Vardy and Vardy (No 2)
[2015] FamCA 1063
•25 November 2015
FAMILY COURT OF AUSTRALIA
| VARDY & VARDY (NO 2) | [2015] FamCA 1063 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| JEL v DDF (No 2) (2001) FLC 93-083 |
| APPLICANT: | Ms Vardy |
| RESPONDENT: | Mr Vardy |
| FILE NUMBER: | SYC | 5082 | of | 2012 |
| DATE DELIVERED: | 25 November 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 25 November 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Othen |
| SOLICITOR FOR THE APPLICANT: | Alexanders Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Nicholas Vasta & Company |
Orders
Within 28 days the husband pay to the wife the wife’s costs assessed in the sum of $23,000.
In the event that the property at B Street, Suburb C is sold as a result of order 5 made 29 May 2015, any amount outstanding under order 1 is to be paid to the wife prior to the balance of the proceeds of sale being paid to the husband pursuant to order 8.8 made 29 May 2015.
I note that the order for the payment of $23,000 is additional to the two previous orders that have been made on 18 December 2012 and 13 May 2013 that the husband pay the wife’s costs in the sum of $1,100 and $3,000 respectively.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vardy & Vardy (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5082 of 2012
| Ms Vardy |
Applicant
And
| Mr Vardy |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
INTRODUCTION
In these proceedings the wife applies for an order that the husband pay her costs of the proceedings for property settlement and lump sum child support from 8 February 2013 to date, on an indemnity basis. The significant of the date of 8 February 2013 on the wife’s application is a date that she made an offer which is in evidence before me. Judgment was delivered by me on 29 May 2015. In those proceedings the husband was found to have failed to make proper disclosure of his financial position. By way of final property settlement, the husband was ordered to pay to the wife $200,000. No order was made for lump sum child support.
The husband was substantially self-represented during the course of the proceedings and particularly at the final hearing.
THE LAW TO BE APPLIED
Ordinarily each party bears their own costs (s 117(1) Family Law Act 1975 (Cth) (“the Act”)). However the court, if it considers it just, may make an order as to costs if the court is of the opinion that there are circumstances to justify doing so (s 117(2) of the Act). In considering whether or not a costs order should be made, the court shall have regard to the matters set out in section 117(2A) of the Act:
(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.
Rule 19.18(1)(b) and (3) Family Law Rules provide that the court may make an order for indemnity costs and relevantly in this case, the court may consider the reasonableness of a party’s behaviour in the case.
Indemnity costs are only ordered in exceptional cases (see Kohan & Kohan (1993) FLC 92-340).
In Munday v Bowman (1997) FLC 92 – 784, Holden CJ highlighted at [84660] examples of circumstances where indemnity costs may be awarded (footnoted omitted):
(a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts.
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.
(c) Evidence of particular misconduct causing loss of time to the court and to other parties.
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless.
(e) An imprudent refusal of an offer to compromise
This list is inexhaustive however, and it is clear that each case shall be assessed on its individual merits (see Yunghanns & Ors and Yunghanns & Ors and Yunghanns (2000) FLC 93-029).
In relation to a failure to accept an offer, the Full Court in JEL v DDF (No 2) (2001) FLC 93-083 stated at [88442] that:
68. We accept the proposition that the objective of the statutory provision in relation to written offers is to encourage settlements and to reduce the cost of litigation to the parties and the community. That, however, does not mean that the failure to accept an offer will necessarily result in an order for indemnity costs.
69. As the Full Court said in Kohan (supra):
“Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income as in Penfold v Penfold (1980) FLC 90-800 and Oriolo and Oriolo (1985) FLC 91-653, no more than party and party costs have been awarded.”
70. In our opinion, the failure to accept an offer which in retrospect, perhaps, should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis. The rejection of the offer must be at the very least imprudent. We express no opinion as to when the rejection of an offer may be so classified.
In [69] of those reasons, the Full Court said, even in cases where there has been dishonest concealment of assets or income (as in Penfold or Oriolo), no more than party/party costs have been awarded.
In regard to the comment made at [69] of JEL v DDF, the position has somewhat changed. The Family Court has become less reluctant to order indemnity costs where there has been a dishonest concealment of financial circumstances.
In Fraser v Moedt (unreported, Family Court of Australia, Full Court, 30 October 1997) the Full Court held that:
Having regard to our findings as to the husband’s blatant and deliberate non-disclosure, the magnitude of the sums involved and comparisons with the fact situations in Weir’s case and Kohan’s case, this is a case where we consider the wife should receive all rather than half of her costs of the proceedings and that such costs should be ordered on a solicitor and client basis. The wife should not have to bear the cost consequences of the husband’s intentional tactics and we propose to order accordingly.
This is a case where there was a finding made that the husband had failed to make a full and frank disclosure.
The financial circumstances of each of the parties to the proceedings
The orders made on 29 May 2015 provided that the husband pay to the wife the sum of $200,000. From those funds, the wife will have to pay her lawyers an amount exceeding $40,000.
At the time of the final hearing the wife had minimal funds in bank accounts.
The husband is the owner of a property at Suburb C which was valued at the time of the hearing at $1,500,000. The husband is the director of a business. I found in my reasons for judgment of 29 May 2015 that the husband has an interest of significant value in that business. However, I was unable to assess what that might be worth as a result of the husband’s conscious decision not to fully disclose his current financial circumstances as it related to that business.
As indicated in the reasons for judgment, it was not possible to make findings as to the true extent of the husband’s assets and income. This was due to the way in which the husband conducted himself in the proceedings, including his failure to produce documents or make a full and frank disclosure.
The wife was, at the time of the hearing, earning $1,900 per week.
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
Neither party is in receipt of a grant of legal aid.
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
As indicated, I found in my reasons for judgment dated 29 May 2015 that the husband failed in his obligation to provide full and frank disclosure. Due to the husband’s failure to provide full disclosure, two conciliation conferences were abandoned on 18 December 2012 and 15 April 2013. On 18 December 2012 the husband was ordered to pay the wife’s costs of $1,100 and at the time of the hearing, the husband had failed to make that payment. The husband was also ordered to pay costs of $3,000 in relation to an event on 13 May 2013 and he failed to make that payment as well. Given that that second order was made on 13 May 2013, I need to ensure there isn’t a double counting in relation to an amount that is sought after 8 February 2013 and I will take the existence of that cost order into account later in the reasons.
There are a number of aspects of the case as presented by the husband which were unmeritorious. They included:
20.1.The assertion of a loan from the respondent’s mother in relation to which the respondent husband produced no documentary or witness evidence;
20.2.The assertion that the husband’s business was owned by another without producing any documentary or witness evidence;
20.3.The deliberate decision not to produce financial records. As I record at [16] of the reasons for judgment, the husband candidly admitted in oral evidence that he had deliberately chosen not to provide information, saying words to the effect that the reason he did not give all the documentation was because of the manner in which the documents he had provided in the past in interim proceedings had been used against him in cross examination.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
As indicated, the husband failed to comply with orders of this court to provide information about his financial circumstances.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
Counsel for the wife did not submit that this was a relevant consideration. The husband was not wholly unsuccessful in the proceedings in respect of property adjustment and lump sum child support. The order made was for $200,000 not $300,000 as sought by the wife and the wife was wholly unsuccessful in her application against the husband to seek an order for lump sum child support.
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
An offer was made on 8 February 2013 and although the husband’s lawyer from the bar table informs me today that the husband may not have received that offer at the time, I cannot have any regard to that given that on 24 September 2015 the husband had three weeks to file and serve any affidavit upon which he sought to rely. He did not and I have no evidence to support the assertion made from the bar table. In that offer, the wife indicated that she would settle the property proceedings if she received $200,000, which was exactly the order that was eventually made. Whilst the offer is relevant to the property settlement order, that was not the entirety of the wife’s application. She also sought a lump sum child support order and that order was not made.
CONCLUSION AS TO AN ORDER FOR COSTS
My conclusion having regard to all of those matters is that once all the considerations pursuant to s 117(2A) of the Act are taken into account, I find that it is just for an order to be made that the husband pay the wife’s costs.
In my view in the circumstances of this case, the deliberate concealment of assets and income by the husband justifies an order which is more than an order on a party/party basis. The wife would have had to incur some expenses for her legal fees even if the husband had not conducted the litigation in the way that he did and I take that into account as a consideration.
I have also looked at the information contained in the affidavit of the wife’s lawyer and it is clear to me that the wife’s legal bill is far more than it should have been had the case been properly conducted by the husband. I think it is appropriate, in order to limit the future costs of the parties, to assess some figure.
I accept the submission from counsel for the wife that given the chargeout rates of the wife’s lawyer, that the overall bill to the wife is somewhere between scale and what would be ordered on an indemnity basis if the wife had been represented by other lawyers.
I take into account that this case may well have been straightforward had the husband not conducted the litigation in the way that he did which added to the complexity and difficulty unnecessarily.
The wife’s claim is for $29,000 which is the full amount on an indemnity basis from the date upon which she claims costs. I take into account the wife already has the benefit of the costs order made on 13 May 2013 in the sum of $3,000. I am prepared to assess the wife’s claim at $23,000 and I will make an order in that amount in the wife’s favour.
The husband shall have 28 days to pay that amount of costs. In the event that he does not, I will make an order that the wife may recover that amount from any sale pursuant to the orders of 29 May 2015 of the property at B Street, Suburb C.
I certify that the preceding thirty (30) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Watts delivered on 25 November 2015
Associate:
Date: 25.11.2015
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Costs
-
Remedies
0
0
2