Agosti & Agosti
[2021] FedCFamC1F 72
•22 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Agosti & Agosti [2021] FedCFamC1F 72
File number(s): PAC 4110 of 2020 Judgment of: WILSON J Date of judgment: 22 September 2021 Catchwords: FAMILY LAW – COSTS – bettering Calderbank offer. Legislation: Family Law Act 1975 ss 13E, 13H, 117(1) 117(2A)
Matrimonial Cause Act 1973 (UK)
Cases cited: Berrigan Shire Council v Ballerini [2006] VSCA 65
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583
Calderbank v Calderbank [1975] 3 All ER 333
Cutts v Head [1984] Ch 290
Donnelly v Edelsten (1994) 49 FCR 384
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602
DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251
Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322
Fitzgerald v Fish (2005) 33 Fam LR 123
Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] FCA 1429
In the Marriage of Hogan (1986) 10 Fam LR 681
Jones v Bradley (No 2) [2003] NSWCA 258
Leichhardt Municipal Council v Green [2004] NSWCA 341
Messiter v Hutchinson (1987) 10 NSWLR 525
MT Associates Pty Ltd v Aqua-Max Pty Ltd [2000] VSC 163
Perry v Comcare (2006) 150 FCR 319
Roberts v Rodier [2006] NSWCA 1084
Semco Developments Pty Ltd v Graham [2005] VSC 268
Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97
White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 910
Division: Division 1 First Instance Number of paragraphs: 36 Date of last submissions: 13 September 2021 Date of hearing: On the papers Place: Melbourne Counsel for the Applicant: Mr P. Schroder Solicitor for the Applicant: Rafton Family Lawyers Solicitor for the Respondent: A B Mezzanotte Lawyers ORDERS
PAC 4110 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS AGOSTI
Applicant
AND: MR AGOSTI
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
22 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The applicant’s party/party costs must be assessed by a registrar of this court, such assessment must be completed by 22 November 2021, and paid by not later than 7 December 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Agosti & Agosti is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
By application in a case sealed on 15 July 2021, the applicant sought an order for the payment to her of the sum of $36,633.16 being scale costs in accordance with the schedule 3 of the Family Law Rules, such sum to be paid from the proceeds of sale of the former matrimonial home in default of payment or agreement. The applicant also sought her costs of and incidental to this application for costs.
The applicant contends that pursuant to the arbitral award[1] the outcome she achieved was more favourable than were the terms of the Calderbank offer[2] made by her to the respondent on 8 December 2020.
[1] This was published on 13 May 2021 and registered under s 13H of the Family Law Act 1975 on 16 June 2021.
[2] Such an offer originated from the decision of the Court of Appeal of England and Wales in Calderbank v Calderbank [1975] 3 All ER 333. That decision has been applied in seeming countless numbers since 1975 including in such cases as Cutts v Head [1984] Ch 290, Leichhardt Municipal Council v Green [2004] NSWCA 341 and Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97, to name but a few.
The respondent opposed the application for costs on two grounds. First, he argued that the offer made by letter dated 8 December 2020 was defective as to content. Second, he argued that the wife achieved an award that was higher than her offer because of the increase in the value of the property in Suburb B, New South Wales.
SYNOPSIS
For the reasons that follow, in my judgment –
(a)pursuant to s 117(2A)(f) of the Family Law Act 1975, the arbitrator’s orders conferred on the applicant an award more favourable than were the terms of the 8 December 2020 offer; and
(b)the applicant’s party/party costs must be assessed by a registrar of this court, such assessment to be completed by 22 November 2021 and paid by not later than 7 December 2021.
THE AWARD
By order of the Federal Circuit Court of Australia as it then was, made 15 February 2021 the whole of this proceeding was referred to arbitration under s 13E of the Family Law Act1975.
The proceeding was entered into the National Arbitration List, then of the Family Court of Australia, by orders made on 15 February 2021.
The arbitration was duly conducted and on 16 June 2021 the arbitral award was registered pursuant to s 13H of the Family Law Act 1975.
The arbitrator ordered the husband (the respondent in the proceeding and in the arbitration) to pay the wife (the applicant to the proceeding, in the arbitration and in this costs dispute) the sum of $600,000 by a specified date. If the husband failed to do so, the husband was to sell the property at C Street, Suburb B in the state of New South Wales and from the net proceeds of sale, pay the wife the sum of $600,000.
The sum of $600,000 represented 23% of the net assets that fell for division.
Shortly prior to this proceeding being referred to arbitration in February 2021, on 8 December 2020 the solicitors for the applicant wrote to the solicitors for the respondent proposing a resolution of the proceeding. The proposal was in the following terms –
“We are instructed to put forward the following offer of settlement to resolve all property matters between the parties:
1. That within 28 days from the date of Orders, your client will pay to our client the sum of $353,755.21, which equates to an amount equal to 20% based on our client’s side of the balance sheet prepared for the purpose of the Conciliation Conference on 30 November 2020.
2.That the parties otherwise retain all bank accounts, shares, interest in any businesses, superannuation and motor vehicles in their current possession, custody and/or control.
3. That the parties otherwise be solely responsible for any credit cards, loans or any other liabilities in their sole names.
The offer of settlement contained in this letter is made pursuant to the principles of Calderbank v Calderbank [1975] 3 All ER 33. We reserve the right to tender this correspondence in relation to costs should the matter proceed.
Mechanical issues aside, the applicant was offering to resolve the entire proceeding if the respondent paid her the sum of $353,755.21. The offer was expressed to be made pursuant to the principles espoused in Calderbank v Calderbank.
It will at once be apparent that no date was specified in the offer as being the latest time and date by which the offer remained open to acceptance. It seemed that the offer was not accepted, whether within a reasonable time after its making, or at all. The case continued, the arbitration was conducted and orders were made in favour of the applicant more favourable than were the terms of the 8 December 2020 proposal.
The parties have joined issue with the terms of the 8 December 2020 letter and whether it is sufficient to invoke the principles in such authorities of indisputable veneration such as Calderbank v Calderbank, Cutts v Head, and others. The point is important because a significant costs liability follows if the 8 December 2020 offer is in proper form whereas the usual principle flowing from s 117(1) applies, that each party bear her and his own costs, if the offer is defective.
CALDERBANK OFFERS
The starting point in the analysis is the decision of the UK Court of Appeal in Calderbank v Calderbank. Prior to that decision few, if any, illustrations had emerged from the decided cases under the 1973 Matrimonial Cause Act (UK) about offers intended to resolve the litigation between a husband and a wife when the relevant offer was expressed in correspondence passing between solicitors. Cairns LJ referred to the practice then in existence in the Land Tribunal and in the Admiralty Court about an offer being made on particular terms, no reference being made to the offer until after judgment and if the judgment was more favourable to the party who made the offer as what was offered, then costs would be awarded on the basis as if there had been a payment in.[3]
[3] [1975] 3 All ER 333, 342 (at (f)).
In Calderbank the offer was in the following terms –
“I am willing and have always been willing, to make over to the [husband] the house at Alderley Edge.”
In this case, in the 8 December 2020 offer, no date was stipulated for acceptance of the proposal nor were the costs consequences of non-acceptance spelled out. In Calderbank, Cairns LJ held that the wife was entitled to her costs. Scar man LJ and Sir Gordon Wilmer agreed.
The precise terms of the offer in Calderbank v Calderbank were examined by Oliver and Fox LJJ in Cutts v Head.[4] Their Lordships considered the formulation by Cairns LJ in Calderbank as dictum only, and, while “obviously a sensible and convenient one in a case where payment into court is not appropriate, it (was) not, therefore, surprising to find that practitioners were quick to adopt it.” Their Lordships addressed the consequences of the trial judge refusing to admit the without prejudice offer. On that basis the appeal was allowed. That point is very different to the situation with which I am concerned.
[4] [1984] 1 Ch 290.
Calderbank offers have attracted attention by Australian courts, not only at single judge level but also at intermediate appellate level. In Leichhardt Municipal Council v Green[5] the court focused on the genuine nature of the offer, holding that an offer with no real element of compromise in it, but which is designed to trigger costs sanctions, will not be regarded as a genuine offer of compromise. In this case, it could not be sensibly suggested that anything otherwise than a genuine attempt to resolve the litigation was being proffered by the 8 December 2020 letter. Moreover, it was expressed to be without prejudice except as to costs and it also specifically incorporated reference to Calderbank v Calderbank, an authority well known since 1975 as invoking issues of litigation resolution. To my mind, the 8 December 2020 letter was a genuine offer. Whether the offer was sufficiently clear, precise and certain, within the contemplation of the decision of the Federal Court of Australia in Perry v Comcare[6] is a matter to which I now turn.
[5] [2004] NSWCA 341.
[6] (2006) 150 FCR 319.
The offer in that case was quite different to the offer in this case. It was as follows –
Without prejudice save as to costs
Dear Sirs
MCRS ats Perry
We refer to our telephone conversation this morning and enclose a copy of our letter which is being forwarded to the AAT.
We confirm that our client is willing to accept liability for your client’s claim and pay compensation for incapacity payments for the period April 1976 to February 1979 with a cessation of liability from the end of February 1979.
Could you please note that, if this offer is not accepted, our client proposes to rely upon the terms of this letter on the question of costs in the event the matter proceeds to hearing. In particular, if the offer is not accepted and the Applicant does not achieve an outcome in the Tribunal Proceedings which is materially better than the terms of our client’s offer, as set out in this letter, our client will, in due course:
1. Oppose the Applicant being awarded costs on and from the date of this letter; and
2. Apply to have any costs the Applicant would otherwise be awarded up to the date of this letter reduced by the amount of costs our client incurs from the date of this letter.
Yours faithfully
Dibbs, Barker Gosling
In that case the applicant elected not to accept the offer.
In Perry v Comcare, Greenwood J adopted the observations of Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2).[7] There, Goldberg J held as follows –
As a matter of principle, if a party is to be put at risk of losing its costs, even if ultimately successful, by not accepting an offer made to settle or compromise the proceeding at a point of time prior to trial, that risk should only be imposed if the party is given the opportunity at the time of the offer, to obtain its taxed costs to date in addition to the offer made, knowing that it has been able to make a careful comparative assessment of the value of the offer as against the ultimate relief sought to be obtained.
[7] [2000] FCA 602 (at [24]).
Greenwood J was not persuaded that the offer was clear and precise because the offer did not make it plain, at the time of the offer, that the offeror would obtain his taxed costs of the proceeding to date. In other words, Greenwood J took the view that the offer was not “couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief being sought in all its aspects.”[8] Greenwood J held as follows –
“Accordingly, the respondent’s letter of offer was not sufficiently clear so as to convey without any room for ambiguity that the applicant as a term of a proposed settlement would obtain his taxed costs of the proceedings to the date of the offer. Accordingly, the letter of offer did not satisfy the central requirement of a Calderbank letter.
[8] (2006) 150 FCR 319, 335 (at [55]).
In this case the respondent contended that applying that observation to the offer in this case, the 8 December 2020 letter did not convey, without any room for ambiguity, that the applicant as a term of a proposed settlement offer would obtain his taxed costs to the date of the offer. The applicant submitted in reply that the offer was clear and that the labelling of the offer was of no relevance.
The need for precision in respect of the offer was restated by Campbell J in Roberts v Rodier.[9]
[9] [2006] NSWCA 1084.
In Elite Protective Personnel Pty Ltd v Salmon[10], the Court of Appeal of the Supreme Court of New South Wales was concerned with the consequence of the non-acceptance of an offer, expressed to be without prejudice except as to costs, in circumstances where the offer of a particular sum inclusive of costs in full settlement of the matter, was open until a specific date. The Court of Appeal made a number of important observations about Calderbank offers, including the following –
(a)citing Messiter v Hutchinson,[11] the court held that a Calderbank letter makes an offer of settlement and warns that the letter will be relied upon on the question of costs if and when that issue arises;
(b)citing Jones v Bradley (No 2)[12] the court held that Calderbank offers are a well-recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted;
(c)citing Donnelly v Edelsten[13] the court held that it is relevant for the court to consider the conduct of the offeree especially whether the offeree had an appropriate opportunity to consider and deal with the offer;
(d)citing Smallacombe v Lockyer Investment Co Pty Ltd[14] the court held that a Calderbank letter expressed to be inclusive of costs will not warrant departure from the usual basis upon which a successful party’s costs are calculated;
(e)the court observed that authorities such as Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [15] and Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd)[16] recognise the importance of isolating the costs component in such manner as it is clear and capable of proper assessment independently of the principal claim as part of a Calderbank letter;
(f)citing White v Baycorp Advantage Business Information Services Ltd[17] the court held that a line of authority exists to the effect that it is not appropriate for a plaintiff who claims payment of a sum of money to serve a Calderbank offer offering to settle a claim upon payment of a particular sum of money inclusive of costs because the offeree is placed in a position of not being able to determine the appropriate amount to attribute to the substantive claim as opposed to the costs incurred in advancing it;
(g)referring to Victorian authority in MT Associates Pty Ltd v Aqua-Max Pty Ltd[18], Semco Developments Pty Ltd v Graham[19] and Berrigan Shire Council v Ballerini[20] the court held that all-in Calderbank letters pose difficulties when a court came to consider the reasonableness of not accepting the offer; and
(h)against those Victorian authorities the court cited the decision of Allsop J (as the Chief Justice was then) in DSE (Holdings) Pty Ltd v InterTAN Inc[21] in which Allsop J held that no definitive rule exists to the effect that in an application for costs, an all-inclusive offer could not, in any circumstance, be taken into account in an application for indemnity costs.
[10] [2007] NSWCA 322.
[11] (1987) 10 NSWLR 525.
[12] [2003] NSWCA 258 (at [5]).
[13] (1994) 49 FCR 384, 396.
[14] (1993) 42 FCR 97.
[15] [2006] NSWSC 583.
[16] [1998] FCA 1429.
[17] [2006] NSWSC 910.
[18] [2000] VSC 163.
[19] [2005] VSC 268 (at [28]).
[20] [2006] VSCA 65.
[21] [2004] FCA 1251.
As is apparent from that distillation of authorities prevailing to March 2007, a significant weight of authority recognised all-in Calderbank offers, other authorities highlighted complications with all-in Calderbank offers and other authorities still have pronounced upon the need in a Calderbank offer for the offer to be framed in such a way that the offeree can carefully consider the difference between the offer made and the ultimate relief being sought in all respects, especially as to costs.
CONSIDERATION
In this case the respondent argued that the offer was defective. I do not agree.
The offer conveyed in the 8 December 2020 letter was not expressed to be open for acceptance by a stipulated date. As it happened, that seems to have been unimportant because the evidence revealed that the respondent did not address the letter dated 8 December 2020 at all and instead pressed ahead with the arbitration. It must be inferred that by reason of the offer not having been accepted within a reasonable time for acceptance, the offer lapsed.
Either expressly or tacitly, the respondent placed reliance upon the observations of Greenwood J in Perry v Comcare. It was said that the offer dated 8 December 2020 did not clearly and precisely make it plain to the respondent, as at the date of the offer, that the applicant would obtain her taxed costs of the proceeding to the date of that offer. That reasoning resonates with the reasoning of Goldberg J in Dr MartensAustralia Pty Ltd v Figgins Holdings Pty Ltd (No 2)[22] where his Honour held as follows –
“If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects. An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking. Although an estimate can be made of what the offeree’s taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim.”
[22] [2000] FCA 602.
In Elite Protective Personnel Pty Ltd v Salmon [23] Basten JA rebutted that suggestion. There, his Honour held as follows –
If a party in receipt of an offer wishes to know how far the sum offered will go in meeting its costs up to that time, all it has to do is ask its lawyers. In an age where lawyers are required to provide advance estimates of their fees and in circumstances where commercial services are billed on a monthly basis, it is unrealistic to suggest that the recipient of an inclusive offer will be confused or otherwise unable to assess the financial risk of proceeding with litigation.
[23] [2007] NSWCA 322 (at [143]).
It must not be forgotten that the applicant, in her proposal dated 8 December 2020, was offering to accept a particular sum in compromise and in resolution of the litigation. It was her offer that was silent as to costs. Precisely how she was to apply the sum, if accepted, was a matter for her. But some of the offered sum was to go towards meeting her outstanding legal fees. She and her solicitors knew the quantum of those costs as at the date of the offer. So if the offer had been accepted and the sum paid, the applicant would have been required to pay her own legal fees from that amount. As it transpired, the arbitral award made provision for her to receive a sum certain, $600,000. The amount ordered that she receive eclipsed the sum recorded in her offer of 8 December 2020. In my view, that enlivens s 117(2A)(f) of the Family Law Act 1975. Only one subsection of s 117(2A) needs to be engaged to justify an order being made under s 1117(2).[24] And even though an order may be made under s 117(2) that deviates from the more usual order under s 117(1), any such costs order must be just in all the circumstances.[25]
[24] Fitzgerald v Fish (2005) 33 Fam LR 123.
[25] In the Marriage of Hogan (1986) 10 Fam LR 681.
In my view, it is just in all the circumstances to make a costs order against the respondent.
The second basis of opposition to the imposition of a costs order was the respondent’s assertion that the sum ordered to be paid to the wife was as high as it was by reason of the increase in property prices.
Once it is recognised, as it must be, that the relevant date for the consideration of property and its value is the date of the trial in court or the arbitral hearing in an arbitration, then it must also be recognised that often the value of real estate increases between the date of the rejection of an offer of compromise and the date of a trial in court or a hearing in an arbitration. But the mere fact of that occurrence should not deprive a party of his or her costs where that party has bettered at trial or arbitration the sum that was the subject of the offer of compromise. Where property prices are increasing, it is always possible for an offeror of a compromise to state that the offer is open for a prescribed period but not beyond. If the market increases between the rejection or lapse of that offer, a respondent can hedge his or her risk by putting a different offer of compromise to reflect the movement in property prices. But that is an altogether different proposition to saying that by reason of the increase in property prices a party who, after trial or arbitration, betters the sum that was earlier offered should not have his or her costs.
CONCLUSION
In my view the applicant has established an entitlement to a costs order under s 117(2) of the Family Law Act 1975.
She sought the sum of $36,633.16, a very precise figure. It reflects the computation of costs according to a scale. Whether that computation is accurate is a matter beyond the facts of the present case. The task of assessing costs should be performed by a registrar. Whether that assessment comes to $36,633.16 must await assessment. I direct that the assessment be conducted and completed by 22 November 2021 and paid by 7 December 2021.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Dated: 22 September 2021
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