TURTON & OXROY

[2015] FCCA 286

FEDERAL CIRCUIT COURT OF AUSTRALIA

TURTON & OXROY [2015] FCCA 286

Catchwords:
FAMILY LAW – Costs – section 117(2A) of the Family Law Act1975 (Cth) – final property Orders made by consent – subsequent costs order made in favour of husband – husband commenced enforcement proceedings – wife sought stay of enforcement proceedings – enforcement proceedings resolved at hearing with costs reserved – both parties seek costs against the other – costs order made in favour of husband limited to enforcement of outstanding costs order.

Legislation:

Family Law Act 1975 (Cth), ss.117(2A), 117(2A)(a), 117(2A)(c)

Applicant: MS TURTON

Respondent: MR OXROY

File Number: MLC 5529 of 2012

Judgment of: Judge Hartnett

Hearing date: Not Applicable

Date of Last Submission: 13 November 2014

Delivered at: Melbourne

Delivered on: 11 February 2015

REPRESENTATION

Solicitors for the Applicant: M & K Lawyers

Solicitors for the Respondent: Zolis Lawyers & Consultants

ORDERS

1. The Applicant pay to the solicitors for the Respondent costs of $1,000. Such payment to be made by 4.00pm on Friday 20 February 2015.

2. Otherwise all extant applications are dismissed and the matter removed from the list.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 5529 of 2012

MS TURTON

Applicant

And

MR OXROY

Respondent

REASONS FOR JUDGMENT

1. Final property Orders were entered into by consent between the parties on 20 May 2013 (‘the final Orders’). Those final Orders were prepared by the Respondent’s lawyers, the Applicant being a litigant in person. The final Orders were made by Registrar Mestrovic. The final Orders provided as follows:-

   “1. That the Applicant pay the sum of $30,000.00 (“the payment”) directly to the (omitted) Bank loan account (no. (omitted)) (“the loan”) and that contemporaneously with the payment:-

   (i) The parties forthwith do all necessary acts and things and sign all necessary documents to transfer (“the transfer”) to the Respondent at the expense of the Respondent all the Applicant’s right, title and interest in the property situated at Property N (“the real property”) within 45 days or earlier subject to the parties obtaining prior finance from the dated (sic) of these Orders.

   2. That contemporaneously with the transfer and the payment, the Respondent refinance the balance of the mortgage encumbering the real property and indemnify the Applicant against all payments and liabilities pursuant to the loan to the (omitted) Bank and all appropriate rates, taxes and outgoings of or with respect to the real property of whatsoever nature or kind.

   3. That in the event the transfer has not been made within 45 days of the date of these orders, than the parties sign all documents and do all things necessary to place the real property on the market to be sold forthwith out of Court (“the sale”) and the proceeds be applied as follows:-

   (i) Firstly to pay all costs, commissions and expenses of sale;

   (ii)     Secondly to discharge the mortgage and any other encumbrances affecting the real property less the payment of the Applicant in Order 1 of these Orders;

   (iii)    Thirdly the balance to the Respondent.

   4. That pending the completion of the sale:-

   (i) The Respondent shall have the sole use and occupation of the real property and during such right of occupation, the Respondent shall pay all instalments pursuant to the mortgage and all rates, taxes and like appropriate outgoings of the real property as they fall due;

   (ii)     The parties shall hold their respective interests in the real property upon trust for each other pursuant to these orders;

   (iii)    Neither party shall further encumber the real property without prior written consent of the other party or subject to the transfer.

   5. That liberty be reserved to either party to apply with respect to the terms and conditions of and execution of the sale.

   6. That the parties exchange rental receipts for Property N, and Property T within 14 days from June 2011 to the date of these Orders.

   7. That unless otherwise specified in these orders and save for the purposes of enforcing the payment of any money due under these or any subsequent orders:

   (a)     each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and the like chattels in the real property being deemed in the possession of the Respondent); 

   (b)    monies standing to the credit of the parties in any joint account be shared equally;

   (c) Each party forego any claims they may have to any superannuation or employment benefits belonging to or earned by the other;

   (d)     insurance policies remain the sole property of the beneficiary named thereon;

   (e) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party has retained or is entitled pursuant to these orders;

   (f) That each party retain to the exclusion of the other any bank accounts or real property held in their name unless stated expressly in these Orders; and

   (g)     any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

   8. Liberty to apply.  

   9. That the Application of the Applicant filed on 21 June 2012 and Contravention Application filed on 23 April 2013 be otherwise dismissed.

   10. That the Response of the Respondent filed on 30 July 2013 be otherwise dismissed.

   THE COURT NOTES:

   A. That pursuant to Section 81 of the Family Law Act 1975 the parties intend these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

   B. Each party will seek accounting advice in respect to taxable losses made in respect to the Property T property.”

2. On 13 August 2013, the Court made Orders in respect of a subsequent Initiating Application filed by the Applicant on 17 June 2013. Those Orders dismissed the Applicant’s application (which was without merit) and provided for her to pay the Respondent’s costs in the sum of $1,650, and by 12 September 2013.

3. On 2 December 2013, the Respondent filed an Enforcement Warrant claiming an amount owing by the Applicant to him of $32,208, that sum including the costs of the application for enforcement warrant. The Respondent sought a sale of the Applicant’s real property and/or properties to provide the monies owing to him under the final Orders referred to in paragraph 1 and 2 of these Reasons. At the time of filing the Enforcement Warrant there had not been payment by the Applicant of the costs order, nor had the parties given effect to the final Orders.

4. On 27 March 2014, the Applicant filed an Application seeking a stay of the Enforcement Warrant proceedings. The Applicant asserted that the Respondent had failed in his obligations to refinance; to provide her with a Transfer of Land Form to sign; and to organise a settlement date as required by  him in accordance with the final Orders. These actions she now describes as a fundamental first step to enable both parties to comply with the final Orders. In fact the arranging of the mechanisms necessary to effect the transfer of real property was the responsibility of both parties and in the event of inaction by either or both there was liberty to apply generally as set out in the final Orders. I note that prior to lodging the Enforcement Warrant, correspondence had emanated from the Respondent’s solicitors to the Applicant dated 19 August 2013. That correspondence said relevantly as follows:-

   “We confirm that at the First Return Court hearing heard on Tuesday 13 August 2013, your Application to set aside the Final Orders dated 20 May 2013 (“Final Orders”) was dismissed and costs in the sum of $1,650.00 were awarded to our client.

   We note that these costs are due and payable within 30 days of the date of the orders which is Thursday 12 September 2013. Please provide a bank cheque payable to Goodman Group Lawyers prior to or by this date.

   In respect to the Final Orders, if no action has been undertaken by you in respect to the payment of $30,000.00 (“'the payment”) which you are required to apply to the (omitted) Bank mortgage (Account no. (omitted)) contemporaneously with transferring all of your right, title and interest in the property situated at Property N to our client, by close of business Friday 30 August 2013, we are instructed to initiate immediate enforcement proceedings.

   We are instructed that our client is able to contemporaneously refinance the balance of the mortgage encumbering the rea1 property immediately.”

   The Court notes no probative evidence in respect of the assertion that the Respondent could refinance the reduced mortgage (assuming payment of $30,000 by the Applicant) was provided with that correspondence.

5. On 9 September 2013, the Applicant emailed the Respondent’s solicitors advising that she was seeking legal advice. She attached invoices for rate payments in respect of the real property located at Property N in the State of Victoria (‘the Property N property’) to be made by the Respondent. She did not respond to the clear demand for payment of the costs as ordered, nor did she address the issue in dispute, namely the mechanics of putting the final Orders into effect. Nor did the solicitors for the Respondent when they replied by email on 9 September 2013. They merely notified the Applicant that an Enforcement Warrant would issue.

6. In support of his Enforcement Warrant, the Respondent swore an Affidavit on 13 November 2013. Annexed to that Affidavit as exhibit “O-3” is correspondence from (omitted) Ltd notifying the Respondent that his loan application to that company had been approved. The date of the loan application itself is not referred to. The correspondence is dated 8 November 2013. It is at that time, that the Respondent had proof to provide to the Applicant of his ability to refinance the mortgage as anticipated by the final Orders. The 45 day period referred to in the final Orders had expired on 4 July 2013. The Respondent claims however he was not in a position to proceed to obtain financial approval until after the determination of the Applicant’s unmeritorious Application of 17 June 2013, heard on 13 August 2013. I accept this. Forty five days from that date was 27 September 2013.

7. There is no doubt that the order for costs against the Applicant stands alone, and became duly payable by her on 12 September 2013. It was not paid until final resolution which came about by agreed implementation of the process of settlement necessary to give effect to the outstanding mechanical operation of the final Orders. On 28 August 2014, the Applicant’s lawyer received a letter from the Respondent’s lawyer enclosing necessary settlement documents. On 24 September 2014 and 26 September 2014, two letters were received by the Applicant’s lawyer from the Respondent’s lawyer providing settlement details and instructions, as well as a confirmation that the Respondent was now in a position to refinance the mortgage loan into his sole name. Settlement took place on 1 October 2014. Prior to that time the Respondent had filed a further Affidavit (affirmed 13 August 2014) in support of his application for a payment of damages by the Applicant in the sum of $1,672.65, being mortgage payments made by the Respondent in the absence of a reduction in his mortgage by the payment (by the Applicant) of the sum $30,000 to him. No further orders were made by the Court save each party was at liberty to make an application for costs. They each did so by written submissions. The Respondent’s submissions are dated 30 October 2014 and 13 November 2014. The Applicant’s submissions are dated 30 October 2014.

8. The Respondent seeks an order that the Applicant pay his costs of and incidental to the Application filed 27 March 2014 on an indemnity basis (or such other basis as the Court may determine) from 5 November 2013 by reason of the Applicant’s conduct as provided for in s.117(2A) of the Family Law Act 1975 (Cth) (‘the Act’) and particularly s.117(2A)(c) of the Act thereof. Such costs to be agreed and in default of agreement taxed.

9. The Applicant seeks that her costs be paid by the Respondent in the amount of $19,848.06 being on an indemnity basis. Failing indemnity costs being ordered, the Applicant seeks that the Respondent pay the Applicant's costs of and incidental to the Application filed 27 March 2014 in accordance with the Family Court scale from 6 December 2013 as agreed, and failing agreement as assessed.

10. The award of costs is a discretionary matter. The Court determines there be no order as to costs save in respect of the outstanding costs order, now paid by the Applicant, but only after litigation ensued. That order stood alone; was clear on its face; and had an obvious payment date. A written demand was made at the expiration of the specified stay period. No payment was forthcoming in response. When the costs payment ultimately was made, it was considerably out of time. In respect of that matter, and with reference to this Court’s scale of costs; those matters required to be taken into account by the Court pursuant to s.117(2A) of the Act; and in particular therein the fact that proceedings were necessary to ensure compliance by the Applicant with orders of the Court; and the further fact of the Applicant’s financial position, being relatively sound, with equity in real properties as at June 2012 of $1,307,724 (in the absence of further updated evidence filed), the Court shall order the Applicant to pay the costs in respect of that matter to the solicitors for the Respondent in the sum of $1,000.

11. As to the parties compliance with the final Orders of 20 May 2013, that is a more vexed issue. Firstly, the final Orders themselves are difficult to interpret. The use of the word “forthwith” in paragraph 1(i) of the final Orders does not sit comfortably with the inclusion of a 45 day period as appearing later in that order. There is not clarity about the reduction of the loan by the Applicant’s application of funds, and the precise timing of provision by the Respondent of proof of his ability to refinance. Both parties are responsible for the formulation of those final Orders. The Applicant then challenged the final Orders, creating further delay. Neither party approached the matter of the mechanics of settlement, in the absence of provision for same in the final Orders, in any practical way so as to give effect to their intent. The Applicant sought time for payment by her actions, and the Respondent failed to provide that which was necessary to effect a settlement. The Applicant failed to request it. The final Orders were defective in that regard and the parties failed to co-operate with each other. The Respondent’s financial position is very limited by comparison with the Applicant, and he has limited capacity to meet any order for costs were same to be imposed. But more to the fore is the behaviour of both parties in their joint failure to effect a timely transfer of real property from the Applicant to the Respondent. Neither acted reasonably. In the exercise of my discretion no costs order shall be made, save as provided for in paragraph 10 herein.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date:  11 February 2015