ANSELL & HAALA
[2012] FamCAFC 122
FAMILY COURT OF AUSTRALIA
| ANSELL & HAALA | [2012] FamCAFC 122 |
| FAMILY LAW – APPEAL – Appeal against an order for costs – Where the Magistrate primarily based his decision on offers of settlement – The Magistrate weighed up all the factors in s 117(2A) and the order made was within his discretion – Appeal dismissed. |
| Family Law Act 1975 (Cth), s 117 |
| Browne v Green (2002) FLC 93-115 Collins and Collins (1985) FLC 91-603 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish and Another (2005) 33 Fam LR 123 Gronow v Gronow (1979) 144 CLR 513 Harris and Harris (1991) FLC 92-254 I and I (No 2) (1995) FLC 92-625 Robinson & Higginbotham (1991) FLC 92-209 |
| APPELLANT: | Mr Ansell |
| RESPONDENT: | Ms Haala |
| FILE NUMBER: | PTW | 2866 | of | 2008 |
| APPEAL NUMBER: | WA | 25L | of | 2011 |
| DATE DELIVERED: | 17 August 2012 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Thackray J |
| HEARING DATE: | 10 May 2012 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 15 July 2011 |
| LOWER COURT MNC: | PTW 2866 of 2008 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | In person |
Orders
The appeal be dismissed.
There be no order as to the costs of the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ansell & Haala has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 25 L of 2011
File Number: PTW 2866 of 2008
| Mr Ansell |
Appellant
And
| Ms Haala |
Respondent
REASONS FOR JUDGMENT
Introduction
This is the husband’s appeal against the order of Family Law Magistrate Moroni made on 15 July 2011 requiring the husband to pay the wife $37,500 by way of costs arising out of the substantive property settlement proceedings.
The wife opposes the appeal.
Background
On 16 June 2008 the husband and wife filed an application for consent orders for property settlement. By letter dated 10 July 2008 a Registrar of the Family Court of Western Australia requested further information from the parties, having not been satisfied that “the orders sought [were] appropriate”.
The wife replied seeking further direction. In response, the Registrar set out the options available, and reiterated, “I do not intend to pronounce the orders sought until I receive the information requested in my letter”.
The wife then withdrew her consent to the proposed orders and filed an application for property settlement on 11 December 2008.
The matter came on for trial before Family Law Magistrate Moroni in February 2011. His Honour published his reasons and made orders in April 2011. After receiving oral and written submissions in relation to costs, his Honour made the costs order that is the subject of this appeal.
On 27 September 2011 the husband filed an Application in an Appeal seeking an extension of time within which to appeal both the property settlement orders and the costs order. On 3 November 2011 the application for an extension of time in relation to the property orders was dismissed, but an extension of time in relation to the costs order was allowed.
This appeal therefore concerns only the order requiring the husband to pay the wife $37,500 by way of costs.
The Magistrate’s reasons
The learned Magistrate recorded that he had before him competing applications for costs, and that the combined legal fees exceeded $156,000.
After briefly outlining the provisions of the Family Law Act 1975 (Cth) (“the Act”), his Honour first considered the husband’s application for costs against the wife. The husband’s application was based on his submissions that the wife received far less than what she sought in her Papers for the Judicial Officer, that she was “wholly unsuccessful”, and that her conduct mandated a costs order. The Magistrate rejected all of these submissions.
His Honour said that the fact that a party receives less than what they asked for in open court, does not, of itself, warrant the making of a costs order. His Honour also disagreed that the wife was “wholly unsuccessful”, even though she received less than what she proposed. In fact, his Honour recorded that the wife received “a fairly substantial portion of the combined wealth of the parties…significantly more than [the husband] proposed”.
In relation to the wife’s conduct, his Honour found that the wife “had no interest in delaying the proceedings or in failing to give disclosure”. Although there were “some arguments along the way in relation to disclosure and other interlocutory issues”, his Honour considered these issues ought to have been resolved “by way of application to a magistrate in the general list and then by the making of costs orders by reference to discrete interlocutory applications”.
His Honour concluded that having regard to the way the wife conducted her case and the “balance of section 117(2A) matters”, there was no basis for a costs order against the wife.
The Magistrate next dealt with the wife’s application for costs against the husband. First, his Honour considered s 117(2A)(f) of the Act, namely whether any offers to settle were made by either party.
His Honour outlined a brief history of the proceedings and the relevant offers made by the parties. In this regard, his Honour said (at page 9):
…what has emerged now, after the trial was completed, is that [the wife] did make offers in writing to [the husband], direct to him, to settle for much less than she actually received and, in fact, for quite a lot less than she was ultimately awarded.
In particular, the Magistrate considered the wife’s offer made on 5 March 2009 by email to the husband. His Honour found this offer was more favourable to the husband than the ultimate outcome at trial.
It was argued by counsel for the husband that he was entitled to reject the offer made on 5 March 2009 as it came direct from the wife, not from her solicitors. Counsel submitted that the husband “could not rely on [the wife] to follow through in the sense of arranging for her lawyers to put a formal minute to [the husband]”. His Honour rejected this argument, stating that s 117(2A)(f) does not require that offers only be made by lawyers.
His Honour then considered an offer made by the wife on 23 July 2010 by email, which was again rejected by the husband. At page 10, his Honour said:
[The wife], some 16 months later and many dollars in legal costs invested later, went back to [the husband] with the same offer. There is an email in the papers bearing the date 23 July 2010, and it is clear from the terms of that email that by this stage [the wife] was becoming a little “spooked”, for want of a better expression, about the extent of the legal bill which she was running up.
However, again her offer was rejected by [the husband] almost out of hand and again the same argument has been put to the Court by [the husband’s] counsel to explain the rejection; that is to say, again it was argued that [the husband] was entitled not to trust [the wife] to follow-up with her lawyers, on the basis that [the husband] considered that [the wife] was the one to blame for the fact that the application for consent orders was never finalised back in 2008.
His Honour considered the circumstances in which the offers were made, and concluded that the wife was “deadly serious” about settling the matter on the terms contained in the original consent orders. His Honour said (at page 11):
[The wife] was in the much weaker financial position, she was becoming alarmed, particularly by the time she made the second offer, about her legal costs, and she makes specific reference to the additional costs of having to instruct a barrister, which apparently took her by surprise. So it seems to the Court that it is crystal clear that [the wife] was indeed serious about trying to bring the case to an end.
…
It seems to the Court that it would be failing in its duty if it did not accord full weight to the circumstances surrounding the making by [the wife] of offers to settle on 5 March 2009 and 23 July 2010. To repeat: [the wife] proposed on both of those occasions to settle for about $78,000 less than her final award, and in the Court’s view this can only be seen as a most compelling circumstance.
His Honour therefore concluded “the fact of these offers being made alone probably supports the making of a costs order”. However, the Magistrate went on to consider other factors in s 117(2A) of the Act, such as the husband’s capacity to meet an order for costs. In this regard his Honour concluded that the husband’s stronger financial position was only relevant to the question of whether or not the husband had capacity to meet a costs order.
The wife’s complaints about the husband’s conduct of the matter, such as his failure to provide adequate disclosure, were examined, but ultimately his Honour was not convinced that the circumstances supported the wife’s application for costs.
His Honour next dealt with s 117(2A)(e) of the Act, and considered whether the husband was “wholly unsuccessful”, not just in relation to the final outcome, but in relation to discrete issues. At page 15-16, his Honour said:
As correctly pointed out by both counsel, there is provision for the Court to take into account the failure of, or rather, a party being “wholly unsuccessful” in relation to single discrete issues, not just the final outcome. In that respect, it is true that there were a couple of important findings of fact which were made against [the husband].
The first of course related to the $200,000 which was sent off to New Zealand or, at least, said to have been sent off to New Zealand. …
…it does need to be said that the raising of this issue by [the husband] probably did not increase [the wife’s] costs heavily, because it did not require her to go into print on the subject on the basis that this was something which happened post-separation about which she had no knowledge.
However, that said, it was an issue maintained by [the husband], in circumstances where really it had no legs. [The wife’s] barrister still had to put some time and effort into considering the issue and she still needed to cross-examine on the subject and so there was time wasted, and it would have impacted on the fees charged by [the wife’s] barrister. So it is a matter which the Court will take into account in the broad exercise of its discretion.
Otherwise, [the wife] says that [the husband] was unsuccessful when he alleged that the parties were separated for relatively brief periods in 2002 and 2005. …
… at the end of the day the raising of the issue made no difference to the result and it probably made no great difference to the way in which [the wife’s] case had to be prepared.
Thus whilst his Honour considered s 117(2A)(e) had some relevance, he concluded at page 17 that:
…the really compelling element of [the wife’s] case concerns the making of the two offers to settle which, in the Court’s view, must be given appropriate weight. So in the result the Court is satisfied that it ought exercise its discretion to make a costs order in favour of [the wife].
The Magistrate then considered the wife’s claim for costs to be awarded on an indemnity basis, but ultimately considered it was appropriate in all of the circumstances to award costs on a party-party basis, fixed in the sum of $37,500.
The grounds of appeal
There were 20 grounds of appeal in the husband’s Amended Notice of Appeal filed 6 February 2012. However, consideration of the submissions makes clear that the real challenge was based on the following ground, namely that:
· His Honour erred in the exercise of his discretion by concluding that the husband’s failure to accept one of the two offers of settlement made by the wife was sufficient grounds for the award of costs against the husband.
History of the two offers for settlement
It is important to set out the history of the offers of settlement made by the wife referred to in his Honour’s reasons. In considering those offers, it is important to note the effect of the property orders made on 8 April 2011. The wife was to retain the property at U Street, subject to the mortgage. This property had an agreed value of $450,000, with a mortgage of $177,112. The husband was to pay the wife $78,149, and otherwise the parties retained all property and superannuation held in their names. The husband retained an unencumbered property with an agreed value of $540,000, along with shares and superannuation funds well in excess of the wife’s.
As noted earlier, the wife filed her application for property settlement on 11 December 2008. On 5 March 2009, by way of personal email to the husband, the wife confirmed her willingness to withdraw from the court proceedings. The email read as follows (errors in the original):
Hi [Mr Ansell],
I jjust wanted to say that I have woken up feeling a lot better this morning and no so emotional thank god. I have decided to stick to my decision and go ahead with the plan of withdrawing court procedures. As I said yesterday I will confirm this decision with my lawyer today but before I do that I need to hear from you that you will be dealing with the consent orders. I don’t see why we can’t do them ourselves again and really there should be minimal fees attached. …
It appears that the parties had spoken the day before this email was sent. Although not explicitly stated in this correspondence, it is clear from a further email (set out below) that the wife agreed to settle the matter in the terms set out in the original consent orders filed on 16 June 2008. The original consent orders proposed that the wife retain the U Street property, subject to the mortgage and the parties otherwise keep the property they held. The husband rejected this offer.
In July 2010, again by way of personal email, the wife offered to settle in terms of the original consent orders. This email read as follows (errors in the original):
Hi [Mr Ansell]
… As I said yesterday I am prepared to cut my losses and work with u to get the information to give them and we can also write a letter or I can stating how I took their advice and all it did was cost me $30 000 and a hell of heartache and stress.
The husband again rejected the offer. The wife responded on 3 August 2010, confirming her two attempts to settle the matter:
Dear [Mr Ansell],
… So just for the record this is the second time (first being in March 2009) I have approached you and offered to work with you to get our original consent orders through the court. As I stated to you on the phone on 22nd July 2010 I am unable to negotiate further around this offer. Thanks for taking the time to consider it…
The matter proceeded to trial in February 2011. The wife’s award after the final hearing was $78,149 more favourable to her than her two offers.
Relevant law
The general principle in relation to costs is set out in s 117(1) of the Act, namely that each party to proceedings shall bear their own costs. Subsection 117(2) provides that if there are circumstances that justify it, a court may make such order as to costs as it considers just. Section 117(2A) of the Act sets out the matters to which a court must have regard when considering what order (if any), should be made as to costs under s 117(2). The section is in the following terms:
(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.
The discretion conferred by s 117 has been described by the Full Court as being a “broad” one, and the s 117(2A) factors are not to be read in a restrictive way: see Collins and Collins (1985) FLC 91-603 at 79,877. Further, an appellate court should be very reluctant to interfere with the exercise of discretion in respect of costs: see Browne v Green (2002) FLC 93-115 and Harris and Harris (1991) FLC 92-254.
Discussion and outcome
The husband complains that the Magistrate erred in concluding that his failure to accept one of the two offers of settlement made by the wife was sufficient grounds for the award of costs. It will be recalled that his Honour considered that the “really compelling” element of the wife’s application for costs was “the making of the two offers to settle”.
The Full Court has made clear that any one of the factors referred to in s 117(2A) may be the sole foundation for an order for costs. The court said in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish and Another (2005) 33 Fam LR 123 at 130 [at 41]:
…A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
Subparagraph 117(2A)(f) was considered in Robinson & Higginbotham (1991) FLC 92-209 at 78,417, where Nygh J said (Simpson and Smithers JJ concurring):
…when one looks to paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure the costs of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. In the circumstances of this case, although paragraph (f) does not have a priority per se, the considerations represented by paragraph (f) are of overriding importance.
Nevertheless, as the Full Court said in I and I (No 2) (1995) FLC 92-625 at 82,277, the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.
Whilst his Honour was of the view that the offers to settle were the “overriding factor” to be taken into account, he did consider other relevant matters in s 117(2A). As will be recalled, his Honour considered that the non-disclosure by the husband in relation to the $200,000 alleged to have been sent to New Zealand would be taken into account by the court “in the broad exercise of its discretion”.
His Honour also considered a number of other complaints about the lack of disclosure, but ultimately decided that there was nothing in s 117(2A)(c) which would support the wife’s costs application. It is clear that his Honour weighed up the factors in s 117(2A), as he was required to do, and made a determination that was open to him on the facts.
In his Summary of Argument, the husband complains that the Magistrate erred in expecting the husband to “predict the outcome of the substantive decision” and to be in a position to “determine whether any offer made by the other party was or was not just and equitable”. The husband further complains at paragraph 3 :
3.Unlike my situation, the Judicial Officer had the benefit of viewing [the wife’s] offers in light of the substantive decision he made on 8th April 2011 however he neglected to give any consideration to the problems associated with comparing offers of settlement with the final outcome.
The husband’s submission has no substance. No party to proceedings can ever have the benefit of knowing what the substantive outcome will be at the time of considering an offer of settlement. This is, of course, the very purpose of offering to settle, namely to avoid proceeding to trial and allowing a judicial officer to determine the matter.
It is contended by the husband that the “Judicial Officer failed to take into account the information available to [the husband] and [the husband’s] assessment of the terms of the offers at the time they were made”. This contention also has no substance. As set out above, his Honour considered that the wife was “deadly serious” about bringing the proceedings to an end and that she made genuine attempts to resolve the matter by way of offers of settlement. The context of these offers was considered by his Honour in detail and any suggestion that they could not be taken seriously was rejected.
It is important to note here that the husband had the benefit of legal advice throughout the proceedings, including at trial. As set out in his Summary of Argument (at paragraph 9):
9.During the course of proceedings I consulted three separate lawyers. After proving a detailed account of the relationship and respective contributions, each lawyer gave a different opinion on what I could expect to be awarded by the Court. …
Further, the husband disclosed in his email to the wife of 2 August 2010 that he had sought the opinion of a barrister. He said:
Back in February I engaged a Barrister, Mr Moser, to review the case and provide his opinion. He was astonished to learn you had turned down my offer of my share in [U] Street with a net value over $150k. He explained that the end result is always up to the Judge however he believed a settlement, in my favour, of between 85/15 and 75/25 was likely. Based on his esteemed opinion, my worst / your best case scenario is you get my share in [U] St and then you pay for all my legal expenses on top of your own.
It is within this context that the husband’s assertions must be assessed. The husband had the benefit of legal advice from various sources and he chose to “take the risk” of proceeding to trial. The fact that the outcome at trial was less favourable to him that the offers made by the wife throughout the course of the proceedings was unfortunate for him. However, the husband cannot now claim that he was not aware at the time he rejected the wife’s offers that “the end result is always up to the Judge”.
The decision to award costs was made in the exercise of a wide discretion granted to judicial officers by the legislation. Stephen J said in Gronow v Gronow (1979) 144 CLR 513 at 519 (my emphasis added):
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.
In my view, the Magistrate’s order was a sound exercise of the discretion available to him. The appeal will therefore be dismissed.
There will be no order as to the costs, as the wife said she would not seek costs in the event the appeal was dismissed.
I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 17 August 2012.
Associate:
Date: 17 August 2012
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