BEATON and BALLAM

[2014] FCWA 44

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: BEATON and BALLAM [2014] FCWA 44

CORAM: CRISFORD J

HEARD: WRITTEN SUBMISSIONS

DELIVERED : 11 JULY 2014

FILE NO/S: PTW 3353 of 2014

BETWEEN: Ms BEATON

Applicant

AND

Mr BALLAM
Respondent

Catchwords:

FAMILY LAW - Costs - neither party wholly unsuccessful - offers - turns on its own facts

Legislation:

Family Law Act 1975 (Cth) - s 117

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr P Dowding SC

Respondent: Mr D Smith

Solicitors:

Applicant: Holden Barlow

Respondent: O'Sullivan Davies

Case(s) referred to in judgment(s):

Browne v Green (2002) FLC 93-115

Colgate-Palmolive v Cussons Pty Limited (1993) 118 ALR 248

Collins & Collins (1985) FLC 91-603

Fitzgerald v Fish (2005) 33 Fam LR 123

I and I (No 2)(1995) FLC 92-625

NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77

Pennisi v Pennisi (1997) FLC 92-774

Prantage & Prantage (2013) FLC 93-545

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL
JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN

CHANGED

1Following a judgment I delivered on 28 March 2014 dividing the parties’ matrimonial property the wife, [Ms Beaton], now seeks an order for costs against the husband, [Mr Ballam]. In her submissions, she seeks that the husband pay her costs from 25 October 2012 (the date the parties reached a Heads of Agreement) to the conclusion of the proceedings (on an indemnity basis) in the sum of $183,486.37.

Background

2The orders sought by the parties at trial are set out at paragraphs 11 to 18 of the reasons for decision:

Overall, the wife is seeking a 75 per cent split of the parties’ assets. In practical terms she wants to be in a position to purchase a property in the same area as the former matrimonial home. She currently rents a property in the [Suburb A] area. She wants the home to be commensurate with the standard previously considered by the parties as appropriate for the family. The children live with her for the majority of the time.

In order to facilitate the obtaining of such a property the wife proposes that the husband procure a mortgage over a property she nominates and that he service the debt. She anticipates that such an arrangement would be a combination of a property settlement and maintenance. She otherwise seeks a raft of orders to secure a share of the husband’s present and ongoing wealth.

It is common ground that the orders sought by the wife for periodic child support marry with the existing administrative assessment of child support the husband is currently to pay for the children.

It is also common ground that the husband will pay, by way of non-periodic child support, some other school and health related expenses for the children.

It is agreed that the annual rate of child support will not to be reduced by the non-periodic child support provided above.

The wife also seeks a weekly payment of spousal maintenance of $1,903 to be indexed according to the Consumer Price Index on an annual basis.

The husband is of the view that the wife should receive 60 per cent of the assets. He accepts she should receive all of the readily available liquid assets and that he should retain his superannuation entitlement. He says as a result of not receiving any of the presently available assets, there should be a decrease in what the wife might otherwise have secured by way of percentage allocation. He says 60 per cent is just and equitable.

The husband strongly opposes any payment of spousal maintenance to the wife. He says he is simply unable to afford to do so and that she can support herself.

3In my reasons for decision, I awarded the wife 72.5 per cent of the value of the assets, liabilities and financial resources of the parties that I found to exist at that court event. I ordered that, until further order, the husband pay the wife $1,125 as and by way of spousal maintenance.

4On the basis of the percentage adjustment the wife would be entitled to $1,771,793. The wife received almost 100 per cent of the available property and 30.5 per cent of the superannuation. As a result the husband has to pay the wife $910,445.

5I have adjourned the matter until December 2014 to monitor this payment.

The law

6Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that “subject to subsection (2), each party to proceedings under this Act shall bear his or her own costs”.

7Section 117(2) provides that if the Court is of the opinion there are circumstances that justify doing so the Court may, subject to subsection 117(2A), make such orders as to costs as it considers just. In considering what order, if any, should be made I am required to have regard to the factors set out in paragraphs (a) through to (g) and balance the relevant matters.

8The Full Court of the Family Court in Collins and Collins (1985) FLC 91-603 described the discretion conferred by s 117 as being a “broad” one and noted that the s 117(2A) factors are not to be read in a restrictive way.

9In Fitzgerald v Fish (2005) 33 Fam LR 123 the Full Court made clear that any one of the factors referred to may be the sole foundation for an order for costs. Nevertheless, in I and I (No 2)(1995) FLC 92-625 at 82,277, the Full Court said the matters enumerated 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.

Indemnity costs

10The wife raises this as being applicable to the circumstances here.

11In Colgate-Palmolive v Cussons Pty Limited (1993) 118 ALR 248 Sheppard J summarised the circumstances which may warrant the exercise of the discretion to award costs on an indemnity basis, of relevance are:

(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that there was no chance of success;

(b)The making of allegations of fraud knowing them to be false and the making or irrelevant allegations of fraud;

(c)Evidence of particular misconduct causing loss of time to the court and to other parties; and

(d)An imprudent refusal of an offer to compromise.

12The Full Court discussed the law in relation to indemnity costs in Prantage and Prantage (2013) FLC 93-545 and identified that there was nothing in the Act which prevents the making of an order for indemnity costs but such an order is a “very great departure from the normal standard”.

13The Full Court noted at 102-103 that it is important to recognise, as in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77:

That there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation… The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as [a] litigant (original emphasis). But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to his or her conduct as [a] litigant.

14As will become apparent, I do not accept there are appropriate grounds to award costs on an indemnity basis.

Discussion

15The factors I must consider are set out in s 117(2A) of the Act:

(a) the financial circumstances of each of the parties to the proceedings

16The husband is employed as the Vice President of [a project] within [a company] His base salary is $327,345 per year. In addition, and on the basis he meets certain performance criteria, he receives shares and cash bonuses. In recent years he has earned bonuses and share options that equate to 80 per cent of his income each year.

17The husband says that the fact the wife is receiving almost 100 per cent of the presently available property militates against his ability to pay an order for costs on top of a continuing obligation for child support and spousal maintenance.

18The wife has not worked in paid employment since 2002. She has the care of the parties’ children, one of whom has Down syndrome. It is likely that his care will continue past his 18^th birthday.

19As discussed in my reasons for decision, I accept it is unlikely the wife can or will work in the foreseeable future. She will never earn anything like the income of the husband.

20The husband says he does not have any available finds and is not in a position to pay an order for costs.

(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

Neither party has been in receipt of assistance from legal aid.

(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

21The wife argues that the husband failed to provide notice that witnesses were not required and that expenses were incurred as a result. She also says that the husband instructed his counsel to cross-examine her extensively regarding issues about which he was unsuccessful and that this should constitute a waste of the Court’s time. She complains of a lack of adequate disclosure by the husband of all relevant financial material in a timely fashion.

22The husband argues that some of the documents sought by the wife were not his to disclose. He states that he did not respond to some of the wife’s requests because the requests were made very close to trial.

23The husband says that, at times, the wife had failed to prosecute her case in a timely manner and had failed to comply with certain procedural orders.

24The husband says that the wife sought that the Court treat his unvested shares and future bonus entitlements as “property” available for division. For the reasons outlined in my judgment, I was not satisfied the unvested shares or bonus should be categorised as property but rather should be treated as a financial resource.

25The appointment of a Single Expert to value the shares and bonuses would have been of great assistance to the Court. Neither party took that course nor endeavoured to obtain their own valuation evidence. There was no “onus” per se on either party to do this, yet I consider each party deficient in not co-operating with the other to narrow this issue, and reduce the time and cost of the trial.

26Apart from this, the conduct of each party was, from time to time, frustrating and irritating, but not of the magnitude to ground an order for costs.

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

27Neither party asserts that the proceedings were necessitated by the failure of a party to comply with previous orders of the court.

(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings

28In the wife’s initiating application filed 9 July 2012 she sought a 75 per cent division of the property in her favour and she also sought spousal maintenance. In the husband's response filed 17 August 2012 he sought final orders that reflected a 65 per cent division in favour of the wife and that the wife’s application for spousal maintenance be dismissed. In his amended response filed 10 January 2014 he sought a division of 60 per cent in favour of the wife. This remained his position at trial.

29At first blush and based solely on a percentage division the husband was unsuccessful given the wife received 72.5 per cent. However, the obvious question relates to the extent and value of the property to which this percentage is allocated.

30The wife sought to include certain unvested shares and contingent bonus entitlements as property. The husband argued that they were simply financial resources and not certain or available. The wife attributed a notional value to the shares and the bonus. This value was not agreed to by the husband. I did not agree with the wife’s position at trial.

31To this extent the wife was unsuccessful.

(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

32The parties reached a Heads of Agreement on 25 October 2012 and, pursuant to this, the percentage division agreed was 65 per cent in favour of the wife with spousal maintenance of $900 a week until 2023 (when [B], the younger child, turned 18).

33The Heads of Agreement did not proceed. The wife says this occurred because the husband reneged on the agreement. The husband says that he did not want to include his work shareholdings and bonuses, which did not exist at the time of agreement, as property of the parties. He says the agreement did not proceed as the wife insisted that the parties had agreed to include the shareholdings as property. He disputes any such agreement.

34Each party has produced some correspondence in relation to the course of events surrounding the Heads of Agreement which was signed on 25 October 2012. What is apparent is that each party agreed to a 65 per cent split in favour of the wife.

35They could not agree on the composition of the property to which the agreed 65 per cent referred. Each party adopted what I consider to be an unreasonable stance in this respect. At this particular juncture I can see no reason to depart from the rule commonly applied in Family Law matters that each party bears their own cost.

36The Full Court emphasised the importance of offers in Browne v Green (2002) FLC 93-115 at [57]:

We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time of offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given.

37It is also important to note what the Full Court said in Pennisi v Pennisi (1997) FLC 92-774 at 84,547:

Offers must be seen in the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.

38The failure by either party to negotiate the impasse created by what each saw as being an appropriate identification of their property resulted in the matter proceeding towards a trial.

39Exactly a year after the parties negotiated their Heads of Agreement, the wife’s solicitors wrote to the husband's solicitors with another offer. I consider that the content of this correspondence reflects a far more conciliatory attitude. While still maintaining the appropriateness of her position, the wife makes what I consider to be a realistic offer, no matter what party’s version of the composition of their property is adopted. The final outcome if that offer had been accepted is that the husband would have paid the wife approximately $377,928 less than my order after trial.

40I consider that if the husband had carefully considered this offer, even on his own calculation of the property, he would have likely been better off.

41In relation to spousal maintenance the husband says that although his offer was less than the amount I awarded in my judgment it was for a longer period of time. In my judgment the wife is to receive $1,125 per week until 2020. However, this amount is subject to annual indexation. The husband’s offer was of $900 per week until 2023. This amount was not subject to indexation.

Conclusion

42I do intend to make an order for the husband to make a contribution towards the wife’s costs. If he had accepted the offer made by the wife on 25 October 2013 he would have been in a far better financial position than he currently finds himself.

43I do not accept that indemnity costs apply to the circumstances here. I consider that the costs should be in relation to property matters only. The costs order will not relate to children’s issues or to spousal maintenance.

44I have not been provided with enough information to ascertain an appropriate amount of the costs. The wife’s submissions contain an enormous bundle of time sheets and costs agreements. It is not the function of this Court to act as an assessing officer.

45Unless the parties can agree an amount, there will need to be an assessment by a Registrar of this Court to arrive at an appropriate amount.

Orders

1The Respondent, pay to the Applicant, costs to be assessed if not agreed, in relation to property settlement from 25 October 2013 until trial.

2 The application otherwise be dismissed.

I certify that the preceding [45] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate