Balzia and Covich (No 2)

[2011] FamCA 601

FAMILY COURT OF AUSTRALIA

BALZIA & COVICH (NO 2) [2011] FamCA 601

FAMILY LAW – COSTS – Husband to pay wife costs of hearing to determine validity of a purported Binding Financial Agreement

Family Law Act 1975 (Cth)

Penfold & Penfold [1980] FLC 9800

APPLICANT: Ms Balzia

RESPONDENT: Mr Covich

FILE NUMBER: PAC 4797 of 2008

DATE DELIVERED: 2 February 2011

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 2 February 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

The orders that I make therefore are these:

1. That the husband pay the wife costs of and incidental to the hearing conducted to determine the validity of a Binding Financial Agreement.

2. That such costs be for an amount as agreed between the parties or as assessed by a proper officer of this Court on a party:party basis to be paid by the husband to the wife within a time either as agreed or within four months of the time the parties reach agreement as to quantum or within four months of the date upon which the certificate of assessment is issued by the appropriate authority.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Balzia & Covich (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 4797 of 2008

Ms Balzia

Applicant

And

Mr Covich

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. Before me for determination are a number of cost applications by the wife arising out of a number of discrete hearings in the overall conduct of this matter.  Firstly, on 21 and 22 May 2009 and 27 August 2009 I heard and determined an application as to the validity of a purported Binding Financial Agreement.  That agreement had been entered between the parties.  It had real difficulties which I do not propose to recap here.  My judgment of 27 August 2009 sets out the manner in which I dealt with the matter.  The result was that I found the document was not a valid Binding Financial Agreement and was thus of no effect.  That meant that the wife’s applications for property settlement and maintenance could proceed.

2. Certainly on that day (27 August 2009) I reserved the parties’ costs in relation to the issue of the Binding Financial Agreement.

3. The wife then endeavoured to bring on the matter for final hearing.  However the wife applied for and obtained an adjournment.  There was an order made for costs as against her solicitor personally. 

4. The property and maintenance issue eventually commenced a final hearing before me on 3 May 2010.  Subsequently, it was heard on 4, 5 and 6 May.  On 7 May I delivered a judgment ordering payment by the husband to the wife of a sum of $200,750. 

5. The matter then came before me on 10 December 2010 in relation to the issue of costs of the substantive hearing.  On that occasion both parties seemed to assert they wished to proceed, but both parties seemed to assert there had been an agreement them to adjourn the matter.  In any event the matter did not proceed on that day. 

6. When the matter came before me again on 28 January 2011 an application for costs of 10 December 2010 was mounted.

7. To the wife’s credit she did not press that application and effectively withdrew it during the course of submissions. 

8. I was therefore required to determine the issue of costs arising out of the hearing in relation to the Binding Financial Agreement and the substantive hearing. 

9. The parties relied on short affidavits and there was exhibited to me a copy of a letter of 12 March 2010.  I raised with counsel this morning that I had concerns and I may be mistaken as to the law in relation to offers of settlement or compromise.  The offer made in respect of the substantive proceedings is clearly a Calderbank offer rather than an offer of settlement filed in Court or otherwise in accordance with the rules of Court.  Ms Pender for the wife put to me with real force that such an offer (ie a Calderbank offer) is required by case law to be made exclusive of costs.  I directed that the legal representatives for the parties exchange material on this issue and make such material available to me to so as to enable me to determine the issue of costs of the substantive hearing.  Accordingly I will take that aspect of the matter no further at this stage.

10. However, I do propose to determine the costs of the proceedings concerning the Binding Financial Agreement. 

THE LAW TO BE APPLIED

1. It is clearly the general rule in this Court that each party should bear their own costs (s 117(1) of the Family Law Act 1975 as amended). It is however clear from the authority of Penfold & Penfold, High Court of Australia[1] that if there are circumstances that so justify it a Court may make an order for costs in favour of a party.  Penfold (Supra) makes it clear that the circumstances need not be special or exceptional.

   [1]  [1980] FLC 9800

2. Section 1172(A) provides that in considering what order, if any, should be made the Court shall have regard to a number of factors.  The first of those factors (s 117(2A)(a)) is the financial circumstances of each of the parties to the proceedings.  Clearly the husband is in a significantly superior financial position to that of the wife.  However, the wife is by no means impecunious.  She has the amount of my award and she retains, of course, a property in Country A. Notwithstanding that her position is inferior by a significant degree to the husband’s. 

3. Neither party is in receipt of legal aid (s 117(2A)(b)).

4. Raised before me by each of the parties was the issue of conduct. (s 117(2A)(c)) The proceedings in respect of the Binding Financial Agreement were hard fought.  However, this was a hearing in which there was no available range of results that could be reached in the exercise of discretion.  It was clear that the application would either succeed, that is, it would be found that the agreement was a binding agreement so as to oust the jurisdiction of the Court, or it would be found that the agreement was not a Binding Financial Agreement and thus the wife’s rights to proceed in respect of property and spouse maintenance remained alive.

5. When I look at the conduct of the parties in respect of that specific hearing I find that each of the parties took the position that he or she should have the order sought by them.  Thus I find that the conduct of the parties was, in all respects, similar in respect to that particular hearing.  The hearing was hard fought. The outcome of that particular application was of vital importance to each of the parties.    

6. I am not satisfied that the proceedings were necessitated by the failure of a party to comply with previous orders (s 117(2A)(d)). 

7. The most significant issue in this case if whether either party to the proceedings has been wholly unsuccessful (s 117(2A)(e)).  The wife at all times asserted that the agreement was not a Binding Financial Agreement. It was her case that the Court should find that this was so. The husband sought to have the agreement found to be a Binding Financial Agreement.  The outcome of the hearing was that the Court found the agreement not to be a Binding Financial Agreement.  The document was faulty for a number of reasons which I set out in my judgment of 27 August 2009.  In my view the result achieved was in escapable.  The husband was therefore wholly unsuccessful.

8. The fact that a change of law was effected subsequently so as to make compliance significantly less onerous in respect of Binding Financial Agreements than it was at the time I dealt with the matter does not lessen the impact of the total failure of the husband to achieve his espoused position.

9. Under (s 117(2A)(g)) (in any other matter as the Court considers relevant) it is important to examine and be aware of the type of application that was before the Court and determined by my order of 27 August 2009.  That application as I have said was not one that enlivened the exercise of discretion. The matter turned on the application of the law to a series of facts as determined by me in that hearing.  On the law as it then stood the result was inevitable.

10. As I apprehend it, there was never an appeal lodged against my judgment and orders of 27 August 2009.  Certainly at no stage were the proceedings, prior to the delivery of judgment, sought to be adjourned so as to enable changes to be made to the Family Law Act.  Taking all of these matters into account I am of the opinion that I should order that the husband pay the whole of the wife’s costs of and incidental to the application in respect of determining whether or not the agreement was a Binding Financial Agreement.  I have not been asked to consider making such an order on an indemnity basis.  Accordingly the order that I will make will be that the costs be paid on a party:party basis.  

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 2 February 2011.

Associate: 

Date: