Balzia and Covich
[2011] FamCA 358
•18 May 2011
FAMILY COURT OF AUSTRALIA
| BALZIA & COVICH | [2011] FamCA 358 |
| FAMILY LAW – COSTS - Between parties FAMILY LAW – COSTS - Offer to Settle |
| Family Law Act 1975 (Cth) |
| Calderbank & Calderbank [1976] Fam 93 |
| APPLICANT: | Ms Balzia |
| RESPONDENT: | Mr Covich |
| FILE NUMBER: | PAC | 4797 | of | 2008 |
| DATE DELIVERED: |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Collier J |
| HEARING DATE: | 28 January 2011 2 February 2011 8 March 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Pender |
| SOLICITOR FOR THE APPLICANT: | Norris Somers |
| COUNSEL FOR THE RESPONDENT: | Mr Dura |
| SOLICITOR FOR THE RESPONDENT: | Kazi Portolesi Lawyers |
Orders
That the husband pay to the wife for her costs from 13 March 2010 an amount to be agreed between the parties.
That failing agreement being reached within one month of the date of these Orders, the husband shall pay to the wife an amount equivalent to one half of her costs, as assessed on a party:party basis, as and from 13 March 2010.
That the amount thus arrived at shall be paid by the husband to the wife or as she may in writing direct within a time agreed between the parties or failing agreement within six months of the issue of the notice of assessment.
IT IS NOTED that publication of this judgment under the pseudonym Balzia & Covich 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 |
FILE NUMBER: PAC 4797 of 2008
| Ms Balzia |
Applicant
And
| Mr Covich |
Respondent
REASONS FOR JUDGMENT
Introduction
This judgment relates to the issue of the costs of a hearing before me.
On 7 May 2010 I delivered judgment in a property application involving the parties. The matter had occupied some three and a half days of hearing before me on 3 May 2010 to 6 May 2010. I made orders that the husband pay a sum of money to the wife.
Following the delivery of judgment and making of orders, the wife’s legal representative made an application for the husband to pay the wife’s costs of the hearing. I stood the matter over to enable the parties to, if possible, reach any agreement in this regard that they could, but this was not able to be done. Accordingly the matter was listed before me on 10 December for the purpose of hearing of the wife’s costs application.
In submissions made to me on 10 December the wife made it clear that the costs sought were as agreed or assessed from the date after the day upon which the husband’s solicitors rejected an offer of compromise. Similarly it was confirmed that costs were sought on a party and party, rather than indemnity, basis up to and including the conclusion of the hearing.
On that same day, there was significant argument before me as to whether the matter was ready to proceed and what had been said as between the legal representatives in respect of an adjournment. In the end result, the matter was adjourned to 28 January 2011 when I heard submissions from the respective counsel.
I then indicated I would give reasons and hear anything further from the parties they wish to put to me on 2 February 2011.
On 2 February 2011 I delivered a judgment in respect of the costs of an earlier dispute between these parties. After hearing further submissions as to costs of the hearing I indicated to both counsel that I required their assistance as to the question of whether or not a Calderbank offer, as it was referred to throughout the costs proceedings, should be in a form where it was exclusive of costs, or whether or not some mention should be made of costs within that offer. I will return to the precise wording of the letter of offer late in these reasons for judgment.
I ordered that the wife’s legal representatives were to furnish their submission and list of authorities relied upon to the husband’s legal representatives’ and that thereafter the husband’s legal representatives would have fourteen days to put on material in reply.
Unfortunately that was not the end of the matter. The wife’s counsel made allegations that the husband’s counsel had made imputations against her which she wished withdrawn or in some way dealt with. I made a copy of transcript available to the parties’ legal representatives. I considered this to be a significant matter requiring some determination.
Thereafter I received documents from the wife’s counsel which dealt with the issue of the Calderbank offer but went further, to request that Mr. Dura and the Court “do what is appropriate” in respect of suggestions allegedly made that impugned the wife’s counsel’s honesty and professional ethics. This has caused me very considerably concern.
As a result I directed my Associate to write to the parties to have the matter of Ms. Pender’s complaint dealt with.
On 8 March, the matter was before me again in relation to the question of the comments made that the wife’s counsel asserted were derogatory and offensive to her. It was submitted on behalf of Mr Dura that the Court could not and should not make orders in respect of this issue. It was further submitted on behalf of Mr Dura that Ms Pender had her remedies with the Bar Association of NSW should she choose to pursue the matter further. I accepted those submissions and accordingly no orders were made.
Background
So far as the issue of costs itself is concerned, it is clear that the wife seeks her costs of hearing from 13 March 2010.
It is common ground that the solicitor for the wife wrote to the husband on 11 March making in writing an offer of compromise and making it clear that the amount that she indicated she would accept was independent of costs. It was mentioned that the offer was made pursuant to the principles in Calderbank & Calderbank[1]. I will return to this letter in my reasons for judgment.
i)[1] [1976] Fam 93.
It is equally clear that the husband’s solicitor by a letter of 12 March advised, in a somewhat strangely worded letter, that the wife’s offer was rejected. I will also return to this letter later in these reasons for judgment.
The Law to be Applied
The issue of costs in the Family Court of Australia is governed by s 117 of the Family Law Act (1975) as Amended. Section 1 of s 117 of the Act makes it clear that except in circumstances which justify an order for costs, each party should pay their own costs.
The High Court of Australia in Penfold’s[2] case determined that the circumstances need not be exceptional or special but they must be such that they justify the making of an order for costs.
ii)[2] (1980) FLC 90-800.
Section 117(2A) then deals with the matters that a Court must consider in arriving at a determination to make an order for costs. The first of those matters is the financial position of each of the parties.
There is no doubt that the husband is in a superior position to the wife in this respect. In my judgment I found that the husband, having complied with my order, would still have money and properties to the value of approximately $2.3 million. The wife would have the amount ordered to be paid, some $200,749, together with property, savings and jewellery to an amount of approximately $100,000.
Thus, whilst it cannot be asserted that the wife is impecunious, the husband is in a much preferred position to her.
I am satisfied that neither party is in receipt of Legal Aid (s 117(2A)(b)).
Both parties made complaints about the conduct of the other in the course of the proceedings (s 117(2A)(c)).
It was the wife’s counsel’s submission that the husband had changed his evidence up to and including the time he was under cross examination. I found that the husband had not made a full and complete disclosure of his business affairs.
It was asserted by the husband’s counsel that I had made findings concerning the wife’s evidence which were critical of her. I did make findings as to the reliability of the wife’s evidence in respect of the work the husband required her to do in respect of his business and her evidence that her son had a share in her property in Country A and her evidence as to money in a safe.
As can be seen, neither party escaped criticism in this regard.
There was an issue relied upon by the husband that the wife was significantly out of time with the filing of documents, in accordance with an order made by me on 26 February 2010.The effect of that order was that the wife was to file and serve material she sought to rely upon by 5 March. That material was not filed until 15 April. This of course means that at the time the wife’s offer of settlement was made (11 March 2010) he did not have the material that the wife relied upon at the subsequent hearing in his possession.
The husband asserted, and it was not challenged, that he had complied at all times with time limits for the filing of material.
Thus there are issues both in relation to the provision of material and the way in which the parties conducted the hearing in more general terms.
I am not satisfied that the proceedings were required by reason of disobedience of a Court Order (s 117(2A)(d)).
This is not a case where either party can be said to be wholly unsuccessful (s 117(2A)(e)). The husband was ordered to pay considerably more than he proposed both in his documents and in his submissions. The wife for her part received considerably less than she had contended for. Further she received no order whatsoever for spouse maintenance as she had sought up to the commencement of submissions before me.
In this matter, a great deal turns upon the next section, s 117(2A)(f), relating to offers of settlement. Section 117(2A)(f) provides:
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;
As I have said the wife’s lawyers made an offer to the husband’s solicitors. That offer was in these terms:
Omitting Formal Parts
I refer to previous correspondence in this matter and in the interests of settlement of this matter I am instructed to make this offer of settlement to your client:
i.That within sixty (60) days from the date of these Orders/Agreement the Husband pay to the Wife by bank cheque, or as she may direct, the sum of two hundred thousand dollars ($200,000.00)
ii.The payment in paragraph (1) above is independent of costs.
iii.This offer will remain open for seven (7) days.
I advise that this offer is made pursuant to the principles in Calderbank v Calderbank [1975] 3 ALR 333.
I note that the asset pool as amended by your client on 26 February 2010, appeared to be approximately $2.4 million. If my client is awarded 10 per cent of this sum with a 10 per cent adjustment on s 75(2), then my client would be looking at receiving a sum of approximately $480,000.00.
I note that my client’s offer represents less than 10 per cent of the total pool as it stands at present.
I note also that your client’s valuation of the business of Aussie Haulage does not appear to take into account the rental income but is purely based on assets, being the capital value of the rental properties. In those circumstances my client’s offer would appear to be a fair compromise of the proceedings.
I note further that my client’s offer is now only $80,000.00 on top of the offer already made by your client. I would expect that this sum is likely to be exceeded by the costs of the parties should the matter proceed to a three day hearing, with the possibility of adding on the costs of the expert in the preparation of the report and attendance at court.
I look forward to receiving your response to this offer.
I advise that should this matter proceed to the hearing and if my client is awarded more than the sum proposed in this offer of settlement, my client will seek to tender this letter in support of her application for costs on an indemnity basis.
The husband’s letter rejecting that offer, which was dated 12 March 2010, was in these terms:
We refer to the above mentioned matter and previous correspondence by you 11 March 2010.
We advise we do not have instructions to accept your offer.
We advise your offer is rejected.
There are a number of issues that I must determine in respect of the offer, and the rejection of the offer. First; was the offer such that it was proper to give it consideration under s 117(2A)(f). I am satisfied that the offer is one that falls within s 117(2A)(f) and is thus capable of being taken into account in this present application.
The next matter for determination is whether or not an offer in the form of a Calderbank offer should make some endeavour to deal with the issue of costs, rather than exclude costs from the offer.
In Farlow and Farlow[3] his Honour Mushin J held, relying on a passage from Calderbank (supra), that he saw no reason why some similar practice should not be adopted in relation to matrimonial proceedings.
iii)[3] [2009] FamCA 46.
I have been referred to a number of authorities in other jurisdictions as to whether or not a Calderbank offer is required to deal with costs. In New South Wales it is clear that Einstein J in a decision of Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd[4] identified a line of authority that it was not appropriate in a Calderbank offer to make such an offer inclusive of costs. The reason for that was that such an offer (inclusive of costs) placed the offeree 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.
iv)[4] [2006] NSWSC 583.
In Elite Protective Personnel Pty Ltd & Anor v Salmon[5], the New South Wales Court of Appeal dealt with the authorities. Their Honours held that although an offer made inclusive of costs would not automatically invalidate a Calderbank offer for certainty, that it may do so.
v)[5] [2007] NSWCA 322.
Of course it must be remembered that these decisions were made in Courts where the usual rule is that costs follow the event. That is very different from the situation in the Family Court of Australia where, as I have already set out, the usual position is that each party should pay their own costs. Thus it may be said that in a jurisdiction where there is almost invariably an order for costs, parties making an offer and parties receiving that offer would have at their minds that costs was a separate issue. Their Honours in Pennisi[6] made it clear that s 117(2A)(f) should not be read as though offers in proceedings under the Act carry the same consequences as payment into Court in common law matters. However in this case I am satisfied that the expression “independent of costs” made it clear and obvious that the amount the wife said she would accept did not include in any fashion an amount for her costs. So far as I am concerned, the offer clearly left the issue of costs to be otherwise determined.
vi)[6] (1997) FLC 92-774.
I have come to the conclusion that having regard to Calderbank and the authorities both in this Court and other courts to which I have made reference, it is appropriate for an offer to be made in the Family Court that makes it clear that costs are not part of the offer.
It was put with some force by counsel for the husband that the application as it stood did not make it clear that the offer meant that if the amount were paid the wife would abandon her claim for maintenance. There is nothing that appears in the letter of offer which touches upon the issue of spousal maintenance, let alone deals with it with any specificity. Counsel for the husband puts further that the issue of maintenance was not withdrawn by the wife during the hearing itself but was effectively abandoned only during her final submissions.
The husband’s counsel therefore says that the husband was not able to form any view as to the effect of the offer upon the wife’s claim for spouse maintenance.
It was further put by the husband’s counsel that at the time the husband was required to consider the offer of settlement, he did not have in his possession the wife’s documents that would have at least assisted him in reaching a determination. Those documents had not been filed within the time specified.
I was referred to the decision of the Full Court in Harris & Harris[7] and that decision clearly indicates that there is no obligation placed on the offeree to seek to clarify the terms of the offer.
vii)[7] (1987) FLC 91-822.
However I am satisfied that I am also required to have regard to what was said by the Full Court in Robinson v Higginbotham[8] .
…when one looks at 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 that cost of litigation is avoided, the workload of the 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.
viii)[8] (1991) FLC 92-209.
Notwithstanding the husband’s assertions that it was not for him to seek particulars, I am of the view that there was an obligation upon the husband to seriously consider the offer as it was made to him. That may have lead to further enquiries.
Had the husband taken more care, it may have lead him to analyse the wife’s offer and, notwithstanding what I have said about his obligation to seek clarification of an offer, may have lead him to enter into a serious attempt to resolve this matter.
Accordingly, and notwithstanding what was been said in Harris (supra), I am satisfied that whilst the husband may not have had imposed upon him a direct obligation to seek clarification of the offer he at least had an obligation to give serious thought to that which had been put to him on behalf of the wife.
In this case, I am satisfied that the husband rejected the wife’s offer of compromise in a cursory if not cavalier fashion. Indeed from the wording of the letter of rejection it may appear that the offer was never brought to the husband’s attention.
I am satisfied that Pennisi (supra) makes it clear that the closer the offer is to the award eventually made, the more weight should be given to this factor.
Having said that, I am satisfied that in Robinson & Higginbothem (supra) their Honours found that s117(2A)(f) does not have any particularly priority but its importance must be weighed in the light of all the circumstances of the case. It is clear that the amount awarded exceeded the amount claimed by the wife by a small margin.
Discussion
In all the circumstances of this case, and having regard to the matters I am required to consider, I am satisfied firstly that the husband is in a much better financial position than is the wife.
I am satisfied that both parties are subject to criticism for the manner in which they gave evidence. I am further satisfied that the wife did not comply with directions for the filing of material.
As I have already set out in these reasons for judgment, I am satisfied that neither party can be said to have been wholly unsuccessful in the matter.
I am satisfied as I have found that the offer was in an acceptable form made as it was expressed to be independent of costs. However I am concerned that the lack of precision in dealing with the issue of spousal maintenance, and the fact that documents had not been provided in time for them to be in the husband’s possession when the offer was made, are matters I must take into account against the wife.
However it is clear that the offer made very closely approximated the eventual award and the in the circumstances of this case I find that that factor has real significance.
Balancing these matters as best I can, I am satisfied that the wife is entitled to recoup some of her costs of the hearing. However I am satisfied that in all the circumstances of this case there are matters which tell against the wife to the extent that it would not be proper that an order be made that the husband be liable for the entirety of her costs.
I have come to the conclusion that the appropriate order for me to make is that the husband pay to the wife one half of her costs from 13 March to the conclusion of the substantive hearing. I propose to order that such costs be as agreed between the parties or failing agreement being reached within one month, as assessed by a proper officer of this Court. The parties are to have the opportunity to agree to a time for payment and if they cannot, I will order the payment to be made within six months.
I certify that the fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier
Associate:
Date: 18 May 2011
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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