Armstrong and Oats
[2017] FamCA 425
•16 June 2017
FAMILY COURT OF AUSTRALIA
| ARMSTRONG & OATS | [2017] FamCA 425 |
| FAMILY LAW – APPLICATION FOR COSTS – costs in proceedings conducted under cross vesting legislation |
| Family Law Act 1975 (Cth) Bosworth & Firkins [2013] FamCA 7 (8 January 2013) |
Kardos v Scarbutt (No 2) [2006] NSWCA 206
| APPLICANT: | Ms Armstrong |
| RESPONDENT: | Mr Oats |
| FILE NUMBER: | CAC | 917 | of | 2011 |
| DATE DELIVERED: | 16 June 2017 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Gill J |
| HEARING DATE: | 9 September 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Farrar Gesini & Dunn |
| SOLICITOR FOR THE RESPONDENT: | Mazengarb Family Lawyers |
Orders
The applicant’s application in a case for the costs of and incidental to the proceedings filed 15 August 2016 is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Armstrong & Oates has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 917 of 2011
| Ms Armstrong |
Applicant
And
| Mr Oats |
Respondent
REASONS FOR JUDGMENT
This matter concerns an Application in a Case filed by the applicant on 15 August 2016, in which she sought orders for costs of and incidental to substantive proceedings concluded by this Court on 18 July 2016. Those substantive proceedings were heard under the Domestic Relationships Act 1994 (ACT) by Faulks DCJ following the transfer of those proceedings from the Supreme Court of the ACT. The respondent resists the application, seeking its dismissal. A question arises as to the legislative scheme under which the question of costs should now be determined.
The substantive proceedings commenced before the introduction of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (Family Law Amendment Act). Section 86 of the Family Law Amendment Act dealt with the transitional arrangements regarding de facto relationships which meant that relationships that broke down before the de facto property provisions, being Parts VIIIAB and VIIIB, and subsection 114(2A) of the Family Law Act commenced were excluded from their operation unless the parties opted in. In this case the respondent declined to opt in and so the matter was dealt with under the Domestic Relationships Act 1994 (ACT) and not under the Family Law Act 1975 (Cth).
The usual costs regime for matters heard by the Family Court of Australia is contained in s 117 of the Family Law Act. That provision applies costs principles for proceedings that are conducted “under this Act.” These proceedings were not conducted under the Family Law Act 1975, but pursuant to jurisdiction conferred by the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and s 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT), which confers upon this Court “original and appellate jurisdiction in respect of ACT matters.”This means that the costs regime contained in s 117 does not apply to these proceedings. This approach is the same as that taken in Bosworth & Firkins[2013] FamCA 7 (8 January 2013) by Faulks DCJ at [6] – [14].
As to the issue of what law ought to apply to the question of costs, Note 2 to s 86 of the Family Law Amendment Act stated that:
Note 2: After commencement, State/Territory law will continue to apply to any proceedings pending at commencement for an order or injunction in relation to the maintenance, or the distribution of property, of the parties to the de facto relationship arising out of the breakdown of the de facto relationship.
The laws of the Territory at the time of commencement relevant to these proceedings were the Domestic Relationships Act 1994 (ACT), and, as proceedings were first instituted in the ACT Supreme Court, the Court Procedures Rules 2006 (ACT) (the Rules) dealt with the issue of costs for such proceedings.
Rule 1721 of the Court Procedures Rules relevantly provides that:
The costs of a proceeding or of an application in a proceeding are in the discretion of the court.
In Bosworth Faulks DCJ accepted what was said by Cooper J sitting as the Supreme Court of the ACT in Ferris v Winslade (1998) ACTSC 214 (15 May 1998) an action pursuant to the Domestic Relationships Act, that there are no specific costs provisions within that Act, that the award of costs is not to punish but is to indemnify the successful party, and that costs will usually follow the event.
Qualifying this is the analysis of Connolly J, again in proceedings under the Domestic Relationships Act in Kilby v O’Brien (No 2) [2006] ACTSC 90 (13 September 2006) where he adopted the reasoning of Brereton J in Kardos v Scarbutt (No 2) [2006] NSWCA 206 that:
... the costs of adjusting property interests consequent upon the failure of a domestic relationship are an incident of the failure of a joint relationship, usually without attributable fault.
That led Connolly J to decline to order costs despite there being an offer made by the plaintiff that bettered the award received by the plaintiff. Connolly J further accepted Brereton J’s analysis of “substantial success” justifying a costs award:
“substantial success” is not to be judged merely by the circumstance that a plaintiff obtains an adjustment in his or her favour. It involves an evaluation of the outcome, in the light of the forensic and negotiating positions of the parties, such that it can be said that one party has been clearly more successful than the other, to the extent that the costs of the proceedings can be seen to be attributable to the unsuccessful party’s opposition, rather than to the matters referred to by Hislop J in Vollmer v Hauber Davidson [2006] NSWCA 79 - including, in particular, the necessity for both parties that their property interests be separated, and the failure of both parties to adopt a realistic position.
Even in circumstances where an offer is bettered there is cause to consider whether costs should effectively follow the event.
In general terms the applicant sought at trial the transfer of B Street Suburb A to her, with the parties to otherwise retain all chattels and liabilities in their possession or name.
The respondent, again in general terms, sought the payment from the applicant of $137,500, the transfer by him of B Street to the applicant, and otherwise the parties to retain all chattels and liabilities in their possession or name.
The judgment provided that the respondent transfer to the applicant the B Street property, the applicant pay to the respondent $100,000, and the parties to otherwise retain all chattels and liabilities in their names or possession.
Neither party could be described unequivocally as successful, or as clearly more successful.
The applicant sought an order for costs based upon a number of factors:
a)By reason of an offer of settlement made on 24 January 2011, wherein she offered to resolve the matter on the basis that she pay to the respondent the sum of $85,000 and he transfer to her the B Street property;
b)By reason of the contested issues each being determined in her favour at the hearing;
c)By virtue of the respondent initially agreeing to opt into the Family Law Act and then reneging on that agreement.
Part 2.10 of the Rules deals with offers of compromise. Rule 1002 deals with making offers of compromise. The Rules provide that the offer must specify that it is made under that provision and the period for acceptance. The offer identified as relevant, at page 16 of the applicant’s affidavit, does neither of these things. However, it is in clear terms, and remained open for period of greater than one year. Despite a lack of strict compliance with the Rules, those circumstances justify the offer being taken into account.
Rule 1010 deals with circumstances where the judgment is no less favourable to the plaintiff than the offer made by the plaintiff. Particular costs consequences favourable to the plaintiff apply unless the court otherwise orders. However, in this case the judgment was less favourable than the offer.
The Rules assign no other consequences to the making of an offer of compromise by a plaintiff. No relevant offer was identified by the respondent.
Each of the parties put forward reasons why the offer should be seen as better or worse than the outcome of the decision in the matter. For the applicant it is put that, if reasonable interest is taken into account, then the offer of $85,000, with an interest rate applied to it, would have exceeded the amount of the award, given the delay between the finalisation of the proceedings and the handing down of judgment. This appears inconsistent with Rule 1013 which deals with how interest is to be considered in the context of an offer of compromise. The Rule provides that even in circumstances where an order is made by the Court for the payment of interest (which did not occur here), it is not to be taken into account in determining the consequences of the offer.
For the respondent it was put that if the award had been made promptly, then taking into account inflation, in real terms the award would be even greater than the sum of money received. This contention was not supported by any evidence.
The applicant points to the circumstance that the offer approximated the award made by the Court. There was a $15,000 difference between the award and the offer, a difference that equated to a 2 ½ per cent difference between what each of the parties would have received under the offer as opposed to the award (when calculated by reference to the agreed pool accepted at trial).
Dal Pont[1], in dealing with offers of compromise as constituting a justification for an order other than for the successful party receive his or her costs, describes that such an effect is derived from circumstances “where an ultimately successful party rejects a settlement offer that proves, in the final analysis, as or more favourable to that party as the judgment of the court.” Even accepting the difficulty here of describing a party as successful, it cannot be said that the respondent rejected an offer that was “as, or more favourable” than the award made by Faulks DCJ.
[1] Law of Costs, 3rd Edition, G E Dal Pont at [13.1]
The second basis put forward by the applicant was that the disputed factual matters were determined in favour of the applicant. Despite the resolution of these matters in favour of the applicant, they did not result in the orders sought by the applicant. Rather, the orders made were closer to those sought by the respondent than those sought by the applicant. No basis was put forward for distinguishing how the particular disputed factual matters should result in a costs award to the applicant.
The third basis put forward by the applicant related to the agreement on the part of the respondent to opt into the Family Law Act as the law governing the proceedings, and then his failure to do so. It was put that this resulted in additional expense due to the need to commence in the Supreme Court of the ACT and then transfer to the Family Court of Australia. Neither the necessity of transfer to this Court, nor a wasted expense in doing so has been demonstrated in the costs proceedings. It was further put that the failure to opt in meant that orders could not be made in relation to the parties’ superannuation interests. Assuming that to be correct, no principle as to why that matter is relevant to a costs award has been identified, other than, by implication, it may identify a capacity to pay a costs award by the respondent. That is, he is not an impecunious litigant.
Neither party could be seen to be successful, or clearly more successful than the other, in relation to their applications. The respondent’s position at final hearing was significantly closer to the final award than the orders sought by the applicant. The applicant did not do better than her offer.
Even without regard for the hesitancy in awarding costs as expressed by Brereton J, in this case sufficient justification for an order for the payment of the applicant’s costs has not been made out. The application is refused.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 16 June 2017
Associate
Date: 16 June 2017
Key Legal Topics
Areas of Law
-
Civil Procedure
Legal Concepts
-
Costs
-
Appeal
0
4
9