferences conducted by this Court.  However, there can be no doubt from the materials provided to me today and from the many days of evidence heard by me, that the wife conducted herself in the most appropriate, honest and commendable way.  The husband’s approach and conduct was in direct contrast to that of the wife. 

2. As I indicated in my reasons, it was not until the trial proceedings that most of the truth as to the asset position of the parties emerged.  Having said that, in many instances, they were in fact details that did not emerge until quite late in the proceedings and in some instances they did not emerge other than under cross examination of the husband.  In short the husband appeared to avoid every opportunity to provide the relevant information to the wife and more significantly, to the Court.  He, in my view, took no steps to foreshorten the proceedings or even avoid the proceedings by entertaining genuine negotiations in an honest fashion.  Hence I accept that it was a struggle throughout for the wife to establish the genuine net asset pool and thereafter, a struggle to secure reasonable behaviour by the husband at the negotiating table.  In fact it became a struggle for me as the Trial Judge to sift the evidence and make determinations given the lack of assistance afforded to the Court by the husband, his deliberate and obstructive attitude in many senses and his failure to fully and adequately disclose in circumstances where I made some damning findings as to his credit. 

3. A side issue arose as to some third party proceedings conducted by the parties’ son S Thomson.  They were resolved ultimately at an earlier stage of the proceedings on 5 June 2009.  However I accept that the wife was obliged to be present at the Court and assist in the conduct of the proceedings at that time in order for the proper net asset pool to be established.  Clearly whether or not the son S had an interest in the property (ultimately conceded by the husband) was an issue of direct relevance to the establishment of the net asset pool.

4. In short the wife could not have done more than she did to try and resolve the matter without the necessity for trial proceedings from as early as June 2008.   To borrow from equitable principle, it was only the wife who came to this Court with clean hands.

I certify that the preceding nineteen (19) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Burr.

Associate: 

Date:  25 June 2010