Bellchambers v Jackson

[2009] TASSC 113

[2009] TASSC 113

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Bellchambers v Jackson [2009] TASSC 113

PARTIES:  BELLCHAMBERS, Christine Ann
  v
  JACKSON, Todd Andrew

FILE NO/S:  BDR 630/2008
DELIVERED ON:  18 December 2009
DELIVERED AT:  Hobart
HEARING DATE:  30 November 2009
JUDGMENT OF:  Blow J

CATCHWORDS:

Family Law and Child Welfare – De facto relationships – Adjustment of property interests – Other matters – Costs – Consent orders for adjustment in applicant's favour – No agreement as to costs – Whether costs should follow the event.

Relationships Act 2003 (Tas), s68.
Dunstan v Rickwood (No 2) (2007) 38 Fam LR 491; [2007] NSWCA 266, followed
Aust Dig Family Law and Child Welfare [500]

REPRESENTATION:

Counsel:
             Applicant:  B R McTaggart
             Respondent:  I C Guest
Solicitors:
             Applicant:  McGrath & Co
             Respondent:  Ian Guest & Associates

Judgment Number:  [2009] TASSC 113
Number of paragraphs:  25

Serial No 113/2009
File No BDR 630/2008

CHRISTINE ANN BELLCHAMBERS v TODD ANDREW JACKSON

REASONS FOR JUDGMENT  BLOW J

18 December 2009

1. These proceedings concern an application for the adjustment of the parties' property interests under the Relationships Act 2003 ("the Act"). On the day that the application was listed for trial, the parties agreed to consent orders in respect of their property. However no agreement was reached as to costs. The applicant sought an order that the respondent pay her costs. Counsel for the respondent said that his client sought costs but, at the end of his submissions, submitted that there should be no order as to costs.

1. The Act, s68, provides:

"A court may make any order for costs it considers appropriate."

1. Under the Supreme Court Civil Procedure Act 1932, s12(1), this Court has "jurisdiction to award costs in all causes and matters whatsoever". The discretion to make an order for costs under that subsection is not fettered in any way. In my view the enactment of s68, has simply given the Court something that it already had, namely a power to award costs that is unfettered by any legislative requirement. When a court has an unfettered discretion to order costs, and one party is successful in litigation against another, an order for costs should ordinarily be made in favour of the successful applicant: Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council (1998) 193 CLR 72; Hardman v Ward (2004) 13 Tas R 134. In other words, the general rule is that costs follow the event.

1. Different considerations apply in property litigation in the Family Court of Australia because the Family Law Act 1975 (Cth), s117, operates so as to require parties to litigation in that court ordinarily to bear their own costs. However the Tasmanian Parliament did not include any such provision in the Act, and it would therefore be inappropriate for me to take into account the fact that different principles are applied in relation to costs applications in another jurisdiction: Dunstan v Rickwood (No 2) (2007) 38 Fam LR 491; [2007] NSWCA 266 at par37; Lawler v Ewington [2009] TASSC 7.

1. Although the applicable general rule is that costs follow the event, the power to award costs in this jurisdiction is discretionary, and the Court therefore is able to depart from the general rule in appropriate cases.  It is therefore necessary to examine the circumstances of this litigation and consider whether there are any circumstances warranting a departure from the general rule.

1. This was a case in which the applicant was successful, to a degree.  The major asset in the parties' pool of property was a house owned by the respondent alone, in which he has lived ever since it was purchased.  When the parties finally separated in July 2006, the applicant had two cars, some furniture, a motorcycle, a little money in a bank account, and some superannuation.  The respondent had his house, a vehicle, some furniture, some tools, and some superannuation.  He owed money to his bank.  He contended that he owed $38,908 either to both his parents or to his mother. 

1. At about the time of separation, which occurred in July 2006, the parties agreed that the respondent would pay $7,000 to the applicant.  That money was subsequently paid.  However the applicant applied for more.  Her originating application was filed on 16 July 2008, nearly two years after the final separation.  That application did not state with precision what orders she was seeking.  The order sought was expressed as follows:

"That provision be made from the nett assets of the parties to effect an equal division of the assets."

1. There were only two ways in which an equal division of the parties' net assets could have been effected.  One was for the respondent to pay a sum of money to the applicant.  The other was for his house to be sold, and for a sum of money to be paid to her from the proceeds of sale. 

1. The respondent could have taken steps to protect himself from a costs application.  He could have lodged and served an offer of compromise: Supreme Court Rules 2000, r280. He could have made an offer of settlement on a "without prejudice except as to costs" basis: Calderbank v Calderbank [1976] Fam 93. He did not do either of those things. However he took the unusual step of proposing certain final orders in an affidavit that his solicitor filed on the last business day before the listed trial date. He proposed an order that he pay the applicant $43,000 within 30 days, and another order to the effect that each party retain the property and financial resources under his or her control. The suggested orders were acceptable to the applicant, and were subsequently made by consent.

1. Counsel for the applicant submitted that she had been successful in the proceedings; that the ordinary rule required that she should have an order for her costs; and that there was no reason why the ordinary rule should be departed from in this case. 

1. In opposing the application for costs, counsel for the respondent referred to a number of factors, including the following:

·     The applicant agreed to settle for $7,000 in 2006, and that sum was paid to her.

·     Her originating application was not preceded by a letter requesting a further property adjustment.

·     The applicant did not specify how much she was seeking from the respondent until 7 August 2009, when her solicitors said in a letter that she was seeking $100,000. 

·     No findings of fact have been made in relation to the factual matters that have been disputed in the proceedings.

·     The applicant failed to make discovery of her pay slips.

·     There were negotiations between the parties in the weeks leading up to the listed hearing date.

·     The applicant wanted much more than she got.

1. If these proceedings had gone to trial, it would have been relevant that the respondent paid the applicant $7,000 following their separation, and that they made an informal agreement to the effect that the payment of that money was intended to effect a final adjustment of property interests: In the Marriage of Candlish and Pratt (1980) FLC ¶90-819 at 75,168 – 75,169; In the Marriage of Neale (1991) 104 FLR 414 at 420; (1991) FLC ¶92-242 at 78,648. However the making and performance of such an agreement could not preclude the making of a property order under the Act, at least in the absence of evidence that it was a just and equitable final agreement when it was made. The trial in this case was to have been a trial on affidavit. The affidavit evidence makes it clear that, even after the payment of the $7,000, there was a substantial imbalance between the assets and financial resources of the parties. By proposing an order whereby a further $43,000 was to change hands, the respondent in effect conceded that it was just and equitable for an order to be made in the applicant's favour. There had been no drastic change in the financial circumstances of either party since the final separation.

1. It is true that neither the applicant nor her solicitors wrote a letter of demand before the institution of proceedings.  That may have been impolite, but I think it was also inconsequential.  The proceedings were defended for some 16 months before the respondent proposed paying a sum that the applicant found acceptable.  There is no reason to think that writing a letter before applying to the Court might somehow have resulted in less costs being incurred, or in a different course being taken by either party.

1. It is true that, whilst the originating application made it clear that the applicant was seeking a 50:50 division of assets, the applicant did not specify the number of dollars that she was seeking.  However the applicant filed an affidavit with her originating application, and in par67 of that affidavit she listed all the parties' assets as at the time of separation, together with their estimated values, save that she said that her bank balance was negligible and the respondent's bank balance unknown.  On the basis of those figures, it is a simple task to calculate that, making allowance for the $7,000 she had already received, and subject to an adjustment when the respondent's bank balance was established, the applicant's claim was for about $83,000.  When family law property proceedings are instituted, it is often the case that assets have not been valued and precise details of the balances of bank and superannuation accounts have not been established.  In such circumstances, an applicant can often do no better than to make an ambit claim, or a claim for a percentage of the value of the parties' combined assets and financial resources.  Similarly, in applications under the Testator's Family Maintenance Act 1912, it is an almost universal practice in Tasmania for the originating application to reveal only that the applicant is seeking provision out of the estate, and not to specify what sum or what assets the applicant is seeking. I have no reason to think that the imprecision of the order sought as specified in the originating application resulted in any costs being incurred that would otherwise not have been incurred, or in the resolution of the applicant's claim being in any way impeded.

1. It is true that the applicant's property application has been disposed of without findings being made on a great many issues of fact.  In particular, no findings have been made as to the amount of the applicant's superannuation, as to the value of the house, as to the value of the respondent's tools, or as to whether the respondent owed money to his parents or either of them.  However that is always the situation when a case settles before the start of a trial.  Sometimes there are cases in which, after a settlement, findings are sought and made for the purposes of determining an application for costs.  Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 Qd R 162 is an example of such a case. However neither party has asked me to make any finding as to any disputed fact for the purpose of determining this costs application.

1. It may well be that the applicant had pay slips in her possession, custody or power; that she was obliged to discover them; and that she did not do so.  If so, I do not regard that as important.  I have no reason to think that any such failure on her part interfered with the resolution of her claim.

1. It is common ground that the parties made a series of "without prejudice" offers in the weeks leading up to the listed hearing date.  By consent, privilege was waived and I was told of the offers.  The sequence of events was as follows:

·     On 13 November the applicant offered to settle for $50,000 plus costs.

·     On 18 November the respondent made a counter-offer of $42,500 "all in". 

·     On 23 November the applicant rejected that offer.

·     On 26 November the respondent offered $50,000 "all in".  After the deduction of her costs, the applicant would have been left with significantly less than $43,000.

·     Later on 26 November, the applicant made a counter-offer of $63,500 "all in".  When I was hearing the costs application, the applicant's counsel told me that her costs were about $20,000.  If she had accepted that offer, she would have ended up with at least about $43,500 after the payment of her costs.

·     That offer expired without having been accepted.

1. It is common in family law property litigation for both parties to be unable to reach agreement as to the adjustment of their interests, with neither being prepared to make a realistic settlement offer.  The New South Wales Court of Appeal considered what costs orders should be made in such a situation in Kardos v Sarbutt (No 2) [2006] NSWCA 206. That case concerned an application under the Property (Relationships) Act 1984 (NSW), but there is no significant difference between the legislation relevant to that case and the legislation applicable in Tasmania. Brereton J, with whom Basten JA and Hunt AJA agreed, said, at par29:

"In this type of litigation, it is artificial to resolve liability for costs according to the accident of who is plaintiff and who is defendant, so as to leave a plaintiff free to litigate confident that he will receive costs however unreasonable his claim, unless the defendant betters her offer. There is no reason why the defendant should bear the risk of costs to the exclusion of the plaintiff where neither makes a realistic offer."

1. His Honour noted similarities to partnership disputes and partition disputes, in which it is common for partners and co-owners to have to bear their own costs.

1. The approach suggested by Brereton J in that case was considered and rejected by the New South Wales Court of Appeal, differently constituted, in Dunstan v Rickwood (No 2) (supra).  McColl JA, with whom Beazley and Ipp JJA agreed, pointed out that the comments of Brereton J amounted only to dicta, and concluded that the proper approach was to apply the rule that, prima facie, costs should follow the event.  It was held that the respondent to the appeal, having been successful at trial, was entitled to an order for costs.  In my view there is no basis for distinguishing Dunstan v Rickwood (No 2), and it therefore should be followed in Tasmania.

1. There may be property cases under the Act in which neither party can be characterised as the successful party. For example, if assets have to be sold, the parties each seek more than 50 per cent of the net proceeds, and the final orders are more or less equally unfavourable to both parties, it might be said that neither party has been successful and that the ordinary rule therefore cannot apply. This was not such a case. The applicant was claiming money from the respondent, to be paid either in cash or from the proceeds of sale of his house. He had no claim against her or any of her assets. If the case resulted in her obtaining an order for the payment of a substantial amount of money, she must be regarded as the successful party.

1. An unusual feature of this costs application is that there has not been a defended hearing leading to a determination of the substantive claim on its merits.  However it does not follow that one cannot apply the rule that costs should follow the event.  The proceedings have had an outcome, and that outcome has benefited the applicant very significantly.  It is worth noting that there are old cases in which it has been held that, after the making of an order for "costs to abide the event", the discontinuance of an action has the same effect as a verdict for the defendant: Howarth v Samuel (1818) 1 B & A 566 at 567; 106 ER 208; Blackman v Mylecharane (1865) 4 SCR (NSW) 233 at 238. 

1. Although these proceedings concluded with the making of consent orders, there still had to be an assessment of the merits of the applicant's claim. Because of the wording of the Act, s40(1), consent orders for the adjustment of property interests may be made under that subsection only if a judicial officer is satisfied that the parties are "partners", that the Court has jurisdiction, and that the order sought is "just and equitable". I was satisfied of those matters when I made consent orders on 30 November 2009. Although the affidavits filed on behalf of the parties left open significant factual questions, I was satisfied that, having regard to the extent of the common ground and the parameters of the parties' dispute, the orders sought were not unreasonable, and it was therefore just and equitable to make them.

1. The applicant would not have obtained the adjustment that was ultimately ordered in her favour if she had not instituted these proceedings and continued them to the brink of a defended hearing.  It follows that, in accordance with Dunstan v Rickwood (No 2), she should be regarded as the successful party in this litigation, and should recover her costs, unless there is reason to depart from the general rule that costs should follow the event.  After considering the matters relied upon by counsel for the respondent, which I have discussed above, I do not think that they or any of them, separately or in combination, warrant a departure from the general rule.

1. I therefore order that the respondent pay the applicant's costs of and incidental to the proceedings commenced by her originating application filed on 16 July 2008.  I certify that the hearing of the costs application herein on 30 November 2009 was a matter proper for the attendance of counsel.